SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-52856
ATOMIC PAINTBALL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2942917
----- ----------
(State of Incorporation) (IRS Employer ID Number)
510 Trophy Lake Drive, Suite 314, PMB 106, Trophy Club, Texas 76262
-------------------------------------------------------------------
(Address of principal executive offices)
(817) 491-8611
(Registrant's Telephone number)
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 past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 for Regulation S-T (ss.232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No []
Indicate by check mark whether the registrant is a large accelerated file, 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 [ ]
(Do not check if a smaller reporting company) Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] Yes [ ] No
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of August 11, 2010, there
were 4,178,549 shares of the registrant's common stock, no par value, issued and
outstanding.
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Balance Sheet - June 30, 2010 and December 31, 2009 F-1
Statement of Operations - Three and Six months ended June 30, 2010 and 2009 and
for the period from inception (May 8, 2001) through June 30, 2010 F-2
Statement of Cash Flows -Six months ended June 30, 2010 and 2009
and for the period from inception (May 8, 2001) through June 30, 2010 F-3
Notes to Financial Statements F-4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk 4
Item 4. Controls and Procedures 4
Item 4T. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 5
Item 1A. Risk Factors - Not Applicable 5
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 5
Item 3. Defaults Upon Senior Securities 5
Item 4. Removed and Reserved 5
Item 5. Other Information 5
Item 6. Exhibits 5
SIGNATURES 6
PART I
ITEM 1. FINANCIAL STATEMENTS
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, DECEMBER 31,
2010 2009
(Unaudited) (Audited)
----------------- ------------------
ASSETS
Current Assets
Cash & Cash Equivalents $ 100 $ -
Prepaid Expenses 1,250 -
----------------- ------------------
Total Current Assets 1,350 -
----------------- ------------------
TOTAL ASSETS $ 1,350 $ -
================= ==================
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 136,156 $ 150,742
Accrued Interest 7,395 20,973
Loans from Shareholders 11,846 179,907
----------------- ------------------
Total Current Liabilities 155,397 351,622
----------------- ------------------
Convertible Note Payable - Long Term 143,733 -
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' (DEFICIT)
Preferred Stock, no par value: 2,000,000 shares authorized
Series A Convertible Preferred Stock, no par value; 400,000 shares authorized - -
no shares issued and outstanding as at December 31, 2009 and 2008 and
188,000 shares issued and outstanding at December 31, 2006 with a
$0.25 per share liquidation preference.
Common Stock, no par value: 10,000,000 shares authorized,
4,178,549 shares issued and outstanding as at June 30, 2010
and December 31, 2009, respectively 528,790 436,790
Deficit accumulated during the development stage. (826,570) (788,412)
----------------- ------------------
Total Stockholders' Deficit (297,780) (351,622)
----------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,350 $ -
================= ==================
See accompanying Notes to Financial Statements.
F-1
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
FROM INCEPTION
Three Months Ended Six Months Ended (May 8, 2001)
June 30, June 30, THROUGH JUNE 30,
2010 009 2010 2009 2010
----------------- ------------ -------------- ---------------- ----------------
OPERATING EXPENSES
General and Administrative $ 97,055 $ 67,758 $ 233,956 $ 69,508 $ 999,529
Depreciation and amortization - - - - 6,835
Gain on Settlement of Liabilities - - (199,218) (4,964) (212,818)
----------------- ------------ -------------- ---------------- ----------------
Total Operating Income / (Expenses) 97,055 67,758 34,738 64,544 793,545
OPERATING LOSS (97,055) (67,758) (34,738) (64,544) (793,545)
OTHER INCOME (EXPENSE)
Interest Expense (2,342) (2,883) (3,420) (5,395) (33,025)
----------------- ------------ -------------- ---------------- ----------------
Net Loss before Income Taxes (99,397) (70,641) (38,158) (69,939) (826,570)
Income tax expense - - - - -
----------------- ------------ -------------- ---------------- ----------------
NET INCOME / (LOSS) $ (99,397)$ (70,641) $ (38,158)$ (69,939) $ (826,570)
================= ============ ============== ================ ================
NET LOSS PER COMMON SHARE
Basic & Diluted ($0.02) ($0.01) ($0.01) ($0.01)
================= ============ ============== ================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic & Diluted 4,178,549 7,488,804 4,511,947 7,488,804
================= ============ ============== ================
See accompanying Notes to Financial Statements.
F-2
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH MARCH 31, 2010
Accumulated
Preferred Stock Common Stock deficit during
------------------------------------
Shares Amount Shares Amount Develop. Stage Total
# $ # $ $ $
--------- ------ ---------- -------- ------------ ----------
Balance at May 8, 2001 (date of inception) - - - - - -
Issuance of common stock for cash on May - - 200,000 1,000 - 1,000
8, 2001 at $0.005 per share
Issuance of common stock for services - - 600,000 6,000 - 6,000
on June 20, 2001 at $0.01 per share
Net loss for the period from inception - - - - (6,815) (6,815)
(May 8, 2001) through December 31, 2001
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2001 - - 800,000 7,000 (6,815) 185
Net loss for the year ended December 31, - - - - (4,155) (4,155)
2002
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2002 - - 800,000 7,000 (10,970) (3,970)
Issuance of Series A Convertible Preferred 116,000 29,000 - - - 29,000
for cash during October and November
2003 at $0.25 per share
Net loss for the year ended December 31, 2003 - - - - (47,656) (47,656)
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2003 116,000 29,000 800,000 7,000 (58,626) (22,626)
Issuance of Series A Convertible Preferred 184,000 46,000 - - - 46,000
Stock for cash during February 2004 at
$0.25 per share
Net loss for the year ended December 31, - - - - (62,156) (62,156)
2004
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2004 300,000 75,000 800,000 7,000 (120,782) (38,782)
Net loss for the year ended December - - - - (6,148) (6,148)
31, 2005
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2005 300,000 75,000 800,000 7,000 (126,930) (44,930)
Issuance of common stock for services - - 2,780,376 119,159 - 119,159
on August 31, 2006 at $0.042857 per share
Issuance of common stock in settlement of - - 323,080 13,846 - 13,846
of debt on September 8, 2006 at $0.042857
per share
Conversion of Series A Convertible (112,000) (28,000) 224,000 28,000 - 0
Preferred into Common Stock on a 1:2
basis during September 2006
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 1, 2006 at $0.042857 per share
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 8, 2006 at $0.042857 per share
Issuance of common stock for services on - - 150,000 6,429 - 6,429
December 18, 2006 at $0.042857 per share
Issuance of common stock in settlement of - - 697,674 30,000 - 30,000
debt on December 19, 2006 at $0.042857
per share
Issuance of common stock for services on - - 100,000 4,286 - 4,286
December 22, 2006 at $0.042857 per share
Net loss for the year ended December 31, - - - - (200,182) (200,182)
2006
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2006 188,000 47,000 5,275,130 217,290 (327,112) (62,822)
Conversion of Series A Convertible (144,000) (36,000) 288,000 36,000 - -
Preferred into Common Stock on a 1:2
basis on January 18 & 23, 2007
Conversion of Series A Convertible (36,000) (9,000) 72,000 9,000 - -
Preferred Stock into Common Stock on a
1:2 basis on February 5, 2007
Issuance of common stock in settlement - - 697,674 30,000 - 30,000
of debt on March 29, 2007 at $0.042857
per share
Issuance of common stock for cash in April - - 400,000 50,000 - 50,000
2007 at $0.125 per share
Issuance of common stock for cash on May - - 400,000 50,000 - 50,000
2007 at $0.125 per share
Issuance of common stock for cash in - - 40,000 5,000 - 5,000
November 2007 at $0.125 per share
Issuance of common stock for services in - - 300,000 37,500 - 37,500
November 2007 at $0.125 per share
F-3
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FROM INCEPTION (MAY 8, 2001) THROUGH MARCH 31, 2010
Accumulated
Preferred Stock Common Stock deficit during
------------------------------------
Shares Amount Shares Amount Develop. Stage Total
# $ # $ $ $
--------- ------ ---------- -------- ------------ ----------
Conversion of Series A Convertible (8,000) (2,000) 16,000 2,000 - -
Preferred Stock into Common Stock on a
1:2 basis on February 5, 2007
Net loss for the year ended December 31, - - - - (166,969) (166,969)
2007
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2007 - - 7,488,804 436,790 (494,082) (57,291)
Net loss for the year ended December 31, - - - - (112,774) (112,774)
2008
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2008 - 7,488,804 $436,790 (606,855) (170,065)
Net loss for the year ended December 31, - - - - (181,557) (181,557)
2009
--------- ------ ---------- -------- ------------ ----------
Balance at December 31, 2009 - - 7,488,804 436,790 (788,413) (351,622)
--------- ------ ---------- -------- ------------ ----------
Cancellation of common stock - - (3,530,255) - - -
Common stock issued for services at
$.50 per share - - 20,000 10,000 - 10,000
Common stock issued to Officers at
$.40 per share - - 200,000 80,000 - 80,000
Capital contribution of services - - - 2,000 - 2,000
Net income for the three months ended
June 30, 2010 - - - - (38,158) (38,158)
--------- ------ ---------- -------- ------------ ----------
Balance at June 30, 2010 - - 4,178,549 $528,790 $ (826,571) $(297,780)
========= ====== ========== ======== ============ ==========
See accompanying Notes to Financial Statements
F-4
ATOMIC PAINTBALL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED (May 8, 2001)
JUNE 30, THROUGH JUNE 30,
2010 2009 2010
--------------------------- ---------------
CASH FLOW FROM OPERATING ACTIVITIES
NET LOSS $ (38,158) $ (69,939) $ (826,570)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Depreciation - - 6,835
Loss on Disposal of Fixed Assets - - 3,464
Issuance of Common Stock For Services 90,000 - 271,944
Capital contribution of services 2,000 2,000
Gain on Settlement of Liabilities (199,218) (4,964) (212,818)
CHANGES IN OPERATING ASSETS & LIABILITIES
Decrease in Prepaid Expenses (1,250) - (1,250)
Decrease in Other Receivables - - -
Increase (Decrease) in Accounts Payable 129,147 14,017 293,489
Increase in Accrued Expenses (13,578) 3,870 7,395
--------------------------- ---------------
Total Cash Flow Used In Operating Activities (31,057 (57,016) (455,511)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets - - (10,299)
------------ ----------- ---------------
Total Cash Flow Used In Investing Activities - - (10,299)
CASH FLOW FROM FINANCING ACTIVITIES
Advances Under Loans From Shareholders 31,157 54,574 284,910
Net Proceeds from Issuance of Common Stock - - 106,000
Net Proceeds from Issuance of Preferred Stock - - 75,000
------------ ----------- ---------------
Total Cash Flow Provided By Financing Activities 31,157) 54,574 465,910
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS $ 100 $ (2,442) $ 100
============ =========== ===============
Cash and Cash Equivalents at the beginning of the $ 0 $ 2,492 $ -
period ============ =========== ===============
Cash and Cash Equivalents at the end of the period $ 100 $ 50 $ 100
============ =========== ===============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ - $ 207
============ =========== ===============
Cash paid for income tax $ - $ - $ -
============ =========== ===============
Conversion of accounts payable to long term debt $ 143,733 $ - $ 143,733
============ =========== ===============
See accompanying Notes to Financial Statements.
F-5
ATOMIC PAINTBALL, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 2010 and 2009
(UNAUDITED)
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES:
Nature of Operations -- We are a development stage corporation incorporated on
May 8, 2001 in the State of Texas which plans to own and operate paintball
facilities and to provide services and products in connection with paintball
sport activities at our facilities and through a website. The Company has
established a website at www.atomicpaintballparks.com.
During the year ended December 31, 2009 and the six months ended March 31, 2010,
we focused on completing those actions necessary to the implement our business
plan.
BASIS OF PRESENTATION
Development Stage Company
The Company has not earned significant revenues from planned operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Company." Among the disclosures required by SFAS No. 7 are
that the Company's financial statements of operations, stockholders' equity and
cash flows disclose activity since the date of the Company's inception.
Interim Presentation
In the opinion of the management of the Company, the accompanying unaudited
financial statements include all material adjustments, including all normal and
recurring adjustments, considered necessary to present fairly the financial
position and operating results of the Company for the periods presented. The
financial statements and notes do not contain certain information included in
the Company's financial statements for the year ended December 31, 2009. It is
the Company's opinion that when the interim financial statements are read in
conjunction with the December 31, 2009 Audited Financial Statements, the
disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any
future period.
SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid debt instruments with original maturities of less than three
months.
Property and Equipment -- Property and equipment are recorded at cost.
Depreciation is provided using the straight line method over the estimated
useful lives of the related assets. Amortization of leasehold improvements is
computed using the straight-line method over the shorter of the remaining lease
term or the estimated useful life of the improvement.
The useful lives of property and equipment for purposes of computing
depreciation are:
Leasehold Improvements 1 year
Equipment 7 years
Computer Equipment 5 years
F-6
Expenditures for maintenance and repairs are charged to operations as incurred,
while betterments that extend the useful lives of the assets are capitalized.
Assets held by the Company are periodically reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
Deferred Costs and Other -- Offering costs with respect to issue of common
stock, warrants or options by us were initially deferred and ultimately offset
against the proceeds from these equity transactions if successful or expensed if
the proposed equity transaction is unsuccessful.
Impairment of Long-Lived and Intangible Assets -- In the event that facts and
circumstances indicated that the cost of long-lived and intangible assets may be
impaired, an evaluation of recoverability was performed. If an evaluation was
required, the estimated future undiscounted cash flows associated with the asset
were compared to the asset's carrying amount to determine if a write-down to
market value or discounted cash flow value was required.
Financial Instruments -- The estimated fair values for financial instruments was
determined at discrete points in time based on relevant market information.
These estimates involved uncertainties and could not be determined with
precision. The carrying amounts of notes receivable, accounts receivable,
accounts payable and accrued liabilities approximated fair value because of the
short-term maturities of these instruments. The fair value of notes payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.
Revenue Recognition - We expect to generate revenue from providing facilities,
services and products in connection with paintball sport activities. Revenues
will be recognized as services and products are delivered. We are currently in
the development stage and had no revenue during the six months ended June 30,
2010 and 2009.
Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders' equity (deficit), exclusive of transactions with owners, such as
capital investments. Comprehensive income includes net income or loss, changes
in certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries and unrealized
gains (losses) on available-for-sale securities.
There were no differences between our comprehensive loss and net loss during the
six months ended June 30, 2010 and 2009.
Income (Loss) Per Share -- The income (loss) per share is presented in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No.128, Earnings Per Share. SFAS No. 128 replaced the presentation of
primary and fully diluted earnings (loss) per share (EPS) with a presentation of
basic EPS and diluted EPS. Basic EPS is calculated by dividing the income or
loss available to common stockholders by the weighted average number of common
stock outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Diluted EPS was the same as Basic EPS
for during the six months ended June 30, 2010 and 2009 as we had losses in all
periods since our inception and, therefore, the effect of all additional
potential common stock would be antidilutive.
Stock-Based Compensation -- Stock compensation expense is recorded on the date
of grant if the current market price of the underlying stock exceeds the
exercise price. Certain pro forma net income and EPS disclosures for employee
stock option grants are also included in the notes to the financial statements
as if the fair value method. Transactions in equity instruments with
non-employees for goods or services are accounted for by the fair value method.
Use of Estimates -- The preparation of our consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in these
F-7
financial statements and accompanying notes. Actual results could differ from
those estimates. Due to uncertainties inherent in the estimation process, it is
possible that these estimates could be materially revised within the next year.
In June 2009, the FASB issued Financial Accounting Standards Codification No.
860 - Transfers and Servicing. FASB ASC No. 860 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor's continuing involvement, if any,
in transferred financial assets. FASB ASC No. 860 is effective as of the
beginning of each reporting entity's first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter. The Company is
evaluating the impact the adoption of FASB ASC No. 860 will have on its
financial statements.
There were accounting standards and interpretations issued during the six months
ended June 30, 2010, none of which are expected to have a material impact on the
Company's financial position, operations or cash flows.
2. GOING CONCERN AND LIQUIDITY:
At June 30, 2010, we had total assets of $100, no operating business or other
source of income, outstanding liabilities totaling $200,502 and a stockholder'
deficit of $200,402.
In our financial statements for the fiscal years ended December 31, 2009 and
2008, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the three months ended
March 31, 2010 have been prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities and commitments in
the normal course of business. At June 30, 2010, we had a working capital
deficit of $154,047 and reported an accumulated deficit of $826,570.
It is our current intention to seek to raise the debt and/or equity financing to
meet ongoing operating expenses and fully implement our proposed business plan.
There is no assurance that this series of events will be satisfactorily
completed.
3. ACCOUNTS PAYABLE
The balances of Accounts Payable at June 30, 2010 and December 31, 2009 include
certain liabilities that were substantially over due as at the date of these
balance sheets but were still outstanding as we did not have the necessary
funding in to pay these liabilities.
No interest accrual has been made in respect of these outstanding accounts
payable as we believe they will be settled at or below their current carrying
value on our balance sheet
4. LOANS FROM SHAREHOLDERS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 2002 to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding. As of June 30, 2010 and December 31, 2009 accrued interest amounted
to $5,198 and $4,816, respectively.
F-8
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, was our sole officer and a director, has made advances to us of $237,687
by way of a loan. These funds are used to support our ongoing operating costs
and settle certain outstanding liabilities. In December 2006, Mr. Cutler
converted $30,000 of his loan into 697,674 shares of common stock. In March
2007, Mr. Cutler converted an additional $30,000 of his loan into an additional
697,674 shares of our common stock. At December 31, 2009 and 2008, the Company
owed Mr. Cutler $168,060 and $113,486, respectively.
As of January 20, 2010, David J. Cutler was released and discharged of from all
claims by the Company and that the Company is released and discharged from all
claims by Mr. Cutler. During the three months ended March 31, 2010, the Company
recorded a gain of $199,218 on amounts owed to Mr. Cutler consisting on accrued
Directors fees of $15,000, accrued interest of $16,157 and notes payable of
$168,060.
5. RELATED PARTY TRANSACTIONS
Our first President and then sole director, Barbara J. Smith, loaned us a total
of $10,900 between April and July 2002 to pay for further research and
development and for general corporate overhead. This loan bears interest at an
annual rate of 6.5% and was repayable in full in July 15, 2004 and was
convertible at Ms. Smith's option into shares of our common stock at $0.125 per
share. This loan has not been repaid and Ms. Smith has declined to convert the
outstanding balance into shares. Accordingly, the entire balance of the loan
continues to be outstanding and we continue to accrue interest on the balance
outstanding. As of June 30, 2010 and December 31, 2009 accrued interest amounted
to $5,198 and $4,816, respectively.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, our sole officer and a director, has made advances to us of $237,687 by
way of a loan. These funds are used to support our ongoing operating costs and
settle certain outstanding liabilities. In December 2006, Mr. Cutler converted
$30,000 of his loan into 697,674 shares of common stock. In March 2007, Mr.
Cutler converted an additional $30,000 of his loan into an additional 697,674
shares of our common stock. At December 31, 2009 and 2008, the Company owed Mr.
Cutler $168,060 and $113,486, respectively.
As of January 20, 2010, David J. Cutler is released and discharged of from all
claims by the Company and that the Company is released and discharged from all
claims by Mr. Cutler. During the three months ended March 31, 2010 the Company
recorded a gain of $199,218 on amounts owed to Mr. Cutler consisting on accrued
Directors fees of $15,000, accrued interest of $16,157 and notes payable of
$168,060. In addition Mr. Cutler has surrendered 3,530,255 shares of the common
stock of the Company for retirement to treasury.
6. CONVERTIBLE NOTE PAYABLE
On March 29, 2010, the Company entered into a $143,733 Commercial Promissory
Note with JH Brech, LLC. The Note is for $143,733 with 6% interest per annum due
two years from the date of the Note. Under the terms of the Note, JH Brech has
the right to convert all or part of the principal balance of the Note to common
stock of the Company at $0.50. At June 30, 2010, accrued interest amounted to
$2,197.
7. STOCKHOLDERS' DEFICIT:
Preferred Stock
In October 2003, our Board of Directors adopted a resolution to authorize the
issuance (in series) of up to 2,000,000 shares of preferred stock with no par
value. Our board of directors may determine to issue shares of our preferred
stock. If done, the preferred stock may be created and issued in one or more
F-9
series and with such designations, rights, preference and restrictions as shall
be stated and expressed in the resolution(s) providing for the creation and
issuance of such preferred stock. If preferred stock is issued and we are
subsequently liquidated or dissolved, the preferred stock would be entitled to
our assets, to the exclusion of the common stockholders, to the full extent of
the preferred stockholders' interest in us. At June 30, 2010, there are no
preferred shares issued and outstanding.
Common Stock
We are authorized to issue 10,000,000 shares of common stock, no par value per
share. The holders of common stock are entitled to one vote per share for the
election of directors and with respect to all other matters submitted to a vote
of stockholders. Shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of such shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
Our common stock does not have preemptive rights, meaning that our common
shareholders' ownership interest would be diluted if additional shares of common
stock are subsequently issued and the existing shareholders are not granted the
right, in the discretion of the Board of Directors, to maintain their ownership
interest in us.
As of January 20, 2010, David J. Cutler has surrendered 3,530,255 shares of the
common stock of the Company for retirement to treasury.
In January 2010 the Company issued a total of 20,000 shares of common stock
valued at $10,000 ($.50 per share) for services.
In February 2010 the Company issued a total of 200,000 shares of common stock
valued at $80,000 ($.40 per share) to Directors for services.
During the six months ended June 30, 2010 two Directors chose to wave there
Director's Fees of $500 per quarter. The Company recorded the fees as a capital
contribution of $2,000 in services.
Stock Options
On October 21, 2003, we adopted a stock purchase plan entitled "2003 Stock
Incentive Plan" to attract and retain selected directors, officers, employees
and consultants to participate in our long-term success and growth through an
equity interest in us. We have been authorized to make available up to 2,000,000
shares of our common stock for grant as part of the long term incentive plan.
No stock options were issued or outstanding as of June 30, 2010.
At the Company's June 26, 2010, Meeting of the Shareholders, a majority of the
Company approved the adoption of a stock option plan entitled the "2010 Atomic
Paintball, Inc. Stock Option and Award Incentive Plan." ("2010 Plan") The 2010
Plan authorizes 2,000,000 shares of the Company's common stock be reserved for
issuance under the 2010 Plan.
No stock options were issued or outstanding as of June 30, 2010.
8. COMMITMENTS AND CONTINGENCIES:
No legal proceedings are pending or threatened to the best of our knowledge.
F-10
9. SUBSEQUENT EVENTS
The Company evaluated subsequent events through August 11, 2010, the date the
condensed financial statements were issued and concluded there are no other
material subsequent events.
F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and the other financial information
included elsewhere in this report. This discussion contains forward-looking
statements that involve risks and uncertainties. You are urged to carefully
consider these factors, as well as other information contained in this Quarterly
Report on Form 10-Q and in our other periodic reports and documents filed with
the SEC.
OVERVIEW
We were incorporated on May 8, 2001, in the State of Texas, as a development
stage corporation which planns to own and operate paintball facilities and to
provide services and products in connection with paintball sport activities at
its own facilities and through our website www.atomicpaintballparks.com.
During ended December 31, 2009 and the six months ended June 30, 2010, we
focused on completing those actions necessary to the implement our business
plan.
On June 30, 2009, the Company filed a voluntary petition for relief in the
United States Bankruptcy Court, Northern District of Texas, Dallas District
under Chapter 7 of Title 7 of the U.S. Bankruptcy Code, case number 09-34008-7.
In Under Chapter 7, all claims against the Debtor in existence prior to the
filing of the petition of relief under U.S. Bankruptcy Code are stayed.
On October 1, 2009, David Cutler, the sole officer and director of the Company
and a creditor in the proceeding, and the bankruptcy trustee filed a Motion for
an Order Approving Bondholder Settlement. Such motion was objected to by a group
of the Company's shareholders consisting of J.H. Brech, LLC, Harry McMillan,
Charles Webb, Don Mark Dominey, Mark Armstrong, David Myers and John E. Bradley
("Objecting Shareholders").
On October 30, 2009, the Objecting Shareholders filed a Motion to Dismiss the
Chapter 7 Case.
On January 20, 2010, the Court dismissed the Chapter 7 proceedings as a result
of the obtainment and execution of a Settlement Agreement (the Settlement
Agreement) between the Company, its existing management and the Objecting
Shareholders of the Company.
Liquidity and Capital Resources
At June 30, 2010, we had total current assets of $1,350 consisting of $100 in
cash and $1,250 in prepaid expenses, no operating business or other source of
income, total current liabilities totaling $155,397 and a stockholder' deficit
of $297,780.
In our financial statements for the fiscal years ended December 31, 2009 and
2008, the Report of the Independent Registered Public Accounting Firm includes
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the fiscal years ended
December 31, 2009 and 2008, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. At June 30, 2010, we reported an
accumulated deficit of $826,570.
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Short Term.
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities as it seeks explore. For
short term needs we will be dependent on receipt, if any, of offering proceeds.
Capital Resources
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for acquisition and working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. Once full operations
commence, our needs for additional financing is likely to increase
substantially.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2010 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2009
During the three months ended June 30, 2010 and 2009, we did not recognize any
revenue from operations.
During the three months ended June 30, 2010, the operational loss of $97,055
compared to operational losses of $67,758 for the three months ended June 30,
2009. The increase of $29,297 in operational losses was a result $29,297
increase in general and administrative expenses. The $29,297 increase in general
and administrative expenses was a result of an increase in legal and accounting
fees in connection with the holding a shareholders' meeting.
During the three months ended June 30, 2010, we recognized net loss of $99,397
compared to a net loss of $70,641 during the three months ended June 30, 2009.
The $28,756 increase in losses is a result of the $$29,297 increase in
operational losses offset by a $541 decrease in interest expense.
SIX MONTHS ENDED JUNE 30, 2010 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2009
During the six months ended June 30, 2010 and 2009, we did not recognize any
revenue from operations.
During the six months ended June 30, 2010, the operational loss of $34,738
compared to operational losses of $64,544 for the six months ended June 30,
2009. The decrease of $29,806 in operational losses was a result of an increase
of $194,254 in gains on the settlement of liabilities offset by a $164,448
2
increase in general and administrative expenses. The $164,448 increase in
general and administrative expenses was a result of an increase in legal and
accounting fees in connection with our dismissal from bankruptcy proceedings,
the filing of our annual report and the requirements of holding a shareholders'
meeting.
During the six months ended June 30, 2010, we recognized net loss of $38,158
compared to a net loss of $69,939 during the six months ended June 30, 2009. The
$31,781 decrease in net losses is a result of the $29,806 decrease in
operational losses combined with the $1,975 decrease in interest expense.
CASH FLOW INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2010 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2009
At June 30, 2010, we had total current assets of $1,350 consisting of $100 in
cash and $1,250 in prepaid expenses, no operating business or other source of
income, total current liabilities totaling $155,397 and a stockholder' deficit
of $297,780.
Net cash provided by operations during the six months ended June 30, 2010 was
$168,161 compared to net used by operations of $57,016 for the six months ended
June 30, 2009. During the six months ended June 30, 2010 net losses of $38,158
was adjusted by the non-cash item of $90,000 in issuing common stock for
services and a $2,000 contribution of services. During the six months ended June
30, 2009, net losses of $69,939 were adjusted for the non- cash item of $4,964
gain in settlement of liabilities.
During the six months ended June 30, 2010 and 2009, the we did not receive or
use any funds in investing activities.
During the six months ended June 30, 2010, we used $168,061 from financing
activities. During the six months ended June 30, 2009, we received $54,574 from
financing activities.
Since his appointment on August 31, 2006 and through December 31, 2008, Mr.
Cutler, was our sole officer and a director, has made advances to us of $237,687
by way of a loan. These funds are used to support our ongoing operating costs
and settle certain outstanding liabilities. In December 2006, Mr. Cutler
converted $30,000 of his loan into 697,674 shares of common stock. In March
2007, Mr. Cutler converted an additional $30,000 of his loan into an additional
697,674 shares of our common stock. At December 31, 2009 and 2008, the Company
owed Mr. Cutler $168,060 and $113,486, respectively.
As of January 20, 2010, David J. Cutler was released and discharged of from all
claims by the Company and that the Company is released and discharged from all
claims by Mr. Cutler. During the six months ended March 31, 2010, the Company
recorded a gain of $199,218 on amounts owed to Mr. Cutler consisting on accrued
Directors fees of $15,000, accrued interest of $16,157 and notes payable of
$168,060.
On March 29, 2010, the Company entered into a $143,733 Commercial Promissory
Note with JH Brech, LLC. The Note is for $143,733 with 6% interest per annum due
two years from the date of the Note. Under the terms of the Note, JH Brech has
the right to convert all or part of the principal balance of the Note to common
stock of the Company at $0.50. At June 30, 2010, accrued interest amounted to
$2,197.
As of January 20, 2010, David J. Cutler has surrendered 3,530,255 shares of the
common stock of the Company for retirement to treasury.
In January 2010, the Company issued a total of 20,000 shares of common stock
valued at $10,000 ($.50 per share) for services.
3
In February 2010 the Company issued a total of 200,000 shares of common stock
valued at $80,000 ($.40 per share) to Directors for services.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and includes those policies and
procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transaction and dispositions of our
assets;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and directors; and
(iii)provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.
4
Management's assessment of the effectiveness of the Company's internal control
over financial reporting is as of the quarter ended March 31, 2010. We believe
that internal control over financial reporting is effective. We have not
identified any, current material weaknesses considering the nature and extent of
our current operations and any risks or errors in financial reporting under
current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
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 annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2010, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. REMOVED AND RESERVED
ITEM 5. OTHER INFORMATION
NONE.
5
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive and Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
Exhibit 32.1 Certification of Principal Executive and
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
6
SIGNATURES
In accordance with the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
ATOMIC PAINTBALL, INC.
Date: August 16, 2010 By: /s/Don Mark Dominey
---------------------------
Don Mark Dominey
Chief Executive Officer, &
Principal Accounting Officer
7