United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
or
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________.
Commission file number 333-175692
NEW FOUND SHRIMP, INC.
(Name of small business issuer in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
20-8926549
(I.R.S. Employer Identification No.)
7830 Inishmore Dr., Indianapolis, IN 46214
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code : (317) 652-3077
Indicate by check mark whether the registrant (1) 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.
x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” 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 ¨ No x . The number of shares of the issuer’s common stock, par value $.00001 per share, outstanding as of June 30, 2012 was 16,000,000.
TABLE OF CONTENTS
| 2 |
Part I. Financial Information
Item 1. Financial Statements.
New Found Shrimp, Inc.
(A Development Stage Company)
Balance Sheets
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 266 | $ | 242 | ||||
| Prepaid and other current assets | 143,864 | — | ||||||
| Total Current Assets | 144,130 | 242 | ||||||
| TOTAL ASSETS | $ | 144,130 | $ | 242 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 6,475 | $ | 2,000 | ||||
| Accrued expenses | 3,920 | — | ||||||
| Note payable, related party | 100 | 100 | ||||||
| Convertible note payable | 39,136 | — | ||||||
| Derivative liability | 347,520 | — | ||||||
| Total Current Liabilities | 397,151 | 2,100 | ||||||
| TOTAL LIABILITIES | 397,151 | 2,100 | ||||||
| Stockholders' Deficit | ||||||||
| Preferred stock: 100,000,000 authorized; $0.00001 par value -0-and -0- shares issued and outstanding, respectively | — | — | ||||||
| Common stock: 10,000,000,000 authorized; $0.00001 par value 16,000,000 and 16,000,000 shares issued and outstanding, respectively | 1,600 | 1,600 | ||||||
| Additional paid in capital | (172,014 | ) | 3,330 | |||||
| Accumulated deficit during development stage | (82,607 | ) | (6,788 | ) | ||||
| Total Stockholders' Deficit | (253,021 | ) | (1,858 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 144,130 | $ | 242 | ||||
See notes to unaudited financial statements
| 3 |
New Found Shrimp, Inc.
(A Development Stage Company)
Statements of Operations
| April 26, 2007 | ||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | (inception) | ||||||||||||||||||
| June 30, | June 30, | June 30, | ||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | ||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenues | $ | — | $ | 1,500 | $ | 250 | $ | 1,500 | $ | 2,000 | ||||||||||
| Operating Expenses | ||||||||||||||||||||
| Professional | 37,611 | 1,250 | 42,611 | 1,250 | 42,611 | |||||||||||||||
| General and administrative | 1,181 | 147 | 1,226 | 147 | 9,764 | |||||||||||||||
| Total operating expenses | 38,792 | 1,397 | 43,837 | 1,397 | 52,375 | |||||||||||||||
| Net loss from operations | (38,792 | ) | 103 | (43,587 | ) | 103 | (50,375 | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Interest expense | (40,056 | ) | — | (40,056 | ) | — | (40,056 | ) | ||||||||||||
| Change in derivative | 7,824 | — | 7,824 | — | 7,824 | |||||||||||||||
| Income taxes | — | — | — | — | ||||||||||||||||
| Net loss | $ | (71,024 | ) | $ | 103 | $ | (75,819 | ) | $ | 103 | $ | (82,607 | ) | |||||||
| Basic and diluted loss per share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||
| Weighted average number of shares outstanding | 16,000,000 | 16,000,000 | 16,000,000 | 16,000,000 | ||||||||||||||||
See notes to unaudited financial statements
| 4 |
New Found Shrimp, Inc.
(A Development Stage Entity)
STATEMENT OF CHANGE IN SHAREHOLDERS’ DEFICIT
From inception (April 26, 2007) to June 30, 2012
| Deficit | ||||||||||||||||||||
| accumulated | ||||||||||||||||||||
| Additional | during the | |||||||||||||||||||
| Common Stock | paid-in | development | ||||||||||||||||||
| Shares | Par Value | Capital | stage | Total | ||||||||||||||||
| Balance at April 26, 2007 (inception) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Issuance of common stock in payment of organizational expenses on behalf of the Company, June 30, 2007 at $$0.0001 per share (par) (Note 4) | 5,000,000 | 500 | — | — | 500 | |||||||||||||||
| Sale of 3,700,000 shares of common stock to various investors at $0.001 per share, August 29, 2007 (Note 4) | 3,700,000 | 370 | 3,330 | — | 3,700 | |||||||||||||||
| Net loss | — | — | — | (833 | ) | (833 | ) | |||||||||||||
| Balance at December 31, 2007 | 8,700,000 | $ | 870 | $ | 3,330 | $ | (833 | ) | $ | 3,367 | ||||||||||
| Issuance of common stock for cash to an officer and director at $0.0001 per share (par) September 22, 2008 (Note 4) | 7,300,000 | 730 | — | — | 730 | |||||||||||||||
| Net loss | — | $ | — | $ | — | $ | (3,105 | ) | $ | (3,105 | ) | |||||||||
| Balance at December 31, 2008 | 16,000,000 | $ | 1,600 | $ | 3,330 | $ | (3,938 | ) | $ | 992 | ||||||||||
| Net loss | — | $ | — | $ | — | $ | (993 | ) | $ | (993 | ) | |||||||||
| Balance at December 31, 2009 | 16,000,000 | $ | 1,600 | $ | 3,330 | $ | (4,930 | ) | $ | — | ||||||||||
| Net loss | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Balance at December 31, 2010 | 16,000,000 | $ | 1,600 | $ | 3,330 | $ | (4,930 | ) | $ | — | ||||||||||
| Net loss | — | $ | — | $ | — | $ | (1,858 | ) | $ | (1,858 | ) | |||||||||
| Balance at December 31, 2011 | 16,000,000 | $ | 1,600 | $ | 3,330 | $ | (6,788 | ) | $ | (1,858 | ) | |||||||||
| Debt discount, attributable to derivative liability | — | — | (175,344 | ) | — | (175,344 | ) | |||||||||||||
| Net loss (unaudited) | — | $ | — | $ | — | $ | (75,819 | ) | $ | (75,819 | ) | |||||||||
| Balance at June 30, 2012 | 16,000,000 | $ | 1,600 | $ | (172,014 | ) | $ | (82,607 | ) | $ | (253,021 | ) | ||||||||
See notes to unaudited financial statements
| 5 |
New Found Shrimp, Inc.
(A Development Stage Entity)
STATEMENTS OF CASH FLOWS
| April 26, 2007 | ||||||||||||
| (Inception) | ||||||||||||
| Six months ended | Through | |||||||||||
| June 30, | June 30, | |||||||||||
| 2012 | 2011 | 2012 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | (75,819 | ) | $ | 103 | $ | (82,607 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Amortization of debt discount | 36,136 | — | 36,136 | |||||||||
| Change in derivative | (7,824 | ) | — | (7,824 | ) | |||||||
| Stock based compensation | — | — | 500 | |||||||||
| Change in assets and liabilities: | ||||||||||||
| Prepaid and other current assets | 36,136 | — | 36,136 | |||||||||
| Accounts payable | 4,475 | — | 6,475 | |||||||||
| Accrued expenses | 3,920 | — | 3,920 | |||||||||
| Net cash used in operating activities | (2,976 | ) | 103 | (7,264 | ) | |||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from notes payable | 3,000 | 100 | 3,100 | |||||||||
| Issuance of common stock | — | — | 4,430 | |||||||||
| Net cash provided by financing activities | 3,000 | 100 | 7,530 | |||||||||
| Net change in cash and cash equivalents | 24 | 203 | 266 | |||||||||
| Cash and cash equivalents | ||||||||||||
| Beginning of period | 242 | — | — | |||||||||
| End of period | $ | 266 | $ | 203 | $ | 266 | ||||||
| Supplemental cash flow information and noncash financing activities: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Income taxes | $ | — | $ | — | $ | — | ||||||
| Interest | $ | — | $ | — | $ | — | ||||||
| Non-cash transactions: | $ | — | $ | — | $ | — | ||||||
See notes to unaudited financial statements
| 6 |
NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
NOTE 1. NATURE OF BUSINESS
ORGANIZATION
The Company was incorporated in the State of Indiana as a for-profit Company on April 26, 2007. In June 2012, the Company amended its articles of incorporation and filed with the state of Florida on June 26, 2012 to move its domicile from Indiana to Florida. It is a development stage company in accordance with FASB ASC 915 Financial Reporting for Development Stage Entities . The Company was formed to provide consultation to the aquatic farming industry. During the Period ended June 30, 2012, management determined it would better suit the long term goals of the company, to expand its areas of consultation into other industries. The Company will continue to provide consolidation opportunities for on-going and start up aquatic farming operations as well as other industries as the opportunities are presented. Additionally, the company will assist with the organizational structure, customer service and marketing aspects of their business, allowing our customers to focus on the business aspects of operating the company. The Company desires to eventually gain the classification as a Business Development Company (“BDC”) as designated in the Investment Company Act of 1940.
The Company is headquartered in Indianapolis, Indiana.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
ADVERTISING
Advertising costs are expensed as incurred. No advertising costs have been incurred for the three and six months ended June 30, 2012 or for the period April 26, 2007 (inception) through June 30, 2012.
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NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
USE OF ESTIMATES
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three and six month periods ended June 30, 2012 and 2011; (b) the financial position at June 30, 2012; and (c) cash flows for the six month periods ended June 30, 2012 and 2011, have been made.
CASH
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. There were no cash equivalents at June 30, 2012 or December 31, 2011.
REVENUE RECOGNITION
The Company derives revenue from consulting arrangements with clients. Revenue is generated by hourly fee structure or fixed contract costs, based on expected time to complete, additionally, costs incurred may be billed, as defined by the contractual arrangements. The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
RESEARCH AND DEVELOPMENT
The Company expenses research and development costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related to research and developments are allocated based on percentage usage to the research and development. We spent $-0- in research and development costs for the period of April 26, 2007 (inception) through June 30, 2012.
DEFERRED INCOME TAXES AND VALUATION ALLOWANCE
The Company accounts for income taxes under FASB ASC 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
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NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share is calculated in accordance with FASB ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at June 30, 2012 and at December 31, 2011. As of June 30, 2012 and at December 31, 2011, the Company had no dilutive potential common shares.
RECENT ACCOUNTING PRONOUNCEMENTS
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.
NOTE 3. INCOME TAXES
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. As of December 31, 2011 the Company had a loss of $6,788 and for the period April 26, 2007 (Date of Inception) through June 30, 2012, the Company incurred losses of $82,607. The net operating loss in the amount of $82,607, resulting from operating activities, result in deferred tax assets of approximately $28,086 at the effective statutory rates. The deferred tax asset has been off-set by an equal valuation allowance.
NOTE 4. SHAREHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of the Company consists of 150,000,000 shares with a par value of $0.00001. On April 26, 2012 the Company, through approval of its Board of Directors, amended the Articles of Incorporation for the purpose of authorizing additional shares. The amendment changed the authorized common shares from 150,000,000 to 10,000,000,000.
The Company issued 5,000,000 shares to David Cupp, CEO and sole Director on June 30, 2007 at a par value of $500 in exchange for incorporation services.
The Company sold for cash 3,700,000 shares on August 29, 2007 to 37 shareholders via subscription at a value of $3,700 or $0.001 per share.
The Company issued 7,300,000 shares to David Cupp, CEO and sole Director on September 22, 2008 for cash at a par value of $730 or $0.0001 per share.
There were 16,000,000 and 16,000,000 shares of common stock issued and outstanding at June 30, 2012 and at December 31, 2011, respectively.
| 9 |
NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
NOTE 5. RELATED PARTY TRANSACTIONS
On May 18, 2011 David Cupp, CEO and Director opened a bank account with JPMorgan Chase Bank, N.A. and deposited $100. The amount is documented with a demand note that carries no repayment terms and is non-interest bearing. Management will review this arrangement, in future period, to determine if terms are required to be formalized to reflect the economic relationship. The balance due to the related party at June 30, 2012 and December 31, 2011 was $100 and $100, respectively.
In support of the Company’s efforts and cash requirements, it will rely on advances from shareholders and related parties until such time that the Company can support its operations through generation of revenues or attains adequate financing through sales of its equity and/or traditional debt financing. Although the majority shareholder has pledged support, there is no formal written commitment for continued support by shareholders and related parties. Amounts advanced or amounts paid in satisfaction of liabilities are considered temporary in nature and may not be formalized by a promissory note. Terms have not been defined and are considered demand notes. The Company recognizes the nature of the financing and the economic benefit and anticipates accruing interest at 3% interest rate on such future advances and loans. As of June 30, 2012, the loans payable to shareholders were minimal and therefore no interest has been accrued.
The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
The Company does not own or lease property or lease office space. The office space used by the Company was arranged by the founder of the Company to use at no charge.
The above is not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with independent parties.
NOTE 6. BALANCE SHEET COMPONENTS
Short Term Debt
Notes payable consisted of the following as of June 30, 2012:
| 10 |
NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
The Company has recognized the derivative liability associated with the convertible note agreements and has revalued the beneficial conversion feature, classifying as a derivative liability. As of date of the original note, May 8, 2012, and the period end, June 30, 2012, the derivative liability was calculated to be $355,344 and $347,520, respectively. A debt discount of $180,000 was recorded and is amortized over the life of the loan. Amortized debt discount of $36,136 has been recognized as interest expense for the three months ended June 30, 2012.
The derivative valuation resulted from calculation using an option pricing method for the conversion feature of the note payable. The Company had insufficient historical data for volatility calculation, therefore a group of similar companies were averaged. The following assumptions were used in our calculation:
| Weighted Average: | ||||
| Stock Price | $ | .10 | ||
| Strike Price | $ | .05 | ||
| Dividend rate | 0.0 | % | ||
| Risk-free interest rate | .06 | % | ||
| Expected lives (years) | .72 | |||
| Expected price volatility | 554 | % | ||
| Forfeiture Rate | 0.0 | % | ||
NOTE 7. COMMITMENTS AND CONTINGENCY
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 8. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common stock of the Company.
NOTE 9. SUBSEQUENT EVENTS
On July 3, 2012, the Company issued to David R. Cupp one share of our Class A Convertible Preferred Stock (the “Preferred A Stock”) and two billion shares of our Common Stock. Mr. Cupp was issued the common stock and the Preferred A Stock in connection with and as consideration for his agreement to continue as an officer and director for the Company. The certificate of designations for the Preferred A Stock provides that as a class it possesses a number of votes equal to seventy-five percent (75%) of all votes of capital stock of the Company that could be asserted in any matter put to a vote of the shareholders of the Company. The Company valued the common stock at the market value, $.01 per share, for a total compensation value of $20,000,000.
| 11 |
NEW FOUND SHRIMP, INC.
(A Development Stage Entity)
Notes to Financial Statements
For the period ending June 30, 2012 and 2011
(Unaudited)
On July 10, 2012 the Company issued 8,000 shares of Preferred Series B stock, par value of $0.00001, to a non related party, in exchange for $20,000 cash ($2.50 per share) together with a completed subscription agreement.
In accordance with ASC 855-10, the company has analyzed its operations subsequent to June 30, 2012, through the date these financial statements were issued (date of filing with the Securities and Exchange Commission), and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events discussed above.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Note Regarding Forward Looking Statements.
This quarterly report on Form 10-Q of New Found Shrimp, Inc. for the period ended June 30, 2012 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements which, by definition, involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management's Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.
The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the costs and effects of legal proceedings.
You should not rely on forward-looking statements in this quarterly report. This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by New Found Shrimp, Inc. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include:
| 1. | Our business strategy; |
| 2. | Our financial position; |
| 3. | The extent to which we are leveraged; |
| 4. | Our cash flow and liquidity; |
| 5. | Our inability to obtain additional financing in order to fund our operations, capital expenditures, and to meet our other obligations; |
| 6. | Our inability to attract and retain key personnel; |
Financial information provided in this Form 10-Q, for periods subsequent to December 31, 2011, is preliminary and remains subject to audit. As such, this information is not final or complete, and remains subject to change, possibly materially.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The management’s discussion, analysis of financial condition, and results of operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this reports.
Results of Operations for the three and six months ended June 30, 2012 and June 30, 2011 and for the development stage, April 26, 2007 (date of inception) through June 30, 2012
New Found Shrimp, Inc. (The Company) was organized as of April 26, 2007. Due to the limited operations during April 26, 2007 (date of inception) through the six months ended June 30, 2012, the results of operations for the six months ending June 30, 2012 and 2011 are not comparable. Accordingly, the results of operations for the three and six months ended June 30, 2012 and 2011 are not comparable.
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Revenues
Total Revenue. Total revenues for the three and six months ended June 30, 2012 and 2011 were $0, $1,500, $250 and $1,500, respectively. Total revenues consist of consulting fees earned. Total revenues for the development stage, April 26, 2007 (date of inception) through June 30, 2012 were $2,000.
Operating Expenses
Total Operating Expenses. Total operating expenses for the three and six months ended June 30, 2012 and 2011 were $38,792, $1,397, $43,837 and $1,397, respectively. Total operating expenses for the development stage, April 26, 2007 (date of inception) through June 30, 2012 were $52,375, which consisted of professional fees and selling, general and administrative expenses. The changes in operating expenses were due to consulting agreements with Apollo Holdings, LTD and Raven Holdings, Inc in the amount of $180,000, which is being charged to operation over the life of the contract, or approximately $36,000 in the quarter ended June 30, 2012.
Financial Condition
Total Assets. Total assets at June 30, 2012 and December 31, 2011 were $144,864 and $242, respectively. The increase is due to the unamortized or deferred consulting agreements and will be ratably charged to expense over the future periods of the contract, as the services are rendered. The consulting services were exchanged for convertible notes payable.
Total Liabilities. Total liabilities at June 30, 2012 and December 31, 2011 were $397,151 and $2,100, respectively. Total liabilities consist of note payable and accounts payable. The change in total liabilities was due to consulting agreements with Apollo Holdings, LTD and Raven Holdings, Inc., evidenced by convertible promissory notes in the amount of $180,000. Debt discounts of $180,000 was recorded against the note and a derivative liability, in the amount of $355,344, was recorded in association with the convertible features of the notes.
Liquidity and Capital Resources
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
The Company sustained a loss of $75,819 for the six months ended June 30, 2012. The Company had a small net income of $103 for the six months ended June 30, 2011. The Company has an accumulated loss of $82,607 during the development stage, April 26, 2007 (date of inception) through June 30, 2012. Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of products. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We are presently able to meet our obligations as they come due. At June 30, 2012 we had minimal assets and a working capital deficit of $253,021. Our working capital deficit is due to the results of operations and the recognition of the derivative liability.
Net cash (used in)/provided by in operating activities for the six months ended June 30, 2012 and 2011 was ($2,976) and $103, respectively. Net cash used in operating activities during the development stage, April 26, 2007 (date of inception) through June 30, 2012 was $7,264. Net cash used in operating activities includes our net income (loss), accounts payable and services settled in common stock.
Net cash provided by financing activities for the six months ended June 30, 2012 and 2011 was $3,000 and $100, respectively. Net cash provided by financing activities for the development stage, April 26, 2007 (date of inception) through June 30, 2012 was $7,530. Net cash provided by financing activities includes the proceeds from stock sales of $4,430 and proceeds from notes payable and related party of $3,100.
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We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from the private sources and/or debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. Our CEO has agreed to continue to fund our operations as needed over the next 12 months until cash flows are sufficient to sustain operations. Pursuant to the agreement it is binding on our CEO and he has agreed to only the return of his capital with no interest or other consideration. In addition, our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. We are presently engaged in capital raising activities through one or more private offering of our company’s securities. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
.
Off-Balance Sheet Arrangements
We have made no 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 is material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4. Controls and Procedures .
| (a) | Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures. |
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
With respect to the period ending June 30, 2012, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.
Based upon our evaluation regarding the period ending June 30, 2012, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.
The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
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| (b) | Changes in Internal Controls. |
There have been no changes in the Company’s internal control over financial reporting during the period ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the six month period ending June 30, 2012, the Company did not issue any unregistered shares of its common stock.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure.
None.
Item 5. Other Information.
None.
Item 6. Exhibits
| Exhibit Number and Description | Location Reference | ||||
| (a) | Financial Statements | Filed Herewith | |||
| (b) | Exhibits required by Item 601, Regulation S-K; | ||||
| (3.0) | Articles of Incorporation | ||||
| (3.1) | Amended Articles of Incorporation filed with form 10-Q. | Filed Herewith | |||
| (3.2) | Bylaws filed with S-1 Registration Statement on July 21, 2011. | See Exhibit Key | |||
| (10.0) | Material Contracts | ||||
| (10.1) | Consulting Agreement dated May 24, 2011 Filed with S-1 Registration Statement on July 21, 2011. | See Exhibit Key | |||
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Exhibit Key
| 3.1 | Incorporated by reference herein to the Company’s Form 10-Q filed with the Securities and Exchange Commission. |
| 3.2 | Incorporated by reference herein to the Company’s Form S-1 Registration Statement filed with the Securities and Exchange |
| Commission on July 21, 2011. | |
| 10.1 | Incorporated by reference herein to the Company’s Form S-1 Registration Statement filed with the Securities and Exchange Commission on July 21, 2011. |
| 10.2 | Incorporated by reference herein to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2012 |
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| 10.3 | Incorporated by reference herein to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 14, 2012 |
| 14.0 | Incorporated by reference herein to the Company’s Form S-1 Registration Statement filed with the Securities and Exchange Commission on July 21, 2011. |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NEW FOUND SHRIMP, INC. | |||
| Date: July 20, 2012 | By: /s/ David R. Cupp | ||
| David R. Cupp | |||
| Principal Executive Office, Principal Accounting Officer | |||
| Chief Financial Officer, Secretary, | |||
| Chairman of the Board of Directors |
| 18 |
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Chief Executive Officer and Chief Financial Officer
I, David R. Cupp, certify that:
1. I have reviewed this quarterly report on Form 10-Q of New Found Shrimp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 20, 2012
| NEW FOUND SHRIMP, INC. | |
| /s/: David R. Cupp | |
| DAVID R. CUPP, | |
| Chief Executive Officer | |
| Chief Financial Officer |
| 2 |
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of New Found Shrimp, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Cupp, Chief Executive Officer and Chief Financial Officer of the Company, certify, to my knowledge that:
(i) the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Act”); and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| NEW FOUND SHRIMP, INC. | |
| /s/: David R. Cupp | |
| DAVID R. CUPP, | |
| Chief Executive Officer | |
| Chief Financial Officer | |
| July 20, 2012 |