FILED PURSUANT TO RULE 424(b)(3)
Registration No. 333-140823
Prospectus
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Political Calls, Inc.
150,612,000 shares of common stock held by stockholders
This prospectus relates to the offer for sale of 150,612,000 shares of our
common stock by certain existing holders of the securities, referred to as
selling securityholders throughout this document. The shares of common stock
to be sold by the selling security holders include: a) 612,000 outstanding
shares held by the selling securityholders; and b) 150,000,000 shares issuable
to the selling securityholders upon conversion of Series A Preferred stock.
Upon the effectiveness of this prospectus: the Selling Shareholders may sell
the shares as detailed in the section entitled "Plan of Distribution."
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. The prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Each of the selling stockholders may be deemed to be an "underwriter," as
such term is defined in the Securities Act of 1933.
There has been no market for our securities and a public market may not
develop, or, if any market does develop, it may not be sustained. As of
April 26, 2007, we have 4,231,000 common shares issued and outstanding and
750,000 preferred shares issued and outstanding convertible to 150,000,000
common shares. Our common stock is not traded on any exchange or in the
over-the-counter market. After this Registration statement becomes
effective, we expect to have an application filed with the National
Association of Securities Dealers, Inc. for our common stock to eligible for
trading on the OTC Bulletin Board. Until our common stock is quoted on the
OTC-BB, the offering will be made at $0.02 per share.
The purchase of the securities offered through this prospectus involves a
high degree of risk.
SEE SECTION TITLED "RISK FACTORS" ON PAGE 5.
--------------------------------------------
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read the entire prospectus
and any amendments or supplements carefully before you make your investment
decision.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Date of This Prospectus Is: July 9, 2007
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TABLE OF CONTENTS
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PAGE
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Part I
PROSPECTUS SUMMARY...................................................... 3
THE OFFERING. .......................................................... 3
SUMMARY FINANCIAL INFORMATION........................................... 4
RISK FACTORS............................................................ 5
RISK FACTORS RELATING TO OUR COMPANY.................................... 5
RISK FACTORS RELATING TO OUR COMMON SHARES.............................. 8
CAPITALIZATION .........................................................12
FORWARD-LOOKING STATEMENTS..............................................13
OFFERING INFORMATION....................................................13
USE OF PROCEEDS.........................................................13
DETERMINATIN OF THE OFFERING PRICE......................................13
DILUTION................................................................14
DESCRIPTION OF BUSINESS.................................................14
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...............16
LEGAL PROCEEDINGS.......................................................19
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............20
SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT...........24
CERTAIN RELATINSHIPS AND RELATED TRANSACTIONS...........................25
SELLING SECURITY HOLDERS................................................26
PLAN OF DISTRIBUTION....................................................30
DIVIDEND POLICY.........................................................32
SHARE CAPITAL ..........................................................32
LEGAL MATTERS...........................................................35
EXPERTS.................................................................36
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..........................36
WHERE YOU CAN FIND MORE INFORMATION.....................................37
FINANCIAL STATEMENTS....................................................38
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Prospectus Summary
------------------
The following summary highlights selected information contained in this
prospectus. Before making an investment decision, you should read the entire
prospectus carefully, including the "Risk Factors" section, the financial
statements and the notes to the financial statements.
Corporate Background
Political Calls, Inc. was incorporated on April 24, 2006. Political Calls,
Inc. markets a telephone broadcasting service. Political Calls prepares
recorded political messages for broadcast via the telephone to specific
geographic locations. Once the political message is ready, Political calls
has the equipment to broadcast this political message at the rate of 3,000
telephone calls per minute.
Our offices are currently located at 1015 S. Cimarron, Las Vegas, NV 89145.
Our telephone number is (702) 273-8920.
The Offering
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Securities Being Offered 150,612,000 common shares by selling shareholders.
Common Stock Outstanding
Before the Offering: 4,231,000 shares
Common Stock Outstanding
After the Offering: 154,231,000 shares (assuming the full conversion
of all Series A Callable and Convertible Preferred
shares which are registered herein). All of the
common stock to be sold under this prospectus will
be sold by our existing shareholders. The shares
issued to the selling shareholders were made
in reliance upon an exemption from registration
under Section 4(2) of the Securities Act. For a
list of the selling stockholders and the amount of
shares that each of them expects to sell, see
"Selling Securityholders."
Offering Price The offering price of the common stock is $0.02
per share. We intend to apply to the NASD Over-
the-Counter Bulletin Board electronic quotation
service to allow the trading of our common stock
after this prospectus is declared effective by the
U. S. Securities and Exchange Commission. If our
common stock becomes so traded and a market for the
stock develops, the actual price of stock will be
determined by prevailing market prices at the time
of sale or by private transaction negotiated by the
selling shareholders. The offering price would
thus be determined by market factors and the
independent decisions of the selling shareholders.
If our common stock becomes so traded and a market for the stock develops, the
actual price of stock will be determined by prevailing market prices at the
time of sale or by private transaction negotiated by the selling shareholders.
3
Use of proceeds We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
Risk Factors See "Risk Factors" and the other information in
this prospectus for a discussion of the factors
you should consider before deciding to invest in
our common shares.
OTC/BB symbol Not applicable. We are not trading on any
exchange.
Summary Financial Information
-----------------------------
For the three For The Period
Month period April 24, 2006
ending (Inception) to
March 31, 2007 Dec. 31, 2006
(unaudited) (audited)
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Statement of Operations Data:
Revenues $ - $ 19,491
Net Income (9,019) $ 5,957
Beneficial conversion
feature - preferred stock $(1,492,542)
Net loss attributable to
common stockholders $(1,486,543)
Balance sheet data:
March 31, 2007 December 31, 2006
-------------- -----------------
Working Capital $ 9,067 $ 17,836
Total Assets $ 15,317 $ 24,336
Stockholders' Equity $ 14,294 $ 23,313
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RISK FACTORS
All parties and individuals reviewing this Form SB-2 and considering us as an
investment should be aware of the financial risk involved. When deciding
whether to invest or not, careful review of the risk factors set forth herein
and consideration of forward-looking statements contained in this registration
statement should be adhered to. Prospective investors should be aware of the
difficulties encountered as we face all the risks including competition, and
the need for additional working capital. If any of the following risks
actually occur, our business, financial condition, results of operations and
prospects for growth would likely suffer. As a result, you could lose all or
part of your investment.
You should read the following risk factors carefully before purchasing our
common stock.
Risk Factors Relating to Our Company
------------------------------------
1. Since we are a development stage company, we have generated minimal
revenues and lack an operating history, an investment in the shares offered
herein is highly risky and could result in a complete loss of your investment
if we are unsuccessful in our business plan.
Our company was incorporated on April 24, 2006; we have realized $19,491 in
revenues since our inception. We have no solid operating history upon which an
evaluation of our future prospects can be made. Based upon current plans, we
expect to incur operating losses in future periods as we incur significant
expenses associated with the initial startup of our business. Further, there
are no assurances that we will be successful in realizing revenues or in
achieving or sustaining positive cash flow at any time in the future. Any such
failure could result in the possible closure of our business or force us to
seek additional capital through loans or additional sales of our equity
securities to continue business operations, which would dilute the value of any
shares you purchase in this offering.
2. If our business plan is not successful, we may not be able to continue
operations as a going concern and our stockholders may lose their entire
investment in us.
As discussed in the Notes to Financial Statements included in this
registration statement, at December 31, 2006 we had working capital of
approximately $17,836 and stockholders' equity of approximately $23,313. In
addition, we had a net income of approximately $5,957, prior to the beneficial
conversion feature on our preferred stock valued at $(1,492,500) for the period
April 24, 2006 (inception) to December 31, 2006. For the interim period ending
March 31, 2007, we had unaudited working capital of approximately $9,067
and stockholders' equity of approximately $14,294. In addition, we had a net
loss of approximately $(3,062), prior to the beneficial conversion feature on
our preferred stock valued at $(1,492,500) for the period April 24, 2006
(inception) to March 31, 2007.
These factors raise substantial doubt that we will be able to continue
operations as a going concern, and our independent auditors included an
explanatory paragraph regarding this uncertainty in their report on our
financial statements for the period April 24, 2006 (inception) to March 31,
2007 and the three month interim period ending March 31, 2007. Our ability
to continue as a going concern is dependent upon our generating cash flow
sufficient to fund operations and reducing operating expenses. Our business
plans may not be successful in addressing these issues. If we cannot continue
as a going concern, our stockholders may lose their entire investment in us.
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3. We expect losses in the future because we have little revenue.
We have generated $19,491 in revenues since our inception. We are not
expecting to generate any significant income over the next twelve (12) months
as we execute our business plan. We cannot guarantee that we will ever be
successful in generating revenues in the future. We recognize that if we are
unable to generate revenues, we will not be able to earn profits or continue
operations as a going concern. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and we can
provide investors with no assurance that we will generate any operating
revenues or ever achieve profitable operations.
4. Since our officer works or consults for other companies, his other
activities could slow down our operations.
David Gallagher, our sole officer, does not work for us exclusively and does
not devote all of his time to our operations. Therefore, it is possible that
a conflict of interest with regard to his time may arise based on his
employment in other activities. His other activities will prevent him from
devoting full-time to our operations which could slow our operations and may
reduce our financial results because of the slow down in operations.
David Gallagher, the President and Director of the company, currently devotes
approximately 10-15 hours per week to company matters. The responsibility of
developing the company's business, and fulfilling the reporting requirements of
a public company all fall upon Mr. Gallagher. We have not formulated a plan to
resolve any possible conflict of interest with her other business activities.
Mr. Gallagher intends to limit his role in her other business activities and
devote more of her time to Political Calls, Inc. after we attain a sufficient
level of revenue and are able to provide sufficient officers' salaries per our
business plan. In the event she is unable to fulfill any aspect of her duties
to the company we may experience a shortfall or complete lack of sales
resulting in little or no profits and eventual closure of the business.
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5. Our sole officer, David Gallagher, has no prior experience in running a
broadcast communications marketing company.
Our sole executive officer has no experience in operating a broadcast
marketing company prior to Political Calls, Inc. Due to his lack of
experience, our executive officer may make wrong decisions and choices
regarding the filing of documents on behalf of the Company. Consequently,
our Company may suffer irreparable harm due to management's lack of
experience in this industry. As a result we may have to suspend or cease
operations which will result in the loss of your investment.
6. If we are unable to obtain additional funding, our business operations
will be harmed. Even if we do obtain additional financing our then existing
shareholders may suffer substantial dilution.
We will require additional funds to market our services and pay the required
fees to keep our company fully reporting and compliant with SEC rules and
regulations. We need to address all necessary infrastructure concerns. We
anticipate that we will require up to approximately $100,000 to fund our
continued operations. Such funds may come from the sale of equity and/or
debt securities and/or loans. It is possible that additional capital will be
required to effectively support the operations and to otherwise implement our
overall business strategy. The inability to raise the required capital will
restrict our ability to grow and may reduce our ability to continue to
conduct business operations. If we are unable to obtain necessary financing,
we will likely be required to curtail our development plans which could cause
the company to become dormant. Any additional equity financing may involve
substantial dilution to our then existing shareholders.
7. We may not be able to raise sufficient capital or generate adequate
revenue to meet our obligations and fund our operating expenses.
Failure to raise adequate capital and generate adequate sales revenues to
meet our obligations and develop and sustain our operations could result in
reducing or ceasing our operations. Additionally, even if we do raise
sufficient capital and generate revenues to support our operating expenses,
there can be no assurances that the revenue will be sufficient to enable us
to develop business to a level where it will generate profits and cash flows
from operations.
8. We may not be able to compete with larger broadcast telephone marketing
companies, some of whom have greater resources and experience than we do.
The broadcast marketing business for political messages, is highly
competitive, and subject to rapid change. We do not have the resources to
compete with larger companies. With the minimal resources we have available,
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our customer base is very limited. Competition by existing and future
competitors could result in our inability to secure new business and market
our services. This competition from other broadcast marketing companies with
greater resources and reputations may result in our failure to maintain or
expand our business as we may never be able to successfully execute our
business plan. Further, Political Calls, Inc. cannot be assured that it will
be able to compete successfully against present or future competitors or that
the competitive pressure it may face will not force it to cease operations.
9. Our principal stockholders, officer and director own a controlling
interest in our voting stock and investors will not have any voice in our
management, which could result in decisions adverse to our general
shareholders.
Our officer/director, Mr. Gallagher who owns 3,619,999 shares and our seven (7)
largest stockholders, who include: Mark DeStefano (21,500,000 shares),
Reynalda Gutierrez Ruiz (21,500,000 shares), Rick Jesky (21,500,000 shares), T.
J. Jesky (21,500,000 shares), Marcus Luna (21,500,000 shares), Iryna
Myestyechkina (21,500,000 shares), and Elda M. Valencia (21,500,000 shares) who
in the aggregate upon full conversion of their Series A preferred stock will
have the right to vote approximately 99% of our outstanding common stock. As a
result, they have the ability to control substantially all matters submitted to
our stockholders for approval including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our Articles of Incorporation or bylaws; and
d) adoption of measures that could delay or prevent a change in control or
impede a merger, takeover or other business combination involving us.
As a result of their ownership and positions, these individuals have the
ability to influence all matters requiring shareholder approval, including
the election of directors and approval of significant corporate transactions.
In addition, the future prospect of sales of significant amounts of shares
held by our director and executive officer could affect the market price of
our common stock if the marketplace does not orderly adjust to the increase
in shares in the market and the value of your investment in the company may
decrease. Management's stock ownership may discourage a potential acquirer
from making a tender offer or otherwise attempting to obtain control of us,
which in turn could reduce our stock price or prevent our stockholders from
realizing a premium over our stock price.
10. There is a risk to our business of federal and state regulatory proposals
to ban or restrict political calls, or to add political calls to "do not call"
registries.
We are subject to varying degrees of federal, state and local regulations which
may affect our operations.
Our operations are subject to varying degrees of federal, state and local
regulation. In addition to the existing regulatory framework, new regulatory
efforts affecting our operations may be proposed from time to time in the
future at the federal, state and local level. There can be no assurance that
such regulatory efforts will not have a material adverse effect on our ability
to operate our businesses or our results of operations.
Our direct marketing operations are subject to various federal and state "do
not call" list requirements. The Federal Trade Commission has created a
national "do not call" registry. Under these federal regulations, consumers
may have their phone numbers added to the national "do not call" registry.
Generally, we are prohibited from calling anyone on that registry. In
September 2003, telemarketers were granted access to the registry and are now
required to compare their call lists against the national "do not call"
registry at least once every 90 days. Enforcement of the "do not call"
provisions began in late 2003, and the rule provides for fines of up to $11,000
per violation and other possible penalties. These rules limit our ability to
market telemarketing services to new customers. Furthermore, we may incur
penalties if we do not conduct our marketing activities in compliance with
these rules.
Risks Relating To Our Common Shares
-----------------------------------
11. We may, in the future, issue additional common shares, which would
reduce investors' percent of ownership and may dilute our share value.
Our Amended Articles of Incorporation, which were amended on February 9,
2007, authorize the issuance of 195,000,000 shares of common stock and
8
5,000,000 preferred shares. The future issuance of common stock may result
in substantial dilution in the percentage of our common stock held by our
then existing shareholders. We may value any common stock issued in the
future on an arbitrary basis. The issuance of common stock for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares held by our investors, and might have an
adverse effect on any trading market for our common stock.
12. Our common shares are subject to the "Penny Stock" Rules of the SEC and
the trading market in our securities is limited, which makes transactions in
our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to
us, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to
certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules
require: (a) that a broker or dealer approve a person's account for
transactions in penny stocks; and (b) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity
and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must: (a) obtain financial information and investment
experience objectives of the person; and (b) make a reasonable determination
that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form: (a) sets forth the basis on
which the broker or dealer made the suitability determination; and (b) that
the broker or dealer received a signed, written agreement from the investor
prior to the transaction. Generally, brokers may be less willing to execute
transactions in securities subject to the "penny stock" rules. This may make
it more difficult for investors to dispose of our Common shares and cause a
decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks
in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an
investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny
stocks.
9
13. There is no current trading market for our securities and if a trading
market does not develop, purchasers of our securities may have difficulty
selling their shares.
There is currently no established public trading market for our securities
and an active trading market in our securities may not develop or, if
developed, may not be sustained. We intend to apply for admission to
quotation of our securities on the NASD OTC Bulletin Board after this
prospectus is declared effective by the SEC. If for any reason our common
stock is not quoted on the OTC Bulletin Board or a public trading market does
not otherwise develop, purchasers of the shares may have difficulty selling
their common stock should they desire to do so. As of the date of this
filing, there have been no discussions or understandings between Political
Calls, Inc. or anyone acting on our behalf with any market maker regarding
participation in a future trading market for our securities. If no market is
ever developed for our common stock, it will be difficult for you to sell any
shares you purchase in this offering. In such a case, you may find that you
are unable to achieve any benefit from your investment or liquidate your
shares without considerable delay, if at all. In addition, if we fail to have
our common stock quoted on a public trading market, your common stock will
not have a quantifiable value and it may be difficult, if not impossible, to
ever resell your shares, resulting in an inability to realize any value from
your investment.
14. State securities laws may limit secondary trading, which may restrict
the states in which and conditions under which you can sell the shares
offered by this prospectus.
Secondary trading in common stock sold in this offering will not be possible
in any state until the common stock is qualified for sale under the
applicable securities laws of the state or there is confirmation that an
exemption, such as listing in certain recognized securities manuals, is
available for secondary trading in the state. If we fail to register or
qualify, or to obtain or verify an exemption for the secondary trading of,
the common stock in any particular state, the common stock could not be
offered or sold to, or purchased by, a resident of that state. In the event
that a significant number of states refuse to permit secondary trading in our
common stock, the liquidity for the common stock could be significantly
impacted thus causing you to realize a loss on your investment.
15. Because we do not intend to pay any cash dividends on our common stock,
our stockholders will not be able to receive a return on their shares unless
they sell them.
We intend to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on
our common stock in the foreseeable future. Unless we pay dividends, our
stockholders will not be able to receive a return on their shares unless they
sell them. There is no assurance that stockholders will be able to sell
shares when desired.
10
16. The issuance of our Common stock upon the conversion of our Series A
callable and convertible preferred shares will cause immediate and
substantial dilution.
The issuance of common stock upon conversion of 750,000 issued Series A
callable and convertible preferred shares will result in immediate and
substantial dilution to the interests of other stockholders. Once these
preferred shares are converted at the sole discretion of the Series A
preferred shareholders, it will cause substantial dilution to the current
holders of our common stock. Further, our amended articles of incorporation
authorize us to issue up to 5,000,000 shares of Series A Preferred stock. To
the extent that we do issue such additional shares of preferred stock, your
rights as holders of common stock could be impaired thereby, including,
without limitation, dilution of your ownership interests in us. The
conversion of these Series A preferred shares will alter the control of the
Company and may not be in the best interest of the holders of common stock.
17. Political Calls, Inc. is selling shares offered in this prospectus
without an underwriter and may not be able to sell any of the shares offered
herein.
No broker-dealer has been retained as an underwriter and no broker-dealer is
under any obligation to purchase any common shares. There are no firm
commitments to purchase any of the shares in this offering. Consequently,
there is no guarantee that the stockholders of Political Calls will be
able to sell their shares.
18. We will incur ongoing costs and expenses for SEC reporting and
compliance, without minimal revenues we may not be able to remain in
compliance, making it difficult for investors to sell their shares, if at
all.
We plan to contact a market maker immediately following the effectiveness of
our Registration Statement and have them file an application on our behalf to
have the shares quoted on the OTC Electronic Bulletin Board. To be eligible
for quotation on the OTCBB, issuers must remain current in their filings with
the SEC. Market Makers are not permitted to begin quotation of a security
whose issuer does not meet this filing requirement. Securities already
quoted on the OTCBB that become delinquent in their required filings will be
removed following a 30 or 60 day grace period if they do not make their
required filing during that time. In order for us to remain in compliance we
will require future revenues to cover the cost of these filings, which could
comprise a substantial portion of our available cash resources. If we are
unable to generate sufficient revenues to remain in compliance it may be
difficult for you to resell any shares you may purchase, if at all.
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Capitalization
--------------
The following table sets forth, as of March 31, 2007, the capitalization
of the Company on an actual basis. This table should be read in conjunction
with the more detailed financial statements and notes thereto included
elsewhere herein.
Actual
------
March 31, 2007 Dec. 31, 2006
-------------- -------------
Liabilities and Stockholders' Equity
Current liabilities:
Income taxes payable 1,023 1,023
----------- ------------
1,023 1,023
Long-term liabilities:
Deferred taxes payable 117 117
Stockholder's Equity:
Preferred stock, $0.001
par value, 5,000,000 shares authorized,
750,000 shares issued or outstanding
as of 3/31/07 and 12/31/2006 750 750
Common stock, $0.001 par value, 195,000,000
shares authorized, 4,231,000 and 4,231,000 shares
issued and outstanding as of 3/31/2007 and
12/31/2006 respectively 4,231 4,231
Additional paid-in capital 1,504,758 1,504,758
Earnings (Deficit) accumulated during
development stage (1,495,562) (1,486,543)
----------- ------------
14,294 23,313
----------- ------------
$ 15,317 $ 24,336
=========== ============
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Forward-Looking Statements
- --------------------------
This Prospectus contains forward-looking statements, including statements
concerning possible or assumed results of exploration and/or operations of
Political Calls, Inc., and those proceeded by, followed by or that include
the words "may," "should," "could," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the
negative of such terms and other comparable terminology. Investors should
understand that the factors described below, in addition to those discussed
elsewhere in this document could affect Political Calls' future results and
could cause those results to differ materially from those expressed in such
forward looking statements.
Offering Information
- --------------------
This prospectus relates to the following:
The resale by certain selling security holders of the Company of up to
150,612,000 share of common stock in connection with the resale of shares of
common stock issued by us in two separate transactions were issued in
reliance upon an exemption from registration under Section 4(2) of the
Securities Act promulgated thereunder as a transaction involving a public
offering. (See "Liquidity and Capital Resources" Section.)
The selling shareholders may sell their shares of our common stock at a fixed
price of $0.02 per share until shares of our common stock are quoted on the
OTC Bulletin Board, and thereafter at prevailing market prices or privately
negotiated prices. There can be no assurance that we will be able to obtain
an OTCBB listing. We will not receive any proceeds from the resale of common
shares by the selling security holders.
USE OF PROCEEDS
- --------------
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
- -------------------------------
The $0.02 per share offering price of our common stock was determined
arbitrarily by us. There is no relationship whatsoever between this price
and our assets, earnings, book value or any other objective criteria of
value. We intend to apply to the Over-the-Counter Bulletin Board electronic
quotation service for the trading of our common stock upon our becoming a
reporting entity under the Securities Exchange Act of 1934 (the "Exchange
Act"). If our common stock becomes so traded and a market for the stock
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develops, the actual price of stock will be determined by prevailing market
prices at the time of sale or by private transactions negotiated by the
selling shareholders named in this prospectus. The offering price would thus
be determined by market factors and the independent decisions of the selling
shareholders named in this prospectus.
DILUTION
- --------
The common stock to be sold by the selling shareholders is common stock that
is currently issued or convertible Series A Preferred shares. Accordingly,
there will be no additional dilution to our existing shareholders.
Description of Business
-----------------------
Corporate History
- -----------------
Political Calls, Inc. was incorporated under the Laws of the state of
Nevada on April 24, 2006. We have been in the development stage since
inception and has had limited operations to date. We market telephone
broadcasting service. We prepare a political message for broadcast. Once
the message is ready, Political Calls has the equipment to broadcast this
political message at the rate of 3,000 telephone calls per hour.
Business Strategy
- -----------------
Political Calls, Inc. has commenced its operations. We have purchased the
required telephone equipment (an Auto-Dialer with two T-1 lines) to make
broadcast telephone calls. The cost to contract the services of Political
Calls, Inc. is:
Local Calls (Clark County) 3 - 5 cents per call
State Calls (Nevada) 6 - 7 cents per call
Nationwide (USA) 7 cents per call
The average length of a message will be 30 seconds. The Company currently
has the capacity (equipment) to generate 20,000 calls per day (or 3,000 per
hour). Its initial business strategy is to focus on selling its services to
political candidates who are running in the primary and general political
elections. We will prepare a political message which will be sent via the
telephone to a specific geographic area. The Company has not established any
minimum amounts of calls in its contracts.
14
Industry Background
- -------------------
The industry is well established with a number well-financed competitors who
have an established client base. Our business is dependent on the amount of
political contributions a political candidate has available to spend on
broadcast telephone marketing.
Political spending is dependent on a number of factors, including actual and
perceived economic conditions affecting political contributions, interest
rates, availability of credit and tax rates in the general economy and in the
international, regional and local markets where our services are to be sold.
As a result, any deterioration in general economic conditions, reductions in
the level of political contributions or increases in interest rates in any of
the regions in which we compete could adversely affect the sales of our
services.
Marketing Strategies
- --------------------
Political Call's marketing success will be determined by its ability to
create brand awareness for its telemarketing service, acquire customers and
provide its services at a competitive price. We have developed strategies to
accomplish this goal. This includes waiving any set-up fee. Many of the
larger companies charge a set-up fee to establish their broadcast commercial.
Management plans to target its services primarily towards political
campaigns, followed by advocacy voice messaging, frequency marketing,
campaign fundraising, nonprofit fundraising, and persuasion messaging.
Competition
- -----------
The broadcast telecommunication industry is highly competitive. Competition
is generally based upon product quality, brand name recognition, price,
service, reach and target marketing of the phone calls. There are many
larger companies who produce similar services as Political Calls, Inc. The
competition includes larger companies, such as, Political Marketing
International, Inc., Campaign Leverage, Blue Chip Marketing, Inspired Call
Center Services, U.S. Voice Broadcasting. These companies are better funded
and more established than Political Calls, Inc. We might not be able to
compete successfully with these competitors in the future.
All of our competitors have significantly greater financial, marketing, other
resources, and larger customer bases than we have and are less financially
leveraged than we are. As a result, these competitors may be able to adapt
changes in customer requirements more quickly; introduce new and more
innovative products more quickly; better adapt to downturns in the economy or
other decreases in sales; better withstand pressure for cancelled services,
take advantage of acquisition and other opportunities more readily; devote
greater resources to the marketing and sale of their products; and adapt more
aggressive pricing policies.
15
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATIONS, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course
of business.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts.
We will assess the need for any copyright, trademark or patent applications
on an ongoing basis as we obtain the rights to purchase technologies.
NEED FOR GOVERNMENT APPROVAL FOR OUR SERVICES
We are not required to apply for or have any government approval for our
products or services.
Employees
- ---------
We have no full time employees at this time. All functions including
development, strategy, negotiations and clerical work is being provided by
our sole officer/director on a voluntary basis, without compensation.
Description of Property
- -----------------------
Our offices are currently located at 1015 S. Cimarron, Las Vegas, NV 89145.
Our telephone number is (702) 273-8920. The office space is provided to the
Company by our sole officer at no cost to the Company. Our officer will not
seek reimbursement for past office expenses.
Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Certain statements contained in this prospectus, including statements
regarding the anticipated development and expansion of our business, our
intent, belief or current expectations, primarily with respect to the future
operating performance of Political Calls and the services we expect to
offer and other statements contained herein regarding matters that are not
historical facts, are "forward-looking" statements. Future filings with the
16
Securities and Exchange Commission, future press releases and future oral or
written statements made by us or with our approval, which are not statements
of historical fact, may contain forward-looking statements, because such
statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements.
All forward-looking statements speak only as of the date on which they are
made. We undertake no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
Overview
- --------
We are broadcast communications marketing company that offers political
candidates a vehicle to send their political messages utilizing a telephone
mass marketing program. We have the telephone equipment to call potential
voters with a political marketing message.
Results of Operations for Period Ending December 31, 2006 and March 31, 2007
- ----------------------------------------------------------------------------
We earned $19,491 in revenues for the period April 24, 2006 (inception)
ending March 31, 2007. We do not anticipate earning any significant revenues
until such time as we build a greater customer base. We are presently in the
development stage of our business and we can provide no assurance that we
will find any new business for our services.
For the period April 24, 2006 (inception) ending December 31, 2006 we
generated a net income of $5,957. Our income was attributed to keeping our
operating expenses, organizational costs, and developmental costs in line
with our revenues. Our operating expenses included general and
administrative expenses. We anticipate our operating expenses will increase
as we enhance our operations. The increase will be attributed to
professional fees to be incurred in connection with the filing of a
registration statement with the Securities Exchange Commission under the
Securities Act of 1933. We anticipate our ongoing operating expenses will
also increase once we become a reporting company under the Securities
Exchange Act of 1934. For the Quarter ending March 31, 2007, we lost $(9,019),
which is in line with the professional fees we spent in connection with the
filing of a registration statement.
Revenues
- --------
We generated $19,491 in revenues for the period from April 24, 2006
(inception) through March 31, 2007. We do not anticipate generating any major
increase revenues for the next 12 months. Since inception we have had nine
clients, seven of whom who purchased our services. One of our clients included
Mr. Mark DeStefano, who is also a major shareholder of the Company (see
Security Ownership of Certain Beneficial Owners and Management, page 25). Mr.
DeStefano helped the Company conduct an evaluation of its broadcast telephone
communication equipment in August, 2006. At no cost to the Company, Political
Calls provided a local recorded telephone message in Clark County, Nevada for
Mr. DeStefano. Mr. DeStefano received no compensation from the Company, and
the Company received no revenues from Mr. DeStefano to conduct this evaluation.
Our other eight clients were identified and recruited as clients during the
political campaigns that ended in November, 2006. These political candidates
hired our services to broadcast their political message via mass telephone
marketing with the hope of generating votes for their respective
political campaigns.
17
Our business is dependent on political timetables (i.e. elections). We
anticipate that if we continue to focus our telephone marketing services with
political campaigns, as compared to selling our services to businesses trying
to market a particular product or service, our revenues will be seasonal based
on political time tables. At this time we have no plans to expand our business
outside of political telemarketing.
Political timetables operate on many levels. For in example, in 2008,
political candidates will spend more money than the will spend in the 2007
municipal races. There is a likelihood that our revenues will be seasonal
based on the amount of political campaign expenditures during certain election
periods.
Beneficial Conversion Feature - Preferred Stock
- -----------------------------------------------
During fiscal 2006, we recorded a deemed preferred stock dividend. Each share
of our Series A Convertible Preferred Stock can be exchanged for two hundred
(200) shares of Common Stock of the corporation. This Series A preferred stock
was issued with a beneficial conversion feature totaling $1,486,543 measured as
the difference between the $0.01 offering price of the underlying common stock
and the conversion benefit price of $1.99 per share. This non-cash expense
related to the beneficial conversion features of those securities and is
recorded with a corresponding credit to paid-in-capital.
Liquidity and Capital Resources
- -------------------------------
Our balance sheet as of March 31, 2007.reflects cash assets of $9,067 and fixed
assets of $6,250 (net accumulated deprecation) and $1,023 current liabilities
(income taxes payable). Cash and cash equivalents from inception to date have
been sufficient to provide the operating capital necessary to operate to date.
On April 24, 2006 (inception), we issued 3,619,000 shares of its $0.001 par
value common stock to our founder for $3,619 cash.
On April 24, 2006, we issued 750,000 shares of its $0.001 par value non-
voting Callable and Convertible Preferred stock for funding the purchase of
its telephone calling equipment used by Political Calls at a purchase price
of $7,500 paid for by our seven largest investors. This equipment allowed
the Political Calls to begin its operations. The Preferred Stock converts
to two hundred shares of common stock for each share of Preferred Stock.
On December 31, 2006, we issued 612,000 shares of its $0.001 par value
common stock pursuant to a Rule 504 of Regulation D offering for $6,120.
There have been no other issuance of stock.
18
Notwithstanding, we anticipate generating losses and therefore we may be
unable to continue operations in the future. We anticipate we will require
additional capital up to approximately $100,000 and we would have to issue
debt or equity or enter into a strategic arrangement with a third party. We
intend to try and raise capital through a private offering after this
registration statement is declared effective and our shares are quoted on the
Over the Counter Bulletin Board. There can be no assurance that additional
capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources. Management believes the Company
has sufficient funds to satisfy its cash requirements and maintain its fully
reporting status for the next twelve months without the need to raise
additional capital.
Future Financings
- -----------------
We anticipate continuing to rely on equity sales of our common shares in
order to continue to fund our business operations. Issuances of additional
shares will result in dilution to our existing shareholders. There is no
assurance that we will achieve any of additional sales of our equity
securities or arrange for debt or other financing to fund our exploration and
development activities.
Off-Balance Sheet Arrangements
- ------------------------------
We have no off-balance sheet arrangements.
Legal Proceedings
-----------------
There are no pending legal proceedings to which the Company is a party or in
which any director, officer or affiliate of the Company, any owner of record
or beneficially of more than 5% of any class of voting securities of the
Company, or security holder is a party adverse to the Company or has a
material interest adverse to the Company. The Company's property is not the
subject of any pending legal proceedings.
Directors, Executive Officers, Promoters and Control Persons
------------------------------------------------------------
Directors and Executive Officers
- --------------------------------
Our executive officer and director and his respective ages as of February 15,
2007 are as follows:
19
Set forth below are the names, ages and present principal occupations or
employment, and material occupations, positions, offices or employments for
the past five years of our current directors and executive officers.
Name Age Positions and Offices Held
- --------------- --- ---------------------------------
David Gallagher 29 President, Secretary and Director
The business address for our officers/directors is: c/o Political Calls,
Inc., 1015 S. Cimarron, Las Vegas, NV 89145.
Set forth below is a brief description of the background and business
experience of our sole officer/director.
David Gallagher - President, Secretary and Director
- ---------------------------------------------------
Kosin's Party and Tent & Rental, Crew Chief 1997-2000.
Altick & Corwin Co., L.P.A, Closed file Manager-2000.
U.S. Senator Mike DeWine, Personal Assistant/Staff Assistant 2000-2003.
Ohio Republican Party, Field Director for Federal, State and Local candidates
2003-2005.
Mark DeStefano for Nevada State Treasurer, Campaign Manager 2005-Present.
Education:
University of Dayton, BA in Political Science, graduated 2000
Involvement in Certain Legal Proceedings
- ----------------------------------------
Our sole director, executive officer and control persons has not been
involved in any of the following events during the past five years and which
is material to an evaluation of the ability or the integrity of our director
or executive officer:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; and
4. being found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
20
Compensation
- ------------
We presently do not pay our officers/directors any salary or consulting fee.
We do not anticipate paying compensation to officers/directors until our
Company can generate a profit on a regular basis.
We do not have any employment agreements with our officers/directors. We do
not maintain key-man life insurance for any our executive officers/directors.
We do not have any long-term compensation plans or stock option plans.
EXECUTIVE COMPENSATION
Summary Compensation Table
As a result of our the Company's current limited available cash, no officer
or director received compensation since the inception of the company.
Political Calls intends to pay salaries when cash flow permits.
SUMMARY COMPENSATION TABLES
----------------------------------------------------
Annual Compensation
----------------------------------------------------
Name and Other Annual Stock
Principal Position Year Salary ($) Bonus ($) Compensation ($) Awards($)
- -----------------------------------------------------------------------------
David Gallagher
President 2006 -0- -0- -0- -0-
- -----------------------------------------------------------------------------
21
Long Term Compensation Table
------------------------------------------------------
Long Term Compensation
------------------------------------------------------
Awards Payouts
------------------------------------------------------
Restricted Stock Securities LTIP All Other
Name and Principal Award(s)($) Underlying Options/ Payouts Compensation
Position Year SARs(#) ($) ($)
- -----------------------------------------------------------------------------
David Gallagher
President 2006 -0- -0- -0- -0-
- -----------------------------------------------------------------------------
We do not pay to our directors or officers any salary or consulting fee.
We do not pay to our directors any compensation for serving as a director on
our board of directors.
The Company currently does not have employment agreements with its executive
officer. The executive officer/director of the Company has agreed to take no
salary until the Company can generate enough revenues to support salaries on a
regular basis. The officer will not be compensated for services previously
provided. He will receive no accrued remuneration.
Stock Option Grants
We did not grant any stock options to the executive officers or directors
from inception through February 15, 2007.
Family Relationships
- --------------------
Not applicable.
Term of Office
- --------------
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.
22
Significant Employees
- ---------------------
We have no significant employees other than our Officer/Director. We conduct
our business through agreements with consultants and arms-length third
parties.
Audit Committee Financial Expert
- --------------------------------
We do not have an audit committee financial expert nor do we have an audit
committee established at this time.
Auditors; Code of Ethics; Financial Expert
- ------------------------------------------
Our principal independent accountant is Moore & Associates, Chartered. We do
not currently have a Code of Ethics applicable to our principal executive,
financial and accounting officer. We do not have an audit committee or
nominating committee.
Potential Conflicts of Interest
- -------------------------------
We are not aware of any current or potential conflicts of interest with any
of our sole officer/director.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table lists, as of February 15, 2007, the number of shares of
Common Stock beneficially owned by (i) each person or entity known to our
Company to be the beneficial owner of more than 5% of the outstanding common
stock; (ii) each officer and director of our Company; and (iii) all officers
and directors as a group. Information relating to beneficial ownership of
common stock by our principal shareholders and management is based upon
information furnished by each person using "beneficial ownership" concepts
under the rules of the Securities and Exchange Commission. Under these
rules, a person is deemed to be a beneficial owner of a security if that
person has or shares voting power, which includes the power to vote or direct
the voting of the security, or investment power, which includes the power to
vote or direct the voting of the security. The person is also deemed to be a
beneficial owner of any security of which that person has a right to acquire
beneficial ownership within 60 days. Under the Securities and Exchange
Commission rules, more than one person may be deemed to be a beneficial owner
of the same securities, and a person may be deemed to be a beneficial owner
of securities as to which he or she may not have any pecuniary beneficial
interest. Except as noted below, each person has sole voting and investment
power.
23
The percentages below are calculated based on 4,231,000 and 154,231,000
shares respectfully of our common stock issued and outstanding. We do not
have any outstanding options or warrants convertible into shares of our
common stock.
AMOUNT AND PERCENT OF PERCENT OF
NATURE OF CLASS CLASS
TITLE OF NAME OF BENEFICIAL BENEFICIAL BEFORE AFTER
CLASS OWNER AND POSITION OWNERSHIP CONVERSION(1) CONVERSION(2)
- -----------------------------------------------------------------------------
Common David Gallagher (3) 3,619,000 85.5% 2.3%
President,
Secretary, Director
Ownership upon conversion of
Shareholders' preferred stock
Common Mark DeStefano(4) 21,500,000 0.0% 13.9%
Common Reynalda Gutierrez Ruiz(5) 21,500,000 0.0% 13.9%
Common Rick Jesky(6) 21,500,000 0.0% 13.9%
Common T. J. Jesky(7) 21,500,000 0.0% 13.9%
Common Marcus Luna(8) 21,500,000 0.0% 13.8%
Common Iryna Myestyechkina(9) 21,500,000 0.0% 13.9%
Common Elda M. Valencia(10) 21,500,000 0.0% 13.8%
---------------------------------------
DIRECTORS AND OFFICERS AS A GROUP
(1 person) 3,619,000 85.5% 99.4%
(1) Percent of Class based on 4,231,000 shares before conversion of Series
A Callable and Convertible Preferred shares.
(2) Percent of Class based on 154,231,000 after conversion of the 750,000
Series A Callable and Convertible Preferred shares.
(3) David Gallagher, 1015 S. Cimarron, Las Vegas, NV 89145.
(4) Mark DeStefano, 500 N. Rainbow, Suite 300, Las Vegas, NV 89119.
(5) Reynalda Gutierrez Ruiz, Domocilio Conocido Ocotillo, Colima, Col.,
Mexico 28530.
(6) Rick Jesky, 1224 Pleasant Brook Street, Las Vegas, NV 89142.
(7) T. J. Jesky, 1515 E. Tropicana, Ste 710-U, Las Vegas, NV 89119.
(8) Marcus Luna, 1000 N. Green Valley Pkwy, #300-137, Henderson, NV 89074.
(9) Iryna Myestyechkina, 500 N. Rainbow, Suite 300, Las Vegas, NV 89119.
(10) Elda M. Valencia, 1000 N. Green Valley Pkwy, #300-137, Henderson, NV
89074.
24
We are not aware of any arrangements that may result in "changes in control"
as that term is defined by the provisions of Item 403(c) of Regulation S-B.
We believe that all persons named have full voting and investment power with
respect to the shares indicated, unless otherwise noted in the table. Under
the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the
voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person may be deemed
to be a beneficial owner of the same security. A person is also deemed to be
a beneficial owner of any security, which that person has the right to
acquire within 60 days, such as options or warrants to purchase our common
stock.
Certain Relationships and Related Transactions
----------------------------------------------
The company's Director has contributed office space for our use for all
periods presented. There is no charge to us for the space. Our key officer
was issued 3,619,000 founders shares of the Company's $0.001 par value common
stock for $3,619 cash in April, 2006.
Our officer/director can be considered a promoter of Political Calls, Inc. in
consideration of his participation and managing of the business of the
company.
Through a Board Resolution at our inception, we approved the purchase of
telephone equipment by issuing Series A Callable and Convertible Preferred
stock for this equipment. Our President use to work for Mark DeStefano. Mr.
DeStefano is a shareholder that provided initial funding for this telephone
equipment in exchange for Preferred stock.
Through a Board Resolution, we hired the professional services of Moore &
Associates, Chartered, Certified Public Accountants, to perform audited
financials for the Company. Moore & Associates, Chartered own no stock in
the Company. The company has no formal contracts with its accountants, they
are paid on a fee for service basis.
Through a Board Resolution, we resolved that we will not call nor redeem its
Series A non-voting Callable and Convertible Preferred shares. The
shareholders of the Series A Preferred shares will be permitted to convert
each Series A Preferred share for two hundred common shares at their sole
discretion.
In August, 2006, Mr. Mark DeStefano, a major shareholder of the Company helped
the Company conduct an evaluation of its broadcast telephone communication
equipment. At no cost to the Company, Political Calls provided a local
recorded telephone message in Clark County, Nevada for Mr. DeStefano. This
arrangement benefited both the Company and Mr. DeStefano, in that, it helped
the Company test its telephone broadcasting equipment; and, it helped Mr.
DeStefano send a political message in Clark County Nevada. Mr. DeStefano
received no compensation from the Company other than the Company helping
him to send out a broadcast messaged, and the Company received no revenues from
Mr. DeStefano to conduct this evaluation.
25
Other than as set forth above, there are no transactions since our inception,
or proposed transactions, to which we were or are to be a party, in which any
of the following persons had or is to have a direct or indirect material
interest:
a) Any director or executive officer of the small business issuer;
b) Any majority security holder; and
c) Any member of the immediate family (including spouse, parents, children,
siblings, and in-laws) of any of the persons in the above.
Selling Shareholders
--------------------
This Prospectus relates to the resale of 150,612,000 shares of common stock
by the selling shareholders. The table below sets forth information with
respect to the resale of shares of common stock by the selling shareholders.
We will not receive any proceeds from the resale of common stock by the
selling shareholders for shares currently outstanding or in connection with
the resale of the shares of common stock issuable upon conversion our Series
A preferred shares or for previous outstanding shares of common stock being
registered herein. The selling shareholders purchased non-voting Series A
Callable and Convertible Preferred shares at the time of our incorporation;
and, we sold and addition 612,000 common shares through a private offering
that was exempt from registration under Regulation D of the Securities Act of
1933, as amended (the "Securities Act").
The following table provides, as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered by each;
3. the total number of shares that will be owned by each upon completion
of the offering;
4. the percentage owned by each upon completion of the offering; and
5. the identity of the beneficial holder of any entity that owns the shares.
The beneficial Ownership of each shareholder will not change after the
Offering. The beneficial owners are selling securityholders who already own
their stock and are not acquiring additional shares. Therefore, the table
below assumes that all securities registered will be sold.
26
Total
shares Total Total
held Number of Shares
including Shares to to be Percent
issuable be Owned Owned
upon full Offered for Upon Upon
Conversion Selling Completion Completion
and/or Shareholder of this of this
Name of Selling Stockholder(1) exercise Account(2) Offering Offering(3)
- ----------------------------- -------- ----------- ---------- ----------
Aldrich, Jessica 10,000 10,000 10,000 Nil
Beckman, Danny 10,000 10,000 10,000 Nil
Bolsa, S.A.(4) 20,000 20,000 20,000 Nil
Breeze, William R. 20,000 20,000 10,000 Nil
Brown, Monique 20,000 20,000 20,000 Nil
Carter, Patricia M. 10,000 10,000 10,000 Nil
Colello, Anthony 10,000 10,000 10,000 Nil
Colton, Craig 10,000 10,000 10,000 Nil
Corral, Rocio 3,000 3,000 3,000 Nil
Cortinas, Juan 3,000 3,000 3,000 Nil
Cowan, Pamela 20,000 20,000 3,000 Nil
Daskivich, Adam 10,000 10,000 10,000 Nil
DeStefano, Mark(5) 21,500,000 21,500,000 - Nil
Esparza Barraza, Eva 25,000 25,000 25,000 Nil
Fidler, Pat 20,000 20,000 20,000 Nil
Guidry, Chad 20,000 20,000 20,000 Nil
Gutierrez Ruiz, Reynalda(5)21,500,000 21,250,000 - Nil
Hunter, Damon 10,000 10,000 10,000 Nil
Jacobson, Ray M. 10,000 10,000 10,000 Nil
Jesky, Rick(5) 21,500,000 21,500,000 - Nil
Jesky, T. J.(5) 21,500,000 21,500,000 - Nil
Loth, Jeff 10,000 10,000 10,000 Nil
Luna, Marcus(5) 21,270,000 21,270,000 - Nil
Manteris, Nick 10,000 10,000 10,000 Nil
Mokros, Patrick R. 10,000 10,000 10,000 Nil
Montgomery, Nathan 10,000 10,000 10,000 Nil
Morales, Gelana 3,000 3,000 10,000 Nil
Moreno, Jorge 5,000 5,000 5,000 Nil
Murtha, Cynthia 10,000 10,000 10,000 Nil
Murtha, Kevin 10,000 10,000 10,000 Nil
Myestyechkina, Iryna(5) 21,500,000 21,500,000 - Nil
Patterson, Lilia 25,000 25,000 25,000 Nil
Patterson, Michael 25,000 25,000 25,000 Nil
Pro, Jamie 20,000 20,000 20,000 Nil
27
Total
shares Total Total
held Number of Shares
including Shares to to be Percent
issuable be Owned Owned
upon full Offered for Upon Upon
Conversion Selling Completion Completion
and/or Shareholder of this of this
Name of Selling Stockholder(1) exercise Account(2) Offering Offering(3)
- ----------------------------- -------- ----------- ---------- ----------
Ramirez, Gerardo 20,000 20,000 20,000 Nil
Ramirez, Maria Irma 20,000 20,000 20,000 Nil
Ray, Judy 3,000 3,000 3,000 Nil
Reid, Noel 10,000 10,000 10,000 Nil
Rittenbaugh, Thomas II 10,000 10,000 10,000 Nil
Rosales Estrada, Paloma 25,000 25,000 25,000 Nil
Salas, Christine 25,000 25,000 25,000 Nil
Salas, Patricio 10,000 10,000 10,000 Nil
Schmidt, Allen 3,000 3,000 3,000 Nil
Smith, Margaret 20,000 20,000 10,000 Nil
Valencia, Elda M.(5) 21,270,000 21,270,000 - Nil
Vasquez, Esther J. 30,000 30,000 30,000 Nil
Vasquez, Nancy America 15,000 15,000 15,000 Nil
Washington, Dana M. 4,000 4,000 4,000 Nil
Zimmerman, Doreen 4,000 4,000 4,000 Nil
Zimmerman, Edward Jr. 4,000 4,000 4,000 Nil
Totals: 150,612,000 150,612,00 612,000
1) The named party beneficially owns and has sole voting and investment
power over all shares or rights to these shares.
2) This table assumes that each shareholder will sell all of his/her shares
available for sale during the effectiveness of the registration statement
that includes this prospectus. Shareholders are not required to sell their
shares. The numbers in this table assume that none of the selling
shareholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes that
all shares offered are sold.
28
3) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares as
to which the selling stockholders has sole or shared voting power or
investment power and also any shares, which the selling stockholders has the
right to acquire within 60 days. The percentage of shares owned by each
selling stockholder is based on a total outstanding number of 154,231,000,
(assuming the full conversion of all Series A Callable and Convertible
Preferred shares which are registered herein) as of February 15, 2007.
(4) Bolsa, S.A., David Gonzalez is the beneficial owner of this entity.
(5) Owner(s) of the Series A Callable and Convertible Preferred Shares. The
Board of Political Calls, Inc. has resolved that they do not plan on
calling the these Series A Preferred Shares; therefore, these
shareholders may call for the conversion of these shares at their sole
discretion. (See "Certain Relationships and Related Transactions.")
All of the selling shareholders:
1. have not had a material relationship with us other than as a shareholder at
any time within the past two years, with the exception disclosed under
"Certain Relationships and Related Transactions" Section; or
2. has ever been one of our officers or directors.
Expenses of Issuance and Distribution
We have agreed to pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes, which
shall be borne by the selling security holders. The expenses which we are
paying are set forth in the following table.
Nature of Expenses:
Amount
------
Securities and Exchange Commission registration fee $ 322
Legal fees and miscellaneous expenses* $1,000
Audit Fees $1,000
Printing* $ 278
------
Total $2,600
======
*Estimated Expenses.
29
Plan of Distribution
--------------------
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions:
1. On such public markets as the common stock may from time to time be
trading;
2. In privately negotiated transactions;
3. Through the writing of options on the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.
There is currently no market for any of our shares, and we cannot give any
assurance that our shares will have any market value. The sales price to the
public is fixed at $0.02 per share until such time as the shares of our
common stock are traded on the Over-the-Counter Bulletin Board electronic
quotation service. Although we intend to apply for trading of our common
stock on the Over-the-Counter Bulletin Board electronic quotation service,
public trading of our common stock may never materialize. In addition, if a
market for our stock does materialize, we cannot give any assurances that a
public market for our securities may be sustained. If our common stock
becomes traded on the Over-the-Counter Bulletin Board electronic quotation
service, then the sales price to the public will vary according to the
selling decisions of each selling shareholder and the market for our stock at
the time of resale. In these circumstances, the sales price to the public
may be:
1. The market price of our common stock prevailing at the time of sale;
2. A price related to such prevailing market price of our common stock; or
3. Such other price as the selling shareholders determine from time to time.
We can provide no assurance that all or any of the common stock offered will
be sold by the selling shareholders named in this prospectus.
We are bearing all costs relating to the registration of the common stock.
The selling shareholders, however, will pay any commissions or other fees
payable to brokers or dealers in connection with any sale of the common
stock.
The selling shareholders named in this prospectus must comply with the
requirements of the Securities Act and the Exchange Act in the offer and sale
of the common stock. The selling shareholders and any broker-dealers who
execute sales for the selling shareholders may be deemed to be an
"underwriter" within the meaning of the Securities Act in connection with
such sales. In particular, during such times as the selling shareholders may
30
be deemed to be engaged in a distribution of the common stock, and therefore
be considered to be an underwriter, they must comply with applicable law and
may, among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Exchange Act.
Penny Stock Regulations
You should note that our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines "penny stock" to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and "accredited investors". The term
"accredited investor" refers generally to institutions with assets in excess
of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid
and offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before
or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive
the purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in
the secondary market for the stock that is subject to these penny stock
rules. Consequently, these penny stock rules may affect the ability of
broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common
stock.
31
Blue Sky Restrictions on Resale
If a selling security holder wants to sell shares of our common stock under
this registration statement in the United States, the selling security
holders will also need to comply with state securities laws, also known as
"Blue Sky laws," with regard to secondary sales. All states offer a variety
of exemption from registration for secondary sales. Many states, for
example, have an exemption for secondary trading of securities registered
under Section 12(g) of the Securities Exchange Act of 1934 or for securities
of issuers that publish continuous disclosure of financial and non-financial
information in a recognized securities manual, such as Standard & Poor's.
The broker for a selling security holder will be able to advise a selling
security holder which states our common stock is exempt from registration
with that state for secondary sales. Any person who purchases shares of our
common stock from a selling security holder under this registration statement
who then wants to sell such shares will also have to comply with Blue Sky
laws regarding secondary sales.
When the registration statement becomes effective, and a selling security
holder indicates in which state(s) he desires to sell his shares, we will be
able to identify whether it will need to register or it will rely on an
exemption there from.
Dividend Policy
---------------
We have not declared or paid dividends on our Common Stock since our
formation, and we do not anticipate paying dividends in the foreseeable
future. Declaration or payment of dividends, if any, in the future, will be
at the discretion of our Board of Directors and will depend on our then
current financial condition, results of operations, capital requirements and
other factors deemed relevant by the board of directors. There are no
contractual restrictions on our ability to declare or pay dividends.
Share Capital
-------------
Transfer Agent
We utilize the services of Empire Stock Transfer, Inc., 2470 St. Rose Pkwy,
Suite 304, Henderson, NV 89074, telephone: 702-818-5898, fax: 702-974-1444.
Empire serves in the capacity as our transfer agent to help us track and
facilitate the transfer of our stock.
Admission to Quotation on the OTC Bulletin Board
We intend to have our common stock be quoted on the OTC Bulletin Board. If
our securities are not quoted on the OTC Bulletin Board, a security holder
may find it more difficult to dispose of, or to obtain accurate quotations as
to the market value of our securities. The OTC Bulletin Board differs from
32
national and regional stock exchanges in that it (1) is not situated 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.
To qualify for quotation on the OTC Bulletin Board, an equity security must
have one registered broker-dealer, known as the market maker, willing to list
bid or sale quotations and to sponsor the company listing. If it meets the
qualifications for trading securities on the OTC Bulletin Board our
securities will trade on the OTC Bulletin Board. We may not now or ever
qualify for quotation on the OTC Bulletin Board. We currently have no market
maker who is willing to list quotations for our securities.
DESCRIPTION OF SECURITIES
General
On February 9, 2007, we amended our Articles of Incorporation to increase our
number of authorized capital stock from 70,000,000 to 195,000,000 shares of
common stock, with a par value of $0.001 per share. We amended our Articles
to increase the number of authorized shares to accommodate the upcoming
conversion of our Series A Preferred shares to common shares. There are
5,000,000 Series A non-voting Callable and Convertible Preferred shares
authorized and 750,000 issued. These shares convert to two hundred shares
common stock for each share of Series A Preferred. There are approximately
fifty (50) stockholders of record.
Common Stock
Our common stock is entitled to one vote per share on all matters submitted
to a vote of the stockholders, including the election of directors. Except as
otherwise required by law, the holders of our common stock will possess all
voting power. Generally, all matters to be voted on by stockholders must be
approved by a majority (or, in the case of election of directors, by a
plurality) of the votes entitled to be cast by all shares of our common stock
that are present in person or represented by proxy. Holders of our common
stock representing over fifty percent (50.1%) of our capital stock issued,
outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of our stockholders. A vote
by the holders of a majority of our outstanding shares is required to
effectuate certain fundamental corporate changes such as liquidation, merger
or an amendment to our Articles of Incorporation. Our By-laws do not provide
for cumulative voting in the election of directors.
Holders of our common stock have no pre-emptive rights, and no conversion
rights.
33
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase
shares of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares
of our common stock.
Preferred Convertible Securities
At the time of incorporation, we issued 750,000 non-voting Callable and
Convertible Preferred shares. We filed with the Nevada Secretary of State
the designation that "These Series A Preferred shares shall be designated as
"Callable and Convertible Preferred Stock." The corporation has the right to
call for and purchase these shares at any time, within twelve months of
issue, either at par value or at a slight premium above par value, or if
corporation should designate that these shares are deemed not callable, the
holders of these non-voting Series A Preferred Shares shall have the right to
cause the corporation to redeem shares for Common Stock at any time. Each
holder of the non voting Series A Callable and Convertible Preferred Stock
shall have the right to convert all or any portion of such shares as such
holder desires to convert, into shares of the Common Stock of the
corporation, as follows: each share of Series A Convertible Preferred Stock
can be exchanged for two hundred (200) shares of Common Stock of the
corporation."
Through a Board Resolution, it was resolved that we shall not call nor redeem
our Series A non-voting Callable and Convertible Preferred shares. The
shareholders of the Series A Preferred shares will be permitted to convert
each Series A Preferred share owned for two hundred common shares, at their
sole discretion. The conversion of 750,000 Series A Preferred Shares
converts into 150,000,000 common shares which we registering in this
Prospectus.
Rule 144 Shares
- ---------------
As of February 15, 2007, no shares currently issued and outstanding could be
resold pursuant to Section 144 of the Securities Act. This is because no
shares have been held for 2 years in order to satisfy 144(K) and no
sufficient public information is available to satisfy the other 144 rules.
A total of 3,619,000 shares of our common stock will be available for resale
to the public after April, 2008, in accordance with the volume and trading
limitations of Rule 144 of the Securities Act of 1933.
34
In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of a company's common stock for at least one year
is entitled to sell within any three month period a number of shares that
does not exceed the greater of:
1. one percent of the number of shares of the company's common stock then
outstanding, which, in our case, will equal approximately 42,310 shares as
of the date of this prospectus, or;
2. the average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on form 144 with
respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold 100%
of the total shares that may be sold, at least partially, pursuant to Rule
144 after April 2008.
Nevada Anti-Takeover laws
Nevada revised statutes sections 78.378 to 78.3793 provide state regulation
over the acquisition of a controlling interest in certain Nevada corporations
unless the articles of incorporation or bylaws of the corporation provide
that the provisions of these sections do not apply. Our articles of
incorporation and bylaws do not state that these provisions do not apply. The
statute creates a number of restrictions on the ability of a person or entity
to acquire control of a Nevada company by setting down certain rules of
conduct and voting restrictions in any acquisition attempt, among other
things. The statute is limited to corporations that are organized in the
state of Nevada and that have 200 or more stockholders, at least 100 of whom
are stockholders of record and residents of the State of Nevada; and does
business in the State of Nevada directly or through an affiliated
corporation. Because of these conditions, the statute does not apply to our
company.
Legal Matters
-------------
Law Offices of Thomas C. Cook has opined on the validity of the shares of
common stock being offered hereby.
35
Experts
-------
The financial statements included in this prospectus and in the registration
statement have been audited by Moore & Associates, Chartered, an independent
registered public accounting firm, to the extent and for the period set forth
in their report appearing elsewhere herein and in the registration statement,
and are included in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
Interest of Named Experts and Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of
the securities being registered or upon other legal matters in connection
with the registration or offering of the common stock was employed on a
contingency basis or had, or is to receive, in connection with the offering,
a substantial interest, directly or indirectly, in the registrant or any of
its parents or subsidiaries. Nor was any such person connected with the
registrant or any of its parents, subsidiaries as a promoter, managing or
principal underwriter, voting trustee, director, officer or employee.
Mr. David Gallagher, our sole officer/director can be considered a promoter of
Political Calls, Inc. in consideration of his participation and managing of
the business of the company since its incorporation.
Indemnification for Securities Act Liabilities
----------------------------------------------
Our Articles and By-laws provide to the fullest extent permitted by law, our
directors or officers, former directors and officers, and persons who act at
our request as a director or officer of a body corporate of which we are a
shareholder or creditor shall be indemnified by us. We believe that the
indemnification provisions in our By-laws are necessary to attract and retain
qualified persons as directors and officers. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act" or
"Securities Act") may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
36
Reports to Security Holders
At this time, we are not required to provide annual reports to security
holders. However, shareholders and the general public may view and download
copies of all of our filings with the SEC, including annual reports,
quarterly reports, and all other reports required under the Securities
Exchange Act of 1934, by visiting the SEC site (http://www.sec.gov) and
performing a search of our electronic filings. We intend to file with the
Securities and Exchange Commission a Form 8-A to register our common stock
pursuant to Section 12(g) of the Securities and Exchange Act of 1934, as soon
as practicable after this registration statement is declared effective by the
Securities and Exchange Commission. Thereafter, annual reports will be
delivered to security holders as required or they will be available online.
Where You Can Find More Information
-----------------------------------
We have filed a registration statement on Form SB-2 under the Securities Act
with the SEC for the securities offered hereby. This prospectus, which
constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement or the exhibits and
schedules which are part of the registration statement. For additional
information about us and our securities, we refer you to the registration
statement and the accompanying exhibits and schedules. Statements contained
in this prospectus regarding the contents of any contract or any other
documents to which we refer are not necessarily complete. In each instance,
reference is made to the copy of the contract or document filed as an exhibit
to the registration statement, and each statement is qualified in all
respects by that reference. Copies of the registration statement and the
accompanying exhibits and schedules may be inspected without charge (and
copies may be obtained at prescribed rates) at the public reference facility
of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C. 20549.
You can request copies of these documents upon payment of a duplicating fee
by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further
information on the operation of its public reference rooms. Our filings,
including the registration statement, will also be available to you on the
Internet web site maintained by the SEC at http://www.sec.gov.
37
FINANCIAL STATEMENTS
Political Calls, Inc.
December 31, 2006
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Financial Statement
-------------------
PAGE
----
Year end December 31, 2006 Financials (audited):
Independent Auditors' Report F-1a
Balance Sheet F-2a
Statements of Operations F-3a
Statements of Changes in Stockholders' Equity F-4a-5a
Statements of Cash Flows F-6a
Notes to Financials F-7a-11a
Three Months ending March 31, 2007 (unaudited):
Independent Auditors' Report F-1b
Balance Sheet F-2b
Statements of Operations F-3b
Statements of Cash Flows F-4b
Notes to Financials F-5b-6b
38
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
------------------------
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
Political Calls Inc ( A Development Stage Company)
Las Vegas, Nevada
We have audited the accompanying restated balance sheet of Political Calls
Inc (A Development Stage Company) as of December 31 2006, and the related
restated statements of operations, stockholders' equity and cash flows from
inception April 24, 2006 through December 31, 2006 and the period then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the restated financial statements referred to above present
fairly, in all material respects, the financial position of Political Calls
Inc (A Development Stage Company) as of December 31, 2006 and the results of
its operations and its cash flows from inception April 24, 2006 through
December 31, 2006 and the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Moore & Associates, Chartered
- ---------------------------------
Moore & Associates Chartered
Las Vegas, Nevada
April 26, 2007
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7511 Fax (702) 253-7501
F-1a
Political Calls, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 2006
Balance Sheet
Restated
December 31,
2006
------------
Assets
Current Assets:
Cash $ 11,716
Funds held in escrow 6,120
-----------
17,836
Fixed assets, net of accumulated 6,500
depreciation of $1,000 as of
December 31, 2006
------------
24,336
------------
$ 24,336
============
Liabilities and Stockholders' Equity
Current liabilities:
Income taxes payable 1,023
------------
1,023
------------
Long-term liabilities:
Deferred taxes payable 117
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, 750,000 issued and
outstanding as of 12/31/06 750
Common stock, $0.001 par value, 70,000,000
shares authorized, 4,231,000 shares issued and
outstanding as of 12/31/06 4,231
Additional Paid-in Capital 1,504,758
Earnings (Deficit) accumulated during
development stage (1,486,543)
------------
23,313
------------
$ 24,336
============
The accompanying notes are an integral part of these financial statements.
F-2a
Political Calls, Inc.
(A Development Stage Company)
Statement of Operations
For the period from April 24, 2006 (Inception) to December 31, 2006
Statement of Operations
Restated
For the period
from
April 24, 2006
(Inception) to
December 31,
2006
--------------
Revenue $ 19,491
--------------
Expenses:
General and administrative expenses 11,394
Depreciation 1,000
--------------
Total expenses 12,394
--------------
Income before provision
for income taxes 7,097
--------------
Provision for income taxes due 1,023
Provision for deferred taxes due 117
--------------
Net income $ 5,957
--------------
Beneficial Conversion Feature of Preferred stock (1,492,543)
Net income (loss) applicable to common shareholders $ (1,486,586)
==============
Basic Weighted Average Number of Common Shares Outstanding 3,621,429
==============
Basic Loss per Share $ (0.41)
==============
The accompanying notes are an integral part of these financial statements.
F-3a
Political Calls, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the period from April 24, 2006 (Inception) to December 31, 2006
Restated
Statement of Changes in Stockholders' Equity
(Deficit)
Preferred Accumulated
Common Stock Stock Additional During Total
----------------- -------------- Paid-in Development Stockholders
Shares Amt Shares Amt Capital Stage Equity
--------- ------ ------- ----- --------- ----------- ----------
Founders
initial
investment,
4/24/06
$0.001 per
share 3,619,000 $3,619 - - $ - $ - $ 3,619
On 4/24/06
Issuance
of Preferred
Shares for
Equipment 750,000 $750 $ 6,750 - 7,500
Deemed dividends from
beneficial conversion
feature on preferred stock . 1,492,500 (1,492,500) -
Issuance
of Common
Shares for
Cash
pursuant
to 504
offering 612,000 612 5,508 6,120
Net income
for the
year ending
12/31/06 5,957 5,957
--------- ------ ------- ----- --------- ----------- ----------
Balance,
12/31/06 4,231,000 $4,231 750,000 $750 $1,504,758 $(1,486,543) $ 24,336
========= ====== ======= ==== ========== ============ ==========
The accompanying notes are an integral part of these financial statements.
F-4a
Political Calls, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the period from April 24, 2006 (Inception) to December 31, 2006
Statement of Cash Flows
Restated
For the period
from
April 24, 2006
(Inception) to
December 31,
2006
--------------
Cash flows from operating activities:
Net income $ 5,957
--------------
Adjustments to reconcile
net loss to net cash
used by operating
activities
Depreciation 1,000
Changes in assets and liabilities:
Accounts payable (income taxes) 1,023
Other accrued liabilities (deferred taxes) 117
--------------
Cash provided (used) by operating activities 8,097
Cash flows from investing activities:
Purchase of fixed assets (7,500)
--------------
Net cash provided (used) by investing activities (7,500)
Cash flows from financing activities:
Sale of Common Stock 9,739
Sale of Preferred Stock 7,500
--------------
Cash provided (used) by financing activities 17,239
Net increase (decrease) in cash 17,836
Cash at beginning of period -
--------------
Cash at end of period $ 17,836
==============
Supplemental disclosures:
Interest paid $ -
==============
Income taxes paid $ -
==============
The accompanying notes are an integral part of these financial statements.
F-5a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Political Calls, Inc. (the Company) was incorporated under the laws of the
state of Nevada on April 24, 2006. The Company has one sole officer and
director. The Company was organized to conduct any lawful business. The
Company plans to help political candidates broadcast their message via mass
telephone calls.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The Company has $17,836 in current assets and $1,023 in current liabilities
as of December 31, 2006. The relevant accounting policies are listed below.
Basis of Accounting
- -------------------
The basis is United States generally accepted accounting principles.
Dividends
- ---------
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
Income Taxes
- ------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for the
deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Year end
- --------
The Company's year-end is December 31.
Advertising
- -----------
Advertising is expensed when incurred. There has been no advertising
during the period.
F-6a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES-CONTINUED
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 3. STOCKHOLDERS'EQUITY
Common Stock
- ------------
On April 24, 2006 (inception), the Company issued 3,619,000 shares of its
$0.001 par value common stock to it sole shareholder for $3,619.
On December 31, 2006, the Company issued 612,000 shares of its $0.001 par value
common stock pursuant to a regulation 504 offering for $6,120.
Preferred Stock
- ---------------
On April 24, 2006, the Company issued 750,000 shares of its $0.001 par value
preferred stock in exchange for telephone calling equipment valued at $7,500.
Each share of the Convertible Preferred Stock can be exchanged for two hundred
(200) shares of Common Stock of the corporation. This Series A preferred stock
was issued with a beneficial conversion feature totaling $1,486,543 measured as
the difference between the $0.01 offering price of the underlying common stock
and the conversion benefit price of $1.99 per share. This non-cash expense
related to the beneficial conversion features of those securities and is
recorded with a corresponding credit to paid-in-capital.
There were no other issuances of common or preferred stock or equivalents
since April 24, 2006 (inception) through December 31, 2006. The Company has
not issued any options or warrants or similar securities since inception.
NOTE 4. RELATED PARTY TRANSACTIONS
The officer and director of the Company is involved in other business
activities. This person may face a conflict in selecting between the Company
and their other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
F-7a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 5. PROVISION FOR INCOME TAXES
The Company provides for income taxes under Statement of Financial
Accounting Standards NO. 109, Accounting for Income Taxes. SFAS No. 109
requires the use of an asset and liability approach in accounting for income
taxes. Deferred tax assets and liabilities are recorded based on the
differences between the financial statement and tax bases of assets and
liabilities and the tax rates in effect when these differences are expected
to reverse.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely
than not that some or all of the deferred tax assets will not be realized.
All of the expenditures thus far have been to organize the Company and will
not be expensed for tax purposes until the Company has operations.
The provision for income taxes is comprised of the net changes in deferred
taxes less the valuation account plus the current taxes payable as shown in
the chart below.
Net changes in Deferred Tax Benefit less than
valuation account 117
Current Taxes Payable 1,023
-----
Net Provision for Income Taxes 1,140
-----
NOTE 6. REVENUE AND EXPENSES
Revenue recognition
- -------------------
The Company recognizes revenue on an accrual basis as it invoices for
services." Revenue is generally realized or realizable and earned when all
of the following criteria are met: 1) persuasive evidence of an arrangement
exists between the Company and our customer(s); 2) services have been rendered;
3) our price to our customer is fixed or determinable; and 4) collectibility
is reasonably assured. For the period from April 24, 2006 (inception) to
December 31, 2006, the Company recognized a total of $19,491 in revenues and
has accumulated net income of $5,957 through the execution of its business
plan.
F-8a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 7. OPERATING LEASES AND OTHER COMMITMENTS:
The Company also has no lease obligations or employment agreements.
NOTE 8. EARNINGS PER SHARE
Historical net (loss) per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings per share include
additional dilution from common stock equivalents, such as stock issuable
pursuant to the exercise of securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that shared in the earnings of the entity, but these
potential common stock equivalents were determined to be antidilutive.
Calculation of net income(loss) per share is as follows:
Restated
For the period
from
April 24, 2006
(Inception) to
December 31,
2006
-------------
Net loss (numerator) $ (1,486,586)
=============
Weighted Average Common Shares Outstanding 3,621,429
=============
Basic Loss per Share $ (0.41)
=============
F-9a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 9. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Below is a listing of the most recent accounting standards and their effect
on the Company.
SFAS 148 Accounting for Stock-Based Compensation- Transition and
Disclosure
Amends FASB 123 to provide alternative methods of transition for an entity
that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation.
SFAS 149 Amendment of Statement 133 on Derivative Instruments and
Hedging Activities
This Statement amends and clarifies financial accounting and reporting for
Derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement NO. 133, Accounting for Derivative
Instruments and Hedging Activities.
SFAS 150 Financial Instruments with Characteristics of both Liabilities
and Equity
This Statement requires that such instruments be classified as liabilities in
the balance sheet. SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003.
Interpretation No. 46 (FIN 46)
Effective January 31, 2003, The Financial Accounting Standards Board requires
certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have
the characteristics of a continuing financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The Company
has not invested in any such entities, and does not expect to do so in the
foreseeable future.
NOTE 10. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)
The adoption of these new Statements is not expected to have a material
effect on the Company's financial position, results or operations, or cash
flows.
F-10a
Political Calls, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2006
NOTE 11. SUBSEQUENT EVENT
On February 9, 2007, the Company amended its Articles of Incorporation, based
on Board of Directors and shareholder approval to increase its authorized
common shares to One Hundred Ninety-Five Million (195,000,000) with a par
value of $0.001, all of which shall be entitled to voting power of one vote
per share.
The amended Articles included Five Million (5,000,000) authorized non-voting
Series A Preferred Shares with a par value of $0.001 per share. These Series
A Preferred shares are designated as "Callable and Convertible Preferred
Stock."
Additionally, the Company filed a Series A Designation with the Nevada
Secretary of State that states: "Series A Preferred shares shall be
designated as "Callable and Convertible Preferred Stock. The corporation has
the right to call for and purchase these shares at any time, within twelve
months of issue, either at par value or at a slight premium above par value,
or if corporation should designate that these shares are deemed not callable,
the holders of these non-voting Series A Preferred Shares shall have the
right to cause the corporation to redeem shares for Common Stock at any time.
Each holder of the non voting Series A Callable and Convertible Preferred
Stock shall have the right to convert all or any portion of such shares as
such holder desires to convert, into shares of the Common Stock of the
corporation, as follows: each share of Series A Convertible Preferred Stock
can be exchanged for two hundred (200) shares of Common Stock of the
corporation."
NOTE 12. RESTATEMENT
On April 20, 2007, we concluded that we should restate our audited financial
statements for the year ended December 31, 2006 to correct an error in our
Balance Sheet, Statement of Operations and Statement of Stockholders' Equity
to accurately reflect the beneficial conversion feature our preferred stock.
Our Series A preferred stock was issued with a beneficial conversion feature
totaling $1,486,543 measured as the difference between the $0.01 offering price
of the underlying common stock and the conversion benefit price of $1.99 per
share. This is now reflected in our restated financial statements.
F-11a
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
To the Board of Directors
Political Calls Inc.
We have reviewed the accompanying balance sheet of Political Calls Inc. as of
March 31, 2007, and the related statements of operations, retained earnings,
and cash flows for the three months then ended, in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
All information included in these financial statements is the representation
of the management of Political Calls Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than
an audit in accordance with generally accepted auditing standards, 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 financial statements in order for them to be in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. The financial statements do not
include any adjustments that might result from any uncertainty.
/s/ Moore & Associates, Chartered
- ---------------------------------
Moore & Associates, Chartered
Las Vegas, Nevada
May 4, 2007
2675 S. JONES BLVD. SUITE 109, LAS VEGAS, NEVADA 89146
(702) 253-7511 Fax: (702)253-7501
F-1b
Political Calls, Inc.
(A development stage company)
Balance Sheets
December 31, 2006 and March 31, 2007
Balance Sheets
(unaudited)
March 31, December 31,
2007 2006
----------- ------------
Assets
Current Assets:
Cash $ 9,067 $ 11,716
Funds held in escrow - 6,120
----------- ------------
9,067 17,836
Fixed assets, net of accumulated depreciation of
$1,250, $1,000 as of 3/31/07 and 12/31/06,
respectively 6,250 6,500
----------- ------------
Total current assets 15,317 24,336
----------- ------------
$ 15,317 $ 24,336
=========== ============
Liabilities and Stockholder's Equity
Current liabilities:
Income taxes payable 1,023 1,023
----------- ------------
1,023 1,023
Long-term liabilities:
Deferred taxes payable 117 117
Stockholder's Equity:
Preferred stock, $0.001
par value, 5,000,000 shares authorized,
750,000 shares issued or outstanding
as of 3/31/07 and 12/31/2006 750 750
Common stock, $0.001 par value, 195,000,000
shares authorized, 4,231,000 and 4,231,000 shares
issued and outstanding as of 3/31/2007 and
12/31/2006 respectively 4,231 4,231
Additional paid-in capital 1,504,758 1,504,758
Earnings (Deficit) accumulated during
development stage (1,495,562) (1,486,543)
----------- ------------
14,294 23,313
----------- ------------
$ 15,317 $ 24,336
=========== ============
The accompanying notes are an integral part of these financial statements.
F-2b
Political Calls, Inc.
(A development stage company)
Statement of Operations
For the Three Months Ended March 31, 2007
From April 24, 2006 (Inception) to March 31, 2007
(Unaudited)
Statement of Operations
Three Months From April 24,
Ended 2006 (Inception)
March 31, to March 31,
2007 2007
------------ ----------------
Revenue $ - $ 19,491
------------ ----------------
Expenses:
General and administrative
expenses 8,769 20,163
Depreciation 250 1,250
------------ ----------------
Total expenses 9,019 21,413
------------ ----------------
Income (loss) before provision for
income taxes (9,019) (1,922)
------------ ----------------
Provision for income taxes - 1,140
------------ ----------------
Net income (loss) $ (9,019) $ (3,062)
Beneficial Conversion Feature of
Preferred stock - (1,492,543)
------------ ----------------
Net income (loss) applicable to
common shareholders $ (9,019) $ (1,495,562)
============ ================
Basic Weighted Average Number of
Common Shares Outstanding 4,231,000
============
Basic Loss per Share $ (0.00)
============
The accompanying notes are an integral part of these financial statements.
F-3b
Political Calls, Inc.
(A development stage company)
Statement of Cash Flows
For the Three Months ended March 31, 2007
From April 24, 2006 (Inception) to March 31, 2007
(Unaudited)
Statement of Cash Flows
Three Months From April 24,
Ended 2006 (Inception)
March 31, to March 31,
2007 2007
------------ ----------------
Cash flows from operating activities:
Net income (loss) $ (9,019) $ (3,062)
------------ ----------------
Adjustments to reconcile
net loss to net cash
used by operating
activities
Depreciation 250 1,250
Changes in assets and liabilities:
Accounts payable (income taxes) - 1,023
Other accrued liabilities
(deferred taxes) - 117
------------ ----------------
Cash provided (used) by operating activities (8,769) (672)
Cash flows from investing activities:
Purchase of fixed assets - (7,500)
------------ ----------------
Net cash provided (used) by investing
activities - (7,500)
Cash flows from financing activities:
Sale of Common Stock - 9,739
Sale of Preferred Stock - 7,500
------------ ----------------
Cash provided (used) by financing activities - 17,239
Net increase (decrease) in cash (8,769) 9,067
Cash at beginning of period 17,836 -
------------ ----------------
Cash at end of period 9,067 9,067
============ ================
Supplemental disclosures:
Interest paid $ - $ -
============ ================
Income taxes paid $ - $ -
============ ================
The accompanying notes are an integral part of these financial statements.
F-4b
POLITICAL CALLS, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
Note 1 - Basis of Presentation
The consolidated interim financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated interim financial statements be read in conjunction with the
financial statements of the Company for the period ended December 31, 2006 and
notes thereto included in the Company's SB-2 registration statement. The
Company follows the same accounting policies in the preparation of interim
reports.
Results of operations for the interim periods are not indicative of annual
results.
Note 2 - Going concern
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern which
contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As at March 31, 2007, the
Company has recognized revenues of $19,491 since its inception and has
accumulated operating losses of approximately $(3,062) since August 23, 2006
(inception). The Company's ability to continue as a going concern is
contingent upon the successful completion of additional financing arrangements
and its ability to achieve and maintain profitable operations. While the
Company is expending its best efforts to achieve the above plans, there is no
assurance that any such activity will generate funds that will be available
for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
F-5b
POLITICAL CALLS, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2007
Note 3 - Related party transactions
The Company does not lease or rent any property. Office services are provided
without charge by a director. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein. The officers and
directors of the Company are involved in other business activities and may, in
the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
F-6b