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| CMCA.OB > SEC Filings for CMCA.OB > Form 10-Q on 13-Nov-2008 | All Recent SEC Filings |
13-Nov-2008
Quarterly Report
This Management's Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by words such as "anticipates," "expects," "believes," "plans," "predicts," and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is December 31. All information presented herein is based on the three and nine month periods ended September 30, 2008.
The Company's plan of operation for the coming year is to actively pursue development stage technology assets and emerging businesses with which to merge or acquire. The Company intends to function as a business incubator for development stage technology assets and emerging businesses that management believes are well positioned for future growth. We will fund the process of driving emerging technologies towards commercial applications through debt or equity offerings tied to our common stock. Although our focus may be on convergent internet protocol technologies in the security, medical, transportation, and entertainment sectors, we do not intend to restrict considerations to internet related applications, rather we intend to consider business opportunities in any business or industry segment that involves proprietary assets tied to technological advances. We will evaluate each opportunity on its merits.
We have not yet entered into any other agreements, nor do we have any commitments or understandings to enter into or become engaged in any business transactions, as of the date of this filing.
The Company's plan of operation will require a minimum of $50,000 in funding over the next twelve months, which funding is not currently available. Should we acquire or merge with a business opportunity our funding requirements will change.
During the nine month period ended September 30, 2008, the Company's operations consisted of satisfying continuous public disclosure requirements and seeking to identify prospective business opportunities.
The Company has been funded since inception from equity placements, revenue from discontinued operations, and major shareholders in the form of loans. All capital raised or revenue realized to date was allocated to cost of sales, general and administrative costs, interest expense, and research and development costs.
For the period from December 18, 1997 (date of inception) to September 30, 2008 the Company recorded a net loss of $7,388,053, of which $7,364,997 can be attributed to discontinued operations as of December 28, 2007. Costs accounted for in discontinued operations include general and administrative expenses, research and development costs, and professional fees, in addition to amounts incurred in connection with the preparation of public disclosure documentation as required pursuant to the Exchange Act of 1934, as amended. In the current three and nine month periods, we have net losses totaling $7,254 and $23,056, respectively, attributable to general and administrative expenses. We have not generated any revenue since discontinuing operations.
Capital Expenditures
The Company expended no amounts on capital expenditures during the nine month period ended September 30, 2008.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carryforward and start up costs that will offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
Working capital deficit and net stockholders' deficit in the Company was $13,556 at September 30, 2008. We had total and current assets of $6,567 as of September 30, 2008 consisting of cash and a related party receivable. Our total and current liabilities were $20,123, consisting of advances payable to a related party. We are in the development stage and, since inception, have experienced significant changes in liquidity, capital resources, and stockholders' deficit.
Cash flow used in operating activities was $4,134,902 for the period from December 18, 1997 to September 30, 2008, of which $4,131,090 is attributable to discontinued operations.
Cash flow used in investing activities was $59,617 for the period from December 18, 1997, to September 30, 2008, all of which can be attributed to discontinued operations.
Cash flow provided from financing activities was $4,200,207 for the period from December 18, 1997, to September 30, 2008, all of which can be attributed to discontinued operations.
The Company's current assets are insufficient to conduct its plan of operation over the next twelve months. We will have to seek debt or equity financing to fund operations. The Company has no current commitments or arrangements with respect to, or immediate sources of funding. Further, no assurances can be given that funding is available. Our shareholders are the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and we have no agreement formal or otherwise. The Company's inability to obtain funding will have a material adverse affect on its plan of operation.
The Company does not expect to pay cash dividends in the foreseeable future.
The Company had no lines of credit or other bank financing arrangements.
The Company has no defined benefit plan or contractual commitment with any of its officers or directors, except an employment agreement with its chief executive officer.
The Company currently has no employees and has no plans to hire any employees in the near future.
Off Balance Sheet Arrangements
As of September 30, 2008, we have no significant 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 of operations, liquidity, capital expenditures, or capital resources that are material to stockholders.
Critical Accounting Policies
In Note 1 to the audited financial statements for the years ended December 31, 2007 and 2006, included in our Form 10-KSB, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States.
The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Going Concern
The Company's auditors have expressed an opinion as to the Company's ability to
continue as a going concern as a result of an accumulated deficit of $7,364,997
as of December 31, 2007, which deficit increased to $7,388,053 as of September
30, 2008. The Company's ability to continue as a going concern is subject to the
ability of the Company to realize a profit and /or obtain funding from outside
sources. Management's plan to address the Company's ability to continue as a
going concern includes: (i) obtaining funding from private placement sources;
(ii) obtaining additional funding from the sale of the Company's securities;
(iii) acquiring and developing technology based businesses to the point of
realizing revenues; and (iv) obtaining loans and grants from financial
institutions where possible. Although management believes that it will be able
to obtain the necessary funding to allow the Company to remain a going concern
through the methods discussed above, there can be no assurances that such
methods will prove successful.
The statements contained in the section titled Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this current report, with the exception of historical facts, are forward looking statements. Forward looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:
· our anticipated financial performance and business plan;
· the sufficiency of existing capital resources;
· our ability to raise additional capital to fund cash requirements for future operations;
· uncertainties related to the Company's future business prospects;
· our ability to generate revenues from future operations;
· the volatility of the stock market and;
· general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated, including the factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.
Stock-Based Compensation
On January 1, 2006, we adopted SFAS No. 123 (revised 2004) (SFAS No. 123R),
Share-Based Payment, which addresses the accounting for stock-based payment
transactions in which an enterprise receives employee services in exchange for
(a) equity instruments of the enterprise or (b) liabilities that are based on
the fair value of the enterprise's equity instruments or that may be settled by
the issuance of such equity instruments. In January 2005, the Securities and
Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which
provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R
eliminates the ability to account for stock-based compensation transactions
using the intrinsic value method under Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and instead generally requires
that such transactions be accounted for using a fair-value-based method. We use
the Black-Scholes-Merton ("BSM") option-pricing model to determine the
fair-value of stock-based awards under SFAS No. 123R, consistent with that used
for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based
Compensation. We have elected the modified prospective transition method as
permitted by SFAS No. 123R and accordingly prior periods have not been restated
to reflect the impact of SFAS No. 123R. The modified prospective transition
method requires that stock-based compensation expense be recorded for all new
and unvested stock options, restricted stock, restricted stock units, and
employee stock purchase plan shares that are ultimately expected to vest as the
requisite service is rendered beginning on January 1, 2006, the first day of our
fiscal year 2006. Stock-based compensation expense for awards granted prior to
January 1, 2006 is based on the grant date fair-value as determined under the
pro forma provisions of SFAS No. 123.
We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force ("EITF") in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.
Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued Statement of Financial Accounting Standards ("SFAS") No. 163, Accounting for Financial Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts issued by insurance enterprises, and addresses the recognition and measurement of premium revenue and claim liabilities. It requires expanded disclosures about contracts, and recognition of claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations, and (b) the insurance enterprise's surveillance or watch list. The Company is currently evaluating the impact of SFAS No. 163.
In May 2008, FASB issued FASB Staff Position ("FSP") APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, "Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants."
Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company will adopt FSP APB 14-1 beginning in the first quarter of 2009, and this standard must be applied on a retrospective basis. The Company does not expect FSP APB 14-1 to have a material impact on the preparation of its financial statements.
On May 8, 2008, FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature. The Company does not expect SFAS 162 to have a material impact on the preparation of its financial statements.
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