=============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-Q ------------------------------------ |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2008 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ ------------------ Commission file number 000-52725 POLITICAL CALLS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) ------------------ Nevada 20-4765268 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1015 S. Cimarron, Las Vegas, NV 89145 --------------------------------------------------- (Address of principal executive offices)(Zip Code) Issuer's telephone number, including area code: (702) 273-8920 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (Check one). Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_| Smaller Reporting Company |X| (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_| As of November 7, 2008, the registrant's outstanding common stock consisted of 423,100 shares, $0.001 par value; and the registrant's outstanding common preferred stock consisted of 750,000 shares, $0.001 par value. Table of Contents Political Calls, Inc. Index to Form 10-Q For the Quarterly Period Ended September 30, 2008 Part I. Financial Information Page Item 1. Financial Statements Balance Sheets as of September 30, 2008 and December 31, 2008 3 Statements of Income for the three months ended September 30, 2008 and 2007 4 Statements of Cash Flows for the three months ended September 30, 2008 and 2007 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Item 4. Controls and Procedures 15 Part II Other Information Item 1. Legal Proceedings 16 Item 1A. Risk Factors 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3 -- Defaults Upon Senior Securities 16 Item 4 -- Submission of Matters to a Vote of Security Holders 16 Item 5 -- Other Information 17 Item 6. Exhibits 17 Signatures 18 2 Part I. Financial Information Item 1. Financial Statements Political Calls, Inc. (A development stage company) Balance Sheets Balance Sheets September 30, 2008 December 31, (Unaudited) 2007 ----------- ------------ ASSETS Current Assets: Cash $ 42 $ 1,879 ----------- ------------ Total Current Assets 42 1,879 ----------- ------------ Fixed assets, net of accumulated depreciation of $2,750, $2,000 as of 6/30/08 and 12/31/07, respectively 4,750 5,500 ----------- ------------ TOTAL ASSETS $ 4,792 $ 7,379 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Long-term liabilities: Deferred taxes payable 117 117 ----------- ------------ Total liabilities 117 117 ----------- ------------ Stockholder's Equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized, 75,000 shares issued or outstanding as of 9/30/08 and 12/31/07 75 75 Common stock, $0.001 par value, 195,000,000 shares authorized, 423,100 and 423,100 shares issued and outstanding as of 9/30/08 and 12/31/07 respectively 423 423 Additional paid-in capital 1,509,241 1,509,241 Earnings (Deficit) accumulated during development stage (1,505,064) (1,502,477) ----------- ------------ Total stockholders' equity 4,675 7,262 ----------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,792 $ 7,379 =========== ============ The accompanying notes are an integral part of these financial statements. 3 Political Calls, Inc. (A development stage company) Statements of Operations (Unaudited) Statement of Operations From For the three months ended For the nine months ended August 23, 2006 -------------------------- -------------------------- (Inception) to September 30, September 30, September 30, September 30, September 30, 2008 2007 2008 2007 2008 ------------ ------------ ------------ ------------ -------------- Revenue $ - $ - $ - $ - $ 19,491 ------------ ------------ ------------ ------------ -------------- Expenses: General and Administ- rative expenses 1,554 3,160 1,837 14,903 29,188 Depreciation 250 250 750 750 2,750 ------------ ------------ ------------ ------------ -------------- Total expenses 1,804 3,410 2,587 15,653 31,938 ------------ ------------ ------------ ------------ -------------- Net income (loss) before provision for income taxes (1,804) (3,410) (2,587) (15,653) (12,447) ------------ ------------ ------------ ------------ -------------- Provision for income taxes due - - - - 117 ------------ ------------ ------------ ------------ -------------- Income (loss) before beneficial interest (1,804) (3,410) (2,587) (15,653) (12,564) ------------ ------------ ------------ ------------ -------------- Beneficial Conversion Feature of Preferred stock (1,492,500) -------------- Net income (loss) Applicable to common share- holders (1,804) (3,410) (2,587) (15,653) (1,505,064) ============ ============ ============ ============ ============== Basic Earnings (Loss) per share $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============ ============ ============ ============ Weighted Average Number of Common Shares Outstanding 423,100 423,100 423,100 423,100 ============ ============ ============ ============ The accompanying notes are an integral part of these financial statements. 4 Political Calls, Inc. (A development stage company) Statements of Cash Flows (Unaudited) Statement of Cash Flows From For the nine months ended August 23, 2006 -------------------------- (Inception) to September 30, September 30, September 30, 2008 2007 2008 ------------ ------------ --------------- Operating activities: Net income (loss) $ (2,587) $ (15,653) $ (1,505,064) ------------ ------------ --------------- Adjustments to reconcile net loss to net cash used by operating activities Beneficial Interest on Conversion - - 1,492,500 Depreciation 750 750 2,750 Changes in assets and liabilities: Accounts payable (income taxes) - - - Other accrued liabilities (deferred taxes) - - 117 ------------ ------------ --------------- Cash provided (used) by operating activities (1,837) (14,903) (9,697) Financing activities: Sale of Common Stock - - 9,739 ------------ ------------ --------------- Cash provided (used) by financing activities - - 9,739 Net increase (decrease) in cash (1,837) (14,903) 42 Cash at beginning of period 1,879 17,836 - ------------ ------------ --------------- Cash at end of period $ 42 $ 2,933 $ 42 ============ ============ =============== Supplemental disclosures: Interest paid $ - $ - $ - ============ ============ =============== Income taxes paid $ - $ 1,023 $ 1,023 ============ ============ =============== Non-cash transactions $ - $ - $ - ============ ============ =============== The accompanying notes are an integral part of these financial statements. 5 POLITICAL CALLS, INC. (A development stage company) NOTES TO FINANCIAL STATEMENTS September 30, 2008 Note 1 - Basis of Presentation The 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, 2007 and notes thereto included in the Company's 10-KSB annual report. 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 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 September 30, 2008, the Company has recognized revenues of $19,491 since its inception and has accumulated operating losses of approximately $12,564 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. 6 POLITICAL CALLS, INC. (A development stage company) NOTES TO FINANCIAL STATEMENTS September 30, 2008 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. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Information The Company may from time to time make written or oral "forward-looking statements" including statements contained in this report and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements of the Company's plans, objectives, expectations, estimates and intentions, which are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, in addition to others not listed, could cause the Company's actual results to differ materially from those expressed in forward looking statements: the strength of the domestic and local economies in which the Company conducts operations, the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on the Company's suppliers and customers, changes in client needs and consumer spending habits, the impact of competition and technological change on the Company, the Company's ability to manage its growth effectively, including its ability to successfully integrate any business which it might acquire, and currency fluctuations. All forward-looking statements in this report are based upon information available to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Critical Accounting Policies - ---------------------------- There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Registration Statement for the fiscal year ended December 31, 2007. 8 Results of Operations - --------------------- Overview of Current Operations - ------------------------------ Political Calls, Inc. ("the Company") was incorporated under the laws of the State of Nevada on August 23, 2006, under the name Political Calls, Inc. 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. Political Calls is a developmental stage that purchased the required telephone equipment (an Auto-Dialer with two T-1 lines) to make broadcast telephone calls. The average length of a political candidate message is 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. Management prepares a political message which is sent via the telephone to a specific geographic area. The Company has not established any minimum amounts of calls in its contracts. 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. Management has 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. 9 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 the Company's competitors have significantly greater financial, marketing, other resources, and larger customer bases than Political Calls. 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. Results of Operations for the quarter ended September 30, 2008 - -------------------------------------------------------------- The Company has generated no revenues for the third Quarter ending September 30, 2008. Since its inception of August 23, 2006 through September 30, 2008, the Company has recognized $19,491 in revenues. For the Quarter ending September 30, 2008, the Company spent $1,804 in general and administrative expenses as compared to $3,410 for the same period last year. For the nine months ending September 30, 2008, the Company spent $2,587 in general and administrative expenses as compared to $15,653 for the same period last year. The majority of these expenses involved accounting and legal fees to keep the Company fully reporting. As of September 30, 2008, the Company had an accumulated net loss of $(12,564) dollars. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future. Management is paying the day-to-day corporate expenses personally, without seeking reimbursement from the Company for these paid expenses. 10 Revenues - -------- During the nine month period ended September 30, 2008, the Company did not generate any revenues. In addition, the Company does not expect to generate any profit for the next year. Plan of Operation - ----------------- Management does not believe that the Company will be able to generate any significant profit during the coming year. Management believes developmental and marketing costs will most likely exceed any anticipated revenues for the coming year. Political Calls is a developmental stage which markets a telephone broadcasting service to political candidates. Management believes the Company can sustain itself for the next twelve months. Management has agreed to keep the Company funded at its own expense, without seeking reimbursement for expenses paid. In the event the Company requires additional funds, the Company will have to seek loans or equity placements to cover such cash needs. There is no assurance additional capital will be available to the Company on acceptable terms. Management is currently exploring various business strategies to build the Company's business. This includes evaluating various options and strategies. The analysis of new business opportunities and evaluating new business strategies will be undertaken by or under the supervision of the Company's sole Officer. In analyzing prospective businesses opportunities, management will consider, to the extent applicable, the available technical, financial and managerial resources of any given business venture. Management will also consider the nature of present and expected competition; potential advances in research and development or exploration; the potential for growth and expansion; the likelihood of sustaining a profit within given time frames; the perceived public recognition or acceptance of products, services, trade or service marks; name identification; and other relevant factors. The Company anticipates that the results of operations of a specific business venture may not necessarily be indicative of the potential for future earnings, which may be impacted by a change in marketing strategies, business expansion, modifying product emphasis, changing or substantially augmenting management, and other factors. Management will analyze all relevant factors and make a determination based on a composite of available information, without reliance on any single factor. 11 Going Concern - ------------- Going Concern - The Company experienced operating losses, of $(12,564) since its inception on August 23, 2006 through the period ended September 30, 2008. The financial statements have been prepared assuming the Company will continue to operate as a going concern which contemplates the realization of assets and the settlement of liabilities in the normal course of business. No adjustment has been made to the recorded amount of assets or the recorded amount or classification of liabilities which would be required if the Company were unable to continue its operations. (See Financial Footnote 2) Summary of any product research and development that we will perform for the term of our plan of operation. - ----------------------------------------------------------------------------- We do not anticipate performing any additional significant product research and development under our current plan of operation. Expected purchase or sale of plant and significant equipment. - ------------------------------------------------------------- We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time. Significant changes in the number of employees. - ----------------------------------------------- As of September 30, 2008, we did not have any employees. We are dependent upon our sole officer and director for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time. Liquidity and Capital Resources - ------------------------------- The Company's balance sheet as of September 30, 2008 reflects current assets of $42, fixed assets of $4,750 (net accumulated deprecation) and $117 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 August 23, 2006 (inception), we issued 361,900 (post split) shares of our $0.001 par value common stock to our founder for $3,619 cash. 12 On August 23, 2006, we issued 75,000 (post split) shares of our $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 61,200 (post split) shares of our $0.001 par value common stock pursuant to a Rule 504 of Regulation D offering for $6,120. On January 30, 2008, the Company initiated a ten-for-one reverse stock split, for its issued and outstanding common and preferred stock. This reverse stock split had no effect on the authorized number of common shares or preferred shares, and did not affect the par value of the stock. Following the reverse stock split, the Company has 423,100 common shares, par value $0.001 issued and outstanding and 75,000 of its Convertible Preferred Stock, par value $0.001 where each preferred share can be exchanged for two hundred (200) shares of Common Stock of the corporation. There have been no other issuance of stock. As a result of our the Company's current limited available cash, no officer or director received compensation through the nine months ended September 30, 2008. No officer or director received stock options or other non-cash compensation since the Company's inception through September 30, 2008. The Company has no employment agreements in place with its officers. Nor does the Company owe its officers any accrued compensation, as the Officers agreed to work for company at no cost, until the company can become profitable on a consistent Quarter-to-Quarter basis. Off-Balance Sheet Arrangements - ------------------------------ We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors. 13 Critical Accounting Policies and Estimates - ------------------------------------------ Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured. New Accounting Standards - ------------------------ In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements". This statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the de-consolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years and interim periods beginning after December 15, 2008. The adoption of SFAS 160 is not expected to have a material impact on the Company's financial position, results of operation or cash flows. As of January 1, 2008 we adopted SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 allows the company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The adoption of SFAS 159 has not had a material impact on our financial position, results of operation or cash flows. As of January 1, 2008 we adopted SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157 defines fair value and provides guidance for measuring and disclosing fair value. The adoption of SFAS 157 has not had a material impact on our financial position, results of operation or cash flows. Item 3. Quantitative and Qualitative Disclosures about Market Risk. Not applicable. 14 Item 4T. Controls and Procedures (a) Our management supervised and participated in an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2008. Based on that evaluation, our management, including our principal executive and financial officer, concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports filed or submitted by the Company under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and communicated to our management, including our principle executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure within the time periods specified in the SEC's rules and forms. Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems that are determined to be effective by provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. (b) There were no changes in our internal control over financial reporting during the period ended September 30, 2008, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 15 PART II. OTHER INFORMATION Item 1 -- Legal Proceedings From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us. Item 1A - Risk Factors See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 and the discussion in Item 1, above, under "Financial Condition - Liquidity and Capital resources. Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds On April 24, 2006, (inception) we issued 3,619,000 shares of our $0.001 par value common stock to our founder for cash. On April 24, 2006, we issued 750,000 shares of its $0.001 par value non- voting Callable and Convertible Preferred stock in exchange for telephone calling equipment valued at of $7,500. All securities were issued in reliance upon an exemption from registration under Section 4(2) of the Securities Act as a transaction not involving a public offering. 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 to approximately forty- five (45) shareholders in exchange for cash in the amount of $6,120. There have been no other issuance of shares since our inception on April 24, 2006. Item 3 -- Defaults Upon Senior Securities None. Item 4 -- Submission of Matters to a Vote of Security Holders None. 16 Item 5 -- Other Information None. Item 6 -- Exhibits Filed Period Filing Exhibit Exhibit Description herewith Form ending Exhibit date - ------------------------------------------------------------------------------- 3.1 Articles of Incorporation, SB-2 3.1 02/21/2007 as currently in effect - ------------------------------------------------------------------------------- 3.2 Bylaws SB-2 3.2 02/21/2007 as currently in effect - ------------------------------------------------------------------------------- 3.3 Amended Articles of SB-2 3.3 02/21/2007 Incorporation as currently in effect. - ------------------------------------------------------------------------------- 31.1 Certification of President X and Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act - ------------------------------------------------------------------------------- 31.2 Certification of President X and Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act - ------------------------------------------------------------------------------- 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Political Calls, Inc. ------------------------ Registrant By: /s/ David Gallagher -------------------------------- David Gallagher President, Chief Executive Officer, Chief Financial Officer, Secretary and Director (Principal Executive, Financial, and Accounting Officer) Dated: November 7, 2008 ---------------- 18