UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to ___________
File Number 000-51417
CLICK TO RAFFLE.COM, INC., (f/k/a A CLASSIFIED AD, INC.)
- -----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 20-1447963
-------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1016 Clemmons Street, Suite 302, Jupiter, Florida 33477
-----------------------------------------------------------------------------
(Address of principal executive offices)
(561) 745-6789
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(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the 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 shell company (as defined in
Rule 12b-2 of the Exchange Act Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. [As of August 31, 2007 the issuer had
28,373,070 shares of common stock, $.01 Par Value, outstanding]
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
On March 3, 2005, A CLASSIFIED AD, Inc. received Cusip Number: 00089Y 10 9
On March 23, 2005, A CLASSIFIED AD, Inc. received CIK Number: 0001321499
(A CLASSIFIED AD, INC. changed its name to CLICK TO RAFFLE.COM, INC. on
November 30, 2005.)
CLICK TO RAFFLE.COM, INC. FORM 10-QSB August 31, 2007
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise INDEX
PAGE NO.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm....... 3
Balance Sheets
August 31, 2007 and May 31, 2007............................. 4
Statements of Operations
Three Months Ended August 31, 2007 and 2006
and from Inception, March 1, 2004, through
August 31, 2007............................................. 5
Statement of Changes in Stockholders' Equity
from May 31, 2005, through August 31, 2007................... 6
Statement of Cash Flows
Three Months Ended August 31, 2007 and 2006 and
from Inception, March 1, 2004, through August 31, 2007...... 7
Notes to Financial Statements................................. 9
ITEM 2 Management's Discussion and Analysis or Plan of Operation.....15
ITEM 3 Controls and Procedures.......................................20
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings.............................................22
ITEM 2 Unregistered Sales of Equity Securities and Use of
Proceeds.....................................................2
ITEM 3 Defaults Upon Senior Securities...............................23
ITEM 4 Submission of Matters to a Vote Of Security Holders...........23
ITEM 5 Subsequent Events.............................................23
ITEM 6 Exhibits......................................................23
SIGNATURES AND CERTIFICATIONS.........................................24
Exhibit 31.1 Certification required under Section 302 of ........ 29
the Sarbanes-Oxley Act of 2002 by the CE0
Exhibit 31.2 Certification required under Section 302 of ........ 30
the Sarbanes-Oxley Act of 2002 by the CFO
Exhibit 32 Certification of CEO and CFO Pursuant to ........... 31
Section 906 of the Sarbanes-Oxley Act
2
Wieseneck, Andres & Company, P.A.
Certified Public Accountants
772 U.S. Highway 1, Suite 100
North Palm Beach, Florida 33408
(561) 626-0400
Thomas B. Andres, C.P.A.*, C.V.A. FAX (561) 626-3453
Paul M. Wieseneck, C.P.A.
*Regulated by the State of Florida
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Click to Raffle.com, Inc.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
Jupiter, Florida
We have reviewed the accompanying balance sheets of Click to Raffle.com, Inc.
(f/k/a A Classified Ad, Inc.), a Development Stage Enterprise, as of August 31,
2007, the related statements of operations for the three month periods ended
August 31, 2007 and 2006 and Inception, March 1, 2004, through August 31,
2007, and the related statements of operations for three month periods ended
August 31, 2007 and 2006, the statement of changes in stockholders' equity
from May 31, 2005 through August 31, 2007 and the statement of cash flows
for the three month periods ended August 31, 2007 and 2006 and Inception,
March 1, 2004, through August 31, 2007. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with the standards established by the
Public Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures
and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with U.S. generally accepted accounting principles.
/s/Wieseneck, Andres & Company, P.A.
North Palm Beach, Florida
October 15, 2007
3
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
BALANCE SHEETS
(UNAUDITED)
August 31, 2007 MAY 31, 2007
------------- ------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 1 $ 104
Prepaid Expense 0 -
Loan Receivable Related Parties 3,800 3,800
----------- -----------
Total Current Assets 3,801 3,904
----------- -----------
Property & Equipment, Net of Accumulated
Depreciation of $1,047 and $718 600 682
----------- -----------
TOTAL ASSETS $ 4,401 $ 4,586
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts Payable $ 11,037 $ 7,151
Loans Payable 3,270 3,270
Shareholder Loans Payable 16 5,406
----------- -----------
Total Current Liabilities 14,323 15,827
----------- -----------
Total Liabilities 14,323 15,827
----------- -----------
Stockholders' Equity
Common Stock $.01 par value:
100 million shares authorized;
Shares issued and outstanding:
28,373,070 at August 31, 2007
and 24,767,370 at May 31, 2006 283,730 247,675
Paid-in Capital (2,257) (3,259)
Deficit Accumulated during
the Development Stage (291,395) (255,657)
----------- -----------
Total Stockholders' Equity (9,922) (11,241)
----------- -----------
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $ 4,401 $ 4,586
=========== ===========
Read accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
4
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage ENTERPRISE
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 2007 AND 2006
AND FROM INCEPTION, MARCH 1, 2004, THROUGH AUGUST 31, 2007
(UNAUDITED)
INCEPTION
MARCH 1, 2004
THROUGH
2007 2006 AUGUST 31, 2007
------------ ------------ ------------
Revenues
Net Sales $ - $ - $ -
Cost of Sales 82 82 1,407
------------ ------------ ------------
Gross Profit (82) (82) (1,407)
Operating Expenses
General and Administrative 35,445 33,205 286,326
------------ ------------ ------------
Total Operating Expenses 35,527 33,287 286,326
------------ ------------ ------------
Loss from Operations (35,527) (33,287) (286,373)
Interest Expense 211 290 4,022
------------ ------------ ------------
Net Loss $ (35,738) $ (33,577) $ (291,395)
============ ============ ============
Basic and Diluted
Net Loss per Common Share $ (.001) $ (.002)
============ ============
Weighted Average Shares
Outstanding 28,373,070 15,435,595
============ ============
Read accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
5
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM MAY 31, 2005, THROUGH AUGUST 31, 2007
(UNAUDITED)
Number At Par Add'l Total
of Value Paid In Accumulated Stockholder
Shares $.01 Capital (Deficit) Equity
Balance, ----------- -------- --------- ---------- ----------
May 31, 2005 5,499,503 $ 54,995 $ (3,258) $(39,130) $ 12,607
Convert Debt to
Common Stock
(See note Q) 6,145,975 61,460 - - 61,460
Convert Professional
Fees to Common Stock 1,000,000 10,000 - - 10,000
Net Loss 2006 - - - (113,766) (113,766)
Convert Debt to
Common Stock
(See note Q) 11,271,892 112,719 - - 112,719
Convert Professional
Fees to Common Stock 850,000 8,500 - - 8,500
Net Loss 2007 - - - (102,761) (102,761)
----------- -------- --------- ---------- ----------
Balance,
May 31, 2007 24,767,370 247,675 (3,259) (255,657) (11,241)
Convert Debt to
Common Stock
(See note Q) 1,905,700 19,057 1,000 - 20,057
Convert Professional
Fees to Common Stock 1,700,000 17,000 - - 17,000
Net Loss Aug 31, 2007 - - - (35,656) (35,656)
----------- -------- --------- ---------- ----------
Balance
August 31, 2007 28,373,070 $283,731 $ (2,259) $(291,395) $ (9,922)
=========== ======== ========= ========== ==========
Read accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
7
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED AUGUST 31, 2007 AND 2006
AND FROM INCEPTION, MARCH 1, 2004, THROUGH AUGUST 31, 2007
(UNAUDITED)
INCEPTION
MARCH 1, 2004
THROUGH
2007 2006 AUGUST 31, 2007
---------- ---------- ----------
Cash Flows From Operating Activities
Cash received from customers $ - $ - $ -
Cash paid to suppliers of goods
and services (145) (8,088) (147,798)
Income taxes paid - - -
Interest paid - - -
Interest received - - -
---------- ---------- ----------
Net Cash Flows Used in
Operating Activities (145) (8,088) (147,798)
---------- ---------- ----------
Cash Flows From Investing Activities - - -
---------- ---------- ----------
Net Cash Flows Used in
Investing Activities - - -
Cash Flows From Financing Activities
Sale of Common Stock - - 135,719
Proceeds of loans from shareholders - - 39,319
Repayment of loans from shareholders - - (21,169)
Repayment of loans - related company (30) (38,500) (10,983)
Proceeds of loans from related party 72 - 9,192
Loans to related company - (3,800) (3,800)
---------- ---------- ----------
Net Cash Flows Provided By
(Used In) Financing Activities 42 (42,300) 148,278
---------- ---------- ----------
Net Increase / (Decrease) in Cash (103) (50,388) 1
Cash and Cash Equivalents at
Beginning of Period 104 50,127 0
---------- ---------- ----------
Cash and Cash Equivalents at
End of Period $ 1 $ 261 $ 1
========== ========== ==========
Read accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
8
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
FEBRUARY 28, 2007 AND 2006
(UNAUDITED)
Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities
2007 2006
------------ ------------
Net Income (Loss) $ (35,738) $ (85,181)
Add items not requiring outlay of cash:
Depreciation and amortization 82 258
Convert related party debt to equity 14,625 61,460
Convert professional fees to equity 17,000 10,000
Cash was increased by:
Decrease in prepaid assets - -
Increase in accounts payable 3,886 12,875
Cash was decreased by:
Decrease in accounts payable - -
Increase in prepaid assets - (7,500)
------------ ------------
Net Cash Flows Used in
Operating Activities $ (145) $ (8,088)
============ ============
Read accompanying summary of accounting policies, notes to financial statements
and independent accountants' review report.
9
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE A - HISTORY AND DESCRIPTION OF BUSINESS
Pursuant to SEC Staff Legal Bulletin No. 4, eCom decided to spin off A
Classified Ad into an independent company in the belief that the independent
company, with a distinct business, would be better able to obtain necessary
funding and develop its business plans.
On December 1, 2003, the Board of Directors of eCom eCom.com, Inc., approved
the spin-off of A Classified Ad.
A Classified Ad, Inc. (the "Company") was incorporated in the State of Florida
on March 1, 2004 as a wholly owned subsidiary of eCom eCom.com, Inc.
eCom eCom.com, Inc. spun off A Classified Ad, Inc. on June 4, 2004. A
Classified Ad, Inc. changed its name to Click to Raffle.com, Inc. on November
30, 2005. The Company's main office is located at 1016 Clemons Street, Suite
302, Jupiter, FL 33477, and the telephone number is (561) 880-0007.
The Company does not have any off-balance sheet arrangements.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION, USE OF ESTIMATES
The Company maintains its accounts on the accrual basis of accounting. The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles 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 period.
Actual results could differ from those estimates.
REVENUE RECOGNITION
Product revenue is recognized when the product is shipped. Service revenue is
recognized when the service is complete. Dividends from investments are
recognized when declared payable by the underlying investment. Capital gains
and losses are recorded on the date of the sale of the investment.
CASH
Cash consists of deposits in banks and other financial institutions having
original maturities of less than ninety days.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
It is the policy of management to review the outstanding accounts receivable at
each year end, as well as the bad debt write-offs experienced in the past, in
order to establish an allowance for doubtful accounts for uncollectible
amounts.
DEPRECIATION
Property and equipment will be recorded at cost and depreciated over the
estimated useful lives of the related assets. Depreciation is computed using
the straight-line method.
10
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AMORTIZATION
The accounting for a recognized intangible asset acquired after June 30, 2001
is based on its useful life to the Company. If an intangible asset has a finite
life, but the precise length of that life is not known, that intangible asset
shall be amortized over management's best estimate of its useful life. An
intangible asset with an indefinite useful life is not amortized. The useful
life to an entity is the period over which the asset is expected to contribute
directly or indirectly to the future cash flows of that entity.
RECLASSIFICATION
Certain reclassifications have been made to the prior year's financial
statements in order for them to be in conformity with the current year's
presentation.
NOTE C - LOANS RECEIVABLE RELATED PARTIES
The loan receivable from related parties in the amount of $3,800 is
non-interest bearing, non-collateralized and due on demand.
NOTE D - PROPERTY AND EQUIPMENT
Equipment is recorded at cost and is being depreciated over its estimated
useful life of seven years. Accumulated depreciation through August 31, 2007
and May 31, 2007 is $1,047 and $965, respectively.
Depreciation expense for the nine months ended August 31, 2007 and 2006 is
$82 and $82, respectively, and is included in the cost of sales.
NOTE E - CHANGE OF COMMON SHARES AUTHORIZED
The Company changed the number of common shares authorized from 100 million to
300 million with the State of Florida on November 30, 2005. The par value of
the common stock remains at $0.01 per share. The financial statements presented
have been restated to reflect this change.
NOTE F - SHAREHOLDER LOANS AND LOANS PAYABLE
The Loans Payable at August 31, 2007 and May 31, 2007 in the amounts of
$3,270 and $3,270, respectively, are non-interest bearing, non-collateralized
and due on demand.
The Shareholder Loans Payable at August 31, 2007 and May 31, 2007 in the
amounts of $16 and $5,406, respectively, are non-interest bearing, non-
collateralized and due on demand.
NOTE G - DEVELOPMENT STAGE ENTERPRISE
The Company has been and is currently in the development stage. It is the
intention of management to merge or acquire a company engaged in internet
raffle activities. 11
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES
No provision for federal and state income taxes has been recorded because the
Company has incurred net operating losses since inception. The Company's net
operating loss carryforward as of August 31, 2007 totals approximately
$280,000. These carry forwards, which will be available to offset future
taxable income, expire beginning in 2024.
The Company accounts for income taxes in accordance with FASB Statement No.
109, Accounting for Income Taxes (FASB 109). Under FASB 109, income taxes are
provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes related to
certain income and expenses recognized in different periods for financial and
income tax reporting purposes. Deferred tax assets and liabilities represent
the future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for operating losses and tax credits that
are available to offset future taxable income and income taxes, respectively.
A valuation allowance is provided if it is likely that some or all of the
deferred tax asset will not be realized. See Note K.
NOTE I - DEFERRED TAX ASSET
Deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of the Company's assets and
liabilities. Temporary differences, net operating loss carry forwards and
valuation allowances comprising the net deferred taxes on the balance sheets
are as follows: August 31, 2007
----------------
Loss carry forward for tax purposes $ 280,000
================
Deferred tax asset (34%) 95,200
Valuation allowance (95,200)
----------------
Net deferred tax asset $ 0
================
The Company does not believe that the realization of the related net deferred
tax asset meets the criteria required by generally accepted accounting
principles and, accordingly, the deferred income tax asset arising from such
loss carry forward had been fully reserved.
NOTE J - STOCKHOLDERS' EQUITY
The computation of diluted loss per share does not include shares from
potentially dilutive securities as the assumption of conversion or exercise of
these would have an antidilutive effect on loss per share. In accordance with
generally accepted accounting principles, diluted loss per share is calculated
using the same number of potential common shares as used in the computation of
loss per share before extraordinary items.
11
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE K - RELATED PARTY TRANSACTIONS
The Company has loans payable due to related company entities. eCom eCom.com,
Inc. is owed $70 for funds advanced to the Company for its operations.
Green Energy Group, Inc. (f/k/a Maverick Energy Group, Inc.) is owed $2,500,
and Core Medical Group, Inc. (f/k/a Swap and Shop.net Corp.) is owed $700.
The Company is allocated certain expenses such as rent, travel and office &
administrative that are paid on behalf of the Company by American Capital
Holdings, Inc., a company that is related to the Company by mutual stockholders
and directors. The total of expenses allocated to the Company in the nine
months ended August 31, 2007 is approximately $16,015. The amounts due to
American Capital were paid by the issuance of common stock at the end of the
reporting period.
NOTE L - RECENT ACCOUNTING PRONOUNCEMENTS
The FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
characteristics of both Liabilities and Equity, and is effective for financial
instruments entered into after May 31, 2003. This Statement establishes
standards for how an issuer classifies and measures in its statement of
financial position certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability because that financial
instrument embodies an obligation of the issuer.
Statement of Financial Accounting Standards No. 151, Inventory Costs, is an
amendment of ARB No. 43, Chapter 4 and is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. This statement
amends ARB 43, Chapter 4, to clarify that abnormal amounts of idle facility
expense, freight, handling costs, and wasted materials (spoilage) should be
recognized as current-period charges. In addition, this Statement requires
that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities.
Statement of Financial Accounting Standards No. 152, Accounting for Real Estate
Time-Sharing Transactions, is an amendment of FASB Statements No. 66 and 67.
Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary
Assets, was issued in December 2004. The guidance in APB No. 29, Accounting
for Nonmonetary Transactions, is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. The guidance in that Opinion, however, included certain exceptions
to that principle. This Statement amends Opinion 29 to eliminate the exception
for nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a
result of the exchange.
12
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE L - RECENT ACCOUNTING PRONOUNCEMENTS - (CONTINUED)
Statement of Financial Accounting Standards No. 154, Accounting Changes and
Error Corrections, was issued in May 2005. This Statement requires
retrospective application to prior periods' financial statements of changes in
accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. When it is
impracticable to determine the period-specific effects of an accounting change
on one or more individual prior periods presented, this Statement requires that
the new accounting principle be applied to the balances of assets and
liabilities as of the beginning of the earliest period for which retrospective
application is practicable and that a corresponding adjustment be made to the
opening balance of retained earnings (or other appropriate components of equity
or net assets in the statement of financial position) for that period rather
than being reported in an income statement. When it is impracticable to
determine the cumulative effect of applying a change in accounting principle to
all prior periods, this Statement requires that the new accounting principle be
applied as if it were adopted prospectively from the earliest date practicable.
This Statement requires that retrospective application of a change in
accounting principle be limited to the direct effects of the change. Indirect
effects of a change in accounting principle, such as a change in
nondiscretionary profit-sharing payments resulting from an accounting change,
should be recognized in the period of the accounting change. This Statement
also requires that a change in depreciation, amortization, or depletion method
for long-lived, nonfinancial assets be accounted for as a change in accounting
estimate by a change in accounting principle. This Statement carries forward
without change the guidance contained in Opinion 20 for reporting the
correction of an error in previously issued financial statements and a change
in accounting estimate. This Statement also carries forward the guidance in
Opinion 20 requiring justification of a change in accounting principle on the
basis of preferability.
Statement of Financial Accounting Standards No. 155, Accounting for Certain
Hybrid Financial Instruments, was issued in February 2006. This Statement
permits fair value remeasurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation;
clarifies which interest-only strips and principle-only strips are not subject
to the requirements of Statement 133; establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation; clarifies that concentrations of
credit risk in the form of subordination are not embedded derivatives, and
amends Statement 140 to eliminate the prohibition on a qualifying special-
purpose entity from holding a derivative financial instrument that pertains to
a beneficial interest other than another derivative financial instrument.
Statement of Financial Accounting Standards No. 156, Accounting for Servicing
of Financial Assets, was issued in March 2006. This Statement requires an
entity to recognize a servicing asset, a contract to service financial assets
under which the estimated future revenues from contractually specified
servicing fees, late charges, and other ancillary revenues are expected to more
14
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
NOTES TO FINANCIAL STATEMENTS
NOTE L - RECENT ACCOUNTING PRONOUNCEMENTS - (CONTINUED)
than adequately compensate the servicer for performing the servicing, or
servicing liability, a contract to service financial assets under which the
estimated future revenues from contractually specified servicing fees, late
charges, and other ancillary revenues are not expected to adequately compensate
the servicer for performing the servicing, each time it undertakes an
obligation to service a financial asset by entering into a servicing contract.
SFAS No's. 150, 151, 152, 153, 154, 155 and 156 were adopted by the company and
did not have a material effect on the Company's financial position or results
of operations.
NOTE M - NAME CHANGE
The Company changed its name to Click to Raffle.com, Inc. on November 30, 2005
to better reflect the Company's future business activities.
NOTE N - COMMON STOCK
American Capital Holdings, Inc., a related company in that it was also a
company spun off from eCom eCom.com, Inc., acquired 5 million shares of Click
to Raffle.com, Inc. common stock on May 31, 2005 for $50,000. American Capital
Holdings, Inc. distributed the 5 million common shares to its shareholders in
the form of a dividend. The 6,145,975 common shares distributed to American
Capital Holdings, Inc. as partial payment of its accounts payable were also
distributed to the stockholders, prorata, of American Capital Holdings on
August 7, 2006, see note Q. By definition, Click to Raffle.com, Inc. is not a
wholly owned subsidiary of American Capital Holdings, Inc. in that American
Capital Holdings does not directly or indirectly own over fifty (50) percent of
the outstanding voting shares of Click to Raffle.com, Inc.
NOTE O - SHAREHOLDER LOAN, RELATED COMPANY ACCOUNTS PAYABLE
The Company had a portion of its prior and current year accounts payable such
as rent, administrative costs, tax preparation, SEC filing costs, etc. paid by
a related company, American Capital Holdings, Inc., for the benefit of Click to
Raffle.com, Inc. The related company invoiced Click to Raffle.com, Inc. for the
expenses it paid throughout the year on its behalf. In the year ended May 31,
2006, Click to Raffle.com, Inc. reduced a portion of its outstanding accounts
payable to the related company by $61,460 by issuing the company 6,145,975
shares of its common voting shares. See Note P relating to the distribution of
these shares. An additional 5,859,962 shares of common stock were issued to the
related company in payment of accounts payable during the nine months ended
August 31, 2007. The Company has an outstanding balance due to American
Capital Holdings, Inc. of $0 at August 31, 2007.
14
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
ITEM 2. MANAGEMENT'S DISCUSSION AND COMPARISON OF RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
financial statements for the nine month periods ended August 31, 2007 and
2007 and the Form 10-KSB for the fiscal year ended May 31, 2007.
Special Note Regarding Forward-Looking Statements
- -------------------------------------------------
Certain statements in this report and elsewhere (such as in other filings by
the Company with the Securities and Exchange Commission ("SEC"), press
releases, presentations by the Company of its management and oral statements)
may constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended
to identify these forward-looking statements. The company's actual results
could differ materially from those anticipated in these forward-looking
statements. Factors that might cause or contribute to such differences
include, among others, failure to complete a merger or acquisition with a
privately owned operating business that is generating substantial revenues,
success of the Company's business operations, failure to obtain sufficient
capital to fund those operations, and failure to meet the qualifications for
listing of the Company's stock on a major stock exchange. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
History of Spin-Off Company:
On December 1, 2003, the Board of Directors of eCom approved the spin-off of the
Company.
On June 4, 2004, the Board of Directors of eCom readopted a resolution to
spinoff the Company and authorized whatever action necessary to complete this
process including acquisitions and mergers. In this regard, the board included
instructions for the distribution of stock by its Transfer Agent, Florida
Atlantic Stock Transfer (FAST), to the shareholders when the share certificates
were properly exercised and costs relating to the issuance of these shares were
paid in full. Notwithstanding the foregoing, eCom eCom was not able to pay FAST
the amounts required to send out the stock certificates to the shareholders, and
therefore, the shares were not issued. Due to eCom's financial condition, eCom
was unable to effectuate the spinoffs. In connection with the spinoffs, eCom
owned all outstanding and issued shares of common stock of the Company. By
spinning off the Company, eCom distributed the common stock of the Company to
eCom's shareholders in proportion to the shares held in eCom as the relevant
record date.
On November 29, 2004, an involuntary petition was filed against eCom eCom.com,
Inc. under Chapter 11 Title 11, of the United States Bankruptcy Code.
Thereafter, an order for relief was entered by the United States Bankruptcy
Court on May 16, 2005. On June 2, 2005, the shares of the Spin-Off Company were
15
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
ITEM 2. MANAGEMENT'S DISCUSSION AND COMPARISON OF RESULTS OF OPERATIONS
(CONTINUED)
distributed to eCom shareholders of record, as of May 27, 2005. Subsequent
thereto, eCom caused a registration statement on Form 10-SB to be filed for the
Company.
On July 18, 2005, the Company received a letter from the Securities and Exchange
Commission asking it to provide legal analysis for the "spin-off" share
issuance. A copy of this letter is enclosed herein as Exhibit No. 99.1.
In an effort to give the SEC an answer regarding their request for detailed
clarification as to the legal analysis of the spin-off companies and to comply
with the request to withdraw each of the above referenced spin-off companies'
Form 10SBG12, on August 15, 2005 each spin-off company withdrew their respective
July 8, 2005 Form 10SBG12 filings. On August 15, 2005 Barney A. Richmond filed
a reply with the SEC regarding their July 18, 2005 correspondence. A copy of
Mr. Richmond's legal analysis is enclosed as Exhibit No. 99.2.
A transcript of the March 12, 2007 confirmation hearing is attached as Exhibit
99.3. The Order Confirming the First Amended Joint Plan of Reorganization of
Debtor and American Capital Holdings, Inc. as Modified was signed by Judge
Friedman on March 23, 2007 and is attached as Exhibit 99.4. This order may also
be viewed at the eCom website www.ecomecom.net under the bankruptcy link. A post
confirmation status conference is scheduled for Monday September 10, 2007 at
2:30 PM at 1515 North Flagler Drive, Room 801, West Palm Beach, FL
The Company has had no recent revenues or earnings from operations. The Company
will sustain operating expenses without corresponding revenues. This will result
in the Company incurring net operating losses until the Company can realize
profits from the business ventures it intends to acquire.
It is the intention of the Company to perform a merger or acquisition with a
privately owned operating business that is generating substantial revenues.
After a merger or acquisition has occurred, the Company will then file its Form
10-SB and SB-2.
Upon effectiveness of the Registration Statement, the Company intends to apply
to have its common stock listed for trading on the American Stock Exchange.
There is currently no public market for the Company's common stock, until such
time as the Company's Registration Statement under the Securities Act of 1933
and the Securities and Exchange Commission has been declared effective.
On June 22, 2007, the United States Securities & Exchange Commission ("SEC"),
via SEC File No. S7-11-07 and through Release No. 33-8813, issued proposed
revisions to Rule 144 and Rule 145 to Shorten Holding Period for Affiliates and
Non-Affiliates from Two (2) Years To Six (6) Months To Facilitate Capital
Raising For Smaller Companies. Comments from the public were due by September 4,
2007.
16
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
ITEM 2. MANAGEMENT'S DISCUSSION AND COMPARISON OF RESULTS OF OPERATIONS
(CONTINUED)
By waiting on clarification as to the outcome of the new SEC proposed 144 Rule,
if adopted, would reduce eighteen (18) months off the time that the 144
restriction may be removed; and would save significant SEC registration fee
costs for each company. If this proposed rule is adopted by the SEC, 144
Private Placement shares will be automatically eligible for resale in six (6)
months.
As a result, the company is seeking to raise Three Hundred Thousand ($300,000)
U.S. Dollars through the issuance of a ten percent (10%) promissory note to be
used to fund general corporate operations, including pursuing merger and
acquisition opportunities. For each $25,000 purchased, the promissory note
holder will receive ten percent (10%) interest, payable
monthly plus one hundred thousand (100,000) $.01 cent warrants in the company.
Repayment of the promissory note will come from the following intended sources:
1. If the SEC 144 Six (6) Month Rule is adopted, the Company plans to
immediately prepare a SEC 506 Regulation D Private Placement 144 Equity
Offering. The proceeds of this proposed 506 Regulation D Private Placement will
be used to repay this credit facility.
2. If the SEC 144 Six (6) Month Rule is not adopted, the Company plans to
prepare a SEC 506 Regulation D Private Placement 144 Equity Offerings in
accordance with the existing two (2) year SEC 144 Rule. Upon completion of
these offerings, several of the above described Companies would file SB-2 or S-3
Registration Statements to register common shares for resale. The proceeds of
this proposed 506 Regulation D Private Placement will be used to repay this
credit facility.
The success of the Company's proposed plan of operation will depend primarily on
the success of the Company's business operations and the realization of the
business' perceived potential. The funding of this proposed plan will require
significant capital. There can be no assurance that the Company will be
successful or profitable if the Company is unable to raise the funds to provide
this capital, or to otherwise locate the required capital for the operations of
the business.
If, for any reason, the Company does not meet the qualifications for listing on
a major stock exchange, the Company's securities may be traded in the over-the-
counter ("OTC") market. The OTC market differs from national and regional stock
exchanges in that it (1) is not sited in a single location but operates through
communication of bids, offers and confirmations between broker-dealers and (2)
securities admitted to quotation are offered by one or more broker-dealers
rather than the "specialist" common to stock exchanges.
17
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
RESULTS OF OPERATIONS
- ---------------------
Comparison of the Three months ended August 31, 2007
with the Three months ended August 31, 2006
- -------------------------------------------------------------------
Revenue for the Three month periods ended August 31, 2007 and August 31,
2006 was $0.
Cost of sales, which includes depreciation expense, was $0 for August 31, 2007
and $82 for May 31, 2007.
Operating expenses for the three months ended August 31, 2007 totaled
$(35,445) compared to $(33,287) for the three months ended August 31, 2006.
These charges consisted of general and administrative expenses which declined
from the prior year period because costs associated with bringing the Company
current with certain administrative requirements, including SEC filings, were
greater during the prior year time period.
Interest expense in the current three-month period was $211 compared to $290
in the corresponding prior year period.
As a result of the incurrence of depreciation, administrative expenses and
interest expense without the realization of revenues, the net loss for the Three
months ended August 31, 2007 was $(35,656) versus a net loss of $(33,577)
Liquidity and Capital Resources
- ---------------------------------------
Currently there is no trading market for the Company's common stock, and there
can be no assurance that any trading market will ever develop or, if such a
market does develop, that it will continue. As noted above, upon
effectiveness of a Registration Statement, the Company intends to apply to
have its common stock listed for trading on the American Stock Exchange. If,
for any reason, the Company does not meet the qualifications for listing on a
major stock exchange, the Company's securities may be traded in the over-the-
counter ("OTC") market.
The Company continues to be reliant on the private sale of its restricted
common stock plus loans from stockholders and other related parties in order to
fund its operations.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF THE COMPANY'S DISCLOSURE CONTROLS AND INTERNAL CONTROLS:
Within the 90 days prior to the date of this Quarterly Report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
'disclosure controls and procedures' ("Disclosure Controls"). This 'evaluation'
("Controls Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive Officer/Chairman
("CEO") and Chief Financial Officer ("CFO"). As a result of this review, the
Company adopted guidelines concerning disclosure controls and the establishment
of a disclosure control committee made up of senior management.
18
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS:
The Company's management, including the CEO/CHAIRMAN and CFO, does not expect
that its Disclosure Controls or its 'internal controls and procedures for
financial reporting' ("Internal Controls") will prevent all error and all
fraud. Any control system, no matter how well conceived and managed, can
provide only reasonable assurance that the objectives of the control system are
met. The design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or
mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, control may become inadequate because
of changes in conditions, or the degree of compliance with the CLICK TO
RAFFLE.COM, INC. policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.
CONCLUSIONS:
Based upon the Controls Evaluation, the CEO/Chairman and CFO have concluded
that, subject to the limitations noted above, the Disclosure Controls are
effective to timely alert management to material information relating to the
Company during the period when its periodic reports are being prepared. In
accordance with SEC requirements, the CEO/Chairman and CFO note that, since
the date of the Controls Evaluation to the date of this Quarterly Report, there
have been no significant changes in Internal Controls or in other factors that
could significantly affect Internal Controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
19
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. SUBSEQUENT EVENTS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
- -------- -------------------
31.1 Certification required under Section 302 of
the Sarbanes-Oxley Act of 2002 by the CEO
31.2 Certification required under Section 302 of
the Sarbanes-Oxley Act 0f 2002 by the CFO
32 Section 1350 Certification
99.1 Amended Articles of Incorporation of the
Company filed November 30, 2005 (incorporated by
reference to the Company's Form 10SB filed January 17, 2006)
99.2 August 15, 2005 legal analysis from Barney A. Richmond
Filed in response to the SEC July 18, 2005 letter. (1)
99.3 Transcript of March 12, 2007 Confirmation Hearing of
debtor eCom eCom.com, Inc. (1)
99.4 Order dated March 23, 2007 confirming the First Amended
Joint Plan of Reorganization of Debtor and American
Capital Holdings Inc. (2)
(1) Incorporated by reference to Form 10-QSB for the quarter ended
November 30, 2006. (SEC accession number 0001321499-07-000003)
(2) Incorporated by reference to Form 10-QSB for the quarter ended
February 28, 2007. (SEC accession number 0001321499-07-000004)
20
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
(b) Reports on Form 8-K:
None
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 hereunder duly authorized.
October 15, 2007 By: /s/ Barney A. Richmond
Barney A. Richmond,
Chief Executive Officer
October 15, 2007 By: /s/ Richard C. Turner
Richard C. Turner,
Chief Financial Officer
SIGNATURES AND CERTIFICATIONS
21
EXHIBIT 31.1
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Barney A. Richmond, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CLICK TO RAFFLE.COM,
INC. (formerly known as A Classified Ad, Inc.)
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others within the
company, particularly during the period in which this report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 15, 2007
/s/ Barney A. Richmond
Barney A. Richmond
President 22
EXHIBIT 31.2
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard C. Turner, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CLICK TO RAFFLE.COM,
INC.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others within the
company, particularly during the period in which this report is prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this report
(the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls.
6. The registrant's other certifying officer and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: October 15, 2007
/s/ Richard C. Turner
Richard C. Turner
Chief Financial Officer 23
CLICK TO RAFFLE.COM, INC.
(f/k/a A Classified Ad, Inc.)
A Development Stage Enterprise
EXHIBIT 32
CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Registration Statement of CLICK TO RAFFLE.COM, INC., a
Florida corporation (the "Company"), on Form 10-QSB for the period ended
August 31, 2007 as filed with the Securities and Exchange Commission (the
"Report"), Barney A. Richmond, President of the Company, and Richard C. Turner,
Chief Financial Officer of the Company, respectively, do each hereby certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C 1350, that
to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Barney A. Richmond
Barney A. Richmond
President
Date: October 15, 2007
/s/ Richard C. Turner
Richard C. Turner
Chief Financial Officer
Date: October 15, 2007
[A signed original of this written statement required by Section 906 has been
provided to CLICK TO RAFFLE.COM, INC. and will be retained by CLICK TO
RAFFLE.COM, INC. and furnished to the Securities and Exchange Commission or its
staff upon request.]
The Securities and Exchange Commission has not approved or disapproved of this
Form 10-QSB nor has it passed upon its accuracy or adequacy.
24