form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
R
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended November 30, 2009
or
£
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transition period from ______
to ________
Commission
File Number: 000-51716
SLAP,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
98-0531819
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification
No.)
|
565 Silvertip Road, Canmore,
Alberta
|
T1W 3K8
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(403)
609-0311
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
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.
|
(1)
Yes [X] No [ ]
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|
(2)
Yes [X] No [ ]
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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).
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.
Large
accelerated filer
|
[ ]
|
Accelerated
filer
|
[ ]
|
|
|
|
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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).
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a
court.
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
25,200,000
common shares outstanding as of December 22, 2009
SLAP,
INC.
TABLE
OF CONTENTS
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Page
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PART
I – FINANCIAL INFORMATION
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Item
1. Financial
Statements
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3
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|
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Item
2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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4
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|
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Item
3.
Quantitative and Qualitative Disclosures About Market
Risk
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5
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Item
4T. Controls
and Procedures
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6
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PART
II – OTHER INFORMATION
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Item
1. Legal
Proceedings
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8
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Item
1A. Risk
Factors
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8
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Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds
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8
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Item
3. Defaults
Upon Senior Securities
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9
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Item
4. Submission
of Matters to a Vote of Security Holders
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9
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Item
5. Other
Information
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9
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Item
6. Exhibits
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10
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Signatures
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11
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PART
I
ITEM
1.FINANCIAL STATEMENTS
The
accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 210 8-03 of
Regulation S-X. Accordingly, they 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 considered necessary for a fair presentation have been
included. All such adjustments are of a normal recurring
nature. Operating results for the three months ended November 30,
2009, are not necessarily indicative of the results that may be expected for the
fiscal year ending August 31, 2010. For further information refer to
the financial statements and footnotes thereto included in the Company’s Annual
Report on Form 10-K for the fiscal year ended August 31, 2009.
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Page
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Unaudited
Financial Statements
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|
|
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Unaudited
Balance Sheets
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F-1
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|
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Unaudited
Statements of Operations
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F-2
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|
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Unaudited
Statements of Cash Flows
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F-3
|
|
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Notes
to Unaudited Financial Statements
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F-4
to F-5
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|
|
SLAP,
INC.
(A
Development Stage Company)
BALANCE
SHEETS
(Stated in US
Dollars)
(Unaudited)
ASSETS
|
|
November
30,
2009
|
|
|
August
31,
2009
|
|
Current
|
|
|
|
|
|
|
Cash
|
|
$ |
61,144 |
|
|
$ |
113,334 |
|
GST
Receivable
|
|
|
4,788 |
|
|
|
2,649 |
|
Total
Current Assets
|
|
$ |
65,932 |
|
|
$ |
115,983 |
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|
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LIABILITIES
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|
|
|
|
|
|
|
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Current
|
|
|
|
|
|
|
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Accounts payable and accrued
liabilities
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|
$ |
21,337 |
|
|
|
12,838 |
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STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
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Capital
stock –
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|
|
|
|
|
|
|
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Authorized:
|
|
|
|
|
|
|
|
|
$0.001
par value, 675,000,000 common shares authorized;
|
|
|
|
|
|
|
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25,200,000
common shares issued and outstanding at November 30, 2009 and August 31,
2009
|
|
|
25,200 |
|
|
|
25,200 |
|
Additional Paid-in
Capital
|
|
|
151,600 |
|
|
|
151,600 |
|
Deficit
accumulated during the development stage
|
|
|
(132,205 |
) |
|
|
(73,655 |
) |
Total
Stockholders’ Equity
|
|
|
44,595 |
|
|
|
103,145 |
|
Total
Liabilities and Stockholders’ Equity
|
|
$ |
65,932 |
|
|
$ |
115,983 |
|
The
accompanying notes are an integral part of these financial
statements.
SLAP,
INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
For
the three months ended November 30, 2009 and 2008, and for the period
from
Inception
(March 19, 2007) to November 30, 2009
(Stated
in US Dollars)
(Unaudited)
|
|
|
|
|
From
Inception
|
|
|
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Three
months ended November 30,
|
|
|
(March
19, 2007)
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2009
|
|
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2008
|
|
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to
November 30, 2009
|
|
Expenses
|
|
|
|
|
|
|
|
|
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Organizational
costs
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,250 |
|
Dry
hole costs
|
|
|
- |
|
|
|
- |
|
|
|
24,078 |
|
Professional
fees
|
|
|
53,926 |
|
|
|
5,442 |
|
|
|
96,440 |
|
Office
and administration
|
|
|
4,624 |
|
|
|
730 |
|
|
|
10,437 |
|
|
|
|
|
|
|
|
|
|
|
|
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Net
loss for the period
|
|
|
(58,550 |
) |
|
|
(6,172 |
) |
|
$ |
(132,205 |
) |
|
|
|
|
|
|
|
|
|
|
|
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Basic
and diluted loss per share
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted
average number of
shares
outstanding
|
|
|
25,200,000 |
|
|
|
14,370,327 |
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
SLAP,
INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
For
the three months ended November 30, 2009 and 2008, and for the period
from
Inception
(March 19, 2007) to November 30, 2009
(Stated in US
Dollars)
(Unaudited)
|
|
Three
months
|
|
|
From
Inception
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|
|
|
ended
November 30,
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|
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(March
19, 2007)
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2009
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2008
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|
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to
November 30, 2009
|
|
Cash
flows used in Operating Activities
|
|
|
|
|
|
|
|
|
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Net
loss for the period
|
|
$ |
(58,550 |
) |
|
$ |
(6,172 |
) |
|
$ |
(132,205 |
) |
Adjustment
to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
GST
receivable
|
|
|
(2,139 |
) |
|
|
(210 |
) |
|
|
(4,788 |
) |
Deferred
offering costs
|
|
|
- |
|
|
|
38,200 |
|
|
|
- |
|
Accounts
payable and accrued liabilities
|
|
|
8,499 |
|
|
|
(19,304 |
) |
|
|
21,337 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net
cash provided by (used) in operating activities
|
|
|
(52,190 |
) |
|
|
12,514 |
|
|
|
(115,656 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares
|
|
|
- |
|
|
|
111,800 |
|
|
|
176,800 |
|
Net
cash provided by financing activities
|
|
|
|
|
|
|
111,800 |
|
|
|
176,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Increase
(decrease) in cash during the period
|
|
|
(52,190 |
) |
|
|
124,314 |
|
|
|
61,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
113,334 |
|
|
|
13,668 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$ |
61,144 |
|
|
$ |
137,982 |
|
|
$ |
61,144 |
|
|
|
|
|
|
|
|
|
|
|
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|
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Supplemental
disclosure of cash flow information:
|
|
|
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|
|
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|
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Cash
paid for:
|
|
|
|
|
|
|
|
|
|
|
|
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Interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Income
taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these financial
statements.
SLAP,
INC.
(A
Development Stage Company)
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
For
the three months ended November 30, 2009
Note
1- Basis of presentation
The
accompanying unaudited condensed financial statements of SLAP, Inc. (the
“Company”) have been prepared in accordance with Securities and Exchange
Commission requirements for interim financial statements. Therefore, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements. The
financial statements should be read in conjunction with the Company’s audited
financial statements for the year ended August 31, 2009.
On
November 2, 2009, the Company filed with the State of Nevada a forward split of
its authorized and issued shares of common stock on the basis of nine-for-one in
the form of a special stock distribution to stockholders of record as November
2, 2009. The effective date for the distribution to stockholders was November 9,
2009.The effect of the stock split has been recognized retroactively in the
stockholders’ deficit accounts as of March 19, 2007, and in all shares and per
share data in the financial statements.
The
interim financial statements present the balance sheet, statements of operations
and cash flows of SLAP, Inc. The financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States.
The
interim financial information is unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial position
as of November 30, 2009, and the results of operations, and cash flows presented
herein have been included in the financial statements. All such adjustments are
of a normal and recurring nature. Interim results are not necessarily
indicative of results of operations for the full year.
Note
2 – Recently Issued Accounting Pronouncements
In June
2009 the FASB established the Accounting Standards Codification ("Codification"
or "ASC") as the source of authoritative accounting principles recognized by the
FASB to be applied by non-governmental entities in the preparation of financial
statements in accordance with generally accepted accounting principles in the
United States ("GAAP"). Rules and interpretive releases of the Securities and
Exchange Commission ("SEC") issued under authority of federal securities laws
are also sources of GAAP for SEC registrants. Existing GAAP was not intended to
be changed as a result of the Codification, and accordingly the change did not
impact our financial statements. The ASC does change the way the guidance is
organized and presented.
Statement
of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855),
"Subsequent Events", SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of
Financial Assets-an Amendment of FASB Statement No. 140", SFAS No. 167 (ASC
Topic 810), "Amendments to FASB Interpretation No. 46(R)", and SFAS No. 168 (ASC
Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles-a replacement of FASB Statement No.
162" were recently issued. SFAS No. 165, 166, 167, and 168 have no current
applicability to the Company or their effect on the financial statements would
not have been significant.
Accounting
Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair
Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605),
Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 ASC Topic 985),
Certain Revenue Arrangements that include Software Elements, and various other
ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to
existing guidance or affect guidance to specialized industries or entities were
recently issued.
These
updates have no current applicability to the Company or their effect on the
financial statements would not have been significant.
SLAP,
INC.
(A
Development Stage Company)
NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS - continued
For
the three months ended November 30, 2009
The Board
of Directors determined on October 9, 2009 to forward split the authorized and
issued shares of the Company on the basis of 9 for 1, whereby the Company would
issue as a dividend a total of 8 additional shares for each share currently
held. The record date was originally set as October 22,
2009. On October 20, 2009, after a review of the requirements of
FINRA relating to forward splits, the Company amended the record date to
November 2, 2009 to comply with the FINRA requirements.
On
November 2, 2009, the Company filed a notice of change with the State of Nevada,
whereby the Company effected a forward split of both its authorized and issued
common shares, bringing the authorized shares to 675,000,000 and the issued and
outstanding common shares to 25,200,000. The distribution date for
the shares to the stockholders was November 9, 2009.
|
Note
4 – Related Party Transactions
|
During
the three month period ended November 30, 2009, two of the Company’s
shareholders invoiced a total amount of $36,358 as accounting, professional fees
and consulting fees related to our review of additional acquisitions for the
Company.
During
the period covered by this report, management of the Company was presented with
an opportunity to acquire a company that currently holds a minority interest in
a coffee processor in mainland China. The target acquisition
company’s business plan is to become a significant force in the coffee business
by way of ownership roles in all aspects of bringing coffee to
market. The Company hopes to close the acquisition on or before
January 31, 2010 and is currently finalizing acquisition documents.
SLAP,
Inc. currently operates in the oil and gas industry and expects to continue such
operations. Should the Company reach an agreement with the
acquisition target, the coffee operations would operate under a wholly-owned
subsidiary of the Company and independent from its oil and gas operations. As of
the date of this filing, the Company has not completed any agreements in
relation to this potential acquisition.
|
Note
6 – Subsequent Events
|
The
Company has evaluated subsequent events from the balance sheet date through
December 28, 2009 and determined there are no events to be
disclosed.
ITEM
2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
quarterly report contains forward-looking statements relating to future events
or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "should", "intends",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential", or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, levels of activity or performance to be materially
different from any future results, levels of activity or performance expressed
or implied by these forward-looking statements.
Such
factors include, among others, the following: international, national
and local general economic and market
conditions: demographic changes; the ability of the
Company to sustain, manage or forecast its
growth; the ability of the Company to successfully make and integrate
acquisitions; raw material costs and availability; new
product development
and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of
significant customers or
suppliers; fluctuations and difficulty in
forecasting operating results; changes in business
strategy or
development plans; business disruptions; the
ability to
attract and retain qualified personnel; the ability
to protect technology; and other factors referenced in this and previous
filings.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity or
performance. Except as required by applicable law, including the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
Given
these uncertainties, readers of this Form 10-Q and investors are cautioned not
to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
All
dollar amounts stated herein are in US dollars unless otherwise
indicated.
The
management’s discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). The following discussion of our financial condition
and results of operations should be read in conjunction with our audited
financial statements for the years ended August 31, 2009, and 2008, together
with notes thereto. As used in this quarterly report, the terms "we",
"us", "our", and the "Company" mean SLAP, Inc., unless the context clearly
requires otherwise.
General
Overview
SLAP,
Inc. (the “Company”, “we”, “our”, or “us”) was incorporated on March 19, 2007,
in the State of Nevada as an oil and gas exploration company. We
acquired a 2.5% working interest in an oil and gas drilling prospect in Alberta,
Canada..
Current
Operations
The
Company currently operates in the oil and gas industry in the West Caroline area
of Alberta, Canada, and maintains a right to a 2.5% working interest in a well
and in the mineral rights to a Crown Petroleum and Natural Gas lease governing
the well. The Company has decided not to undertake any further
activity on this well and within the lands of the lease. As a working
interest owner in the well, the Company currently is obligated to expend further
funds for additional environmental work to comply with government
regulations. The Company has determined that it will seek alternative
acquisition opportunities, either in the oil and gas industry or in alternate
opportunities which bring value to shareholders during fiscal 2010.
During
November, 2009, the Company was presented with an opportunity to acquire a
company that currently holds a minority interest in a coffee processor in
mainland China. The target acquisition company’s business plan is
to
become a
significant force in the coffee business by way of ownership roles in all
aspects of bringing coffee to market. The Company hopes to close the
acquisition on or before January 31, 2010 and is currently finalizing
acquisition documents.
SLAP,
Inc. currently operates in the oil and gas industry and expects to continue such
operations. Should the Company reach an agreement with the
acquisition target, the coffee operations would operate under a wholly-owned
subsidiary of the Company and independent from its oil and gas
operations. As of the date of this filing, the Company has not
completed any agreements in relation to this potential acquisition.
Liquidity
and Capital Resources
Liquidity
As of
November 30, 2009, we had a total of $61,144 cash on hand, as compared to
$113,334 as at August 31, 2009. Accounts payable and accrued liabilities
increased from $12,838 in August 31, 2009 to $21,337 at November 30, 2009, due
to increased operational costs for accounting, professional fees and consulting
fees related to our review of additional acquisitions for the
Company.
The
Company anticipates it may require approximately $35,000 over the next twelve
months to maintain current basic office and administration operations, assuming
that we do not acquire any further projects or expend funds on our current
leases. Additional funds for the probable abandonment, restoration
and reclamation of the West Caroline 8-18-35-11W5 well could be approximately
$1,200. The amount and timing of additional funds required cannot be
definitively stated as at the date of this report and will be dependent on a
variety of factors. The Company is currently negotiating on an
acquisition outside of the oil and gas operations of the
Company. This acquisition is not expected to require additional
capital but may generate revenue for the Company from operations. The
Company intends to pursue other acquisitions both in the oil and gas industry
and in other industries where they may be able to generate
revenues. However, should the Company find other acquisitions they
may be required to raise additional financing. At the date of this
report, the Company cannot definitively state the amount of capital which may be
required or the type of transaction which may be undertaken. The Company cannot
be certain that we will be able to raise any additional capital to fund our
ongoing operations.
Capital
Resources
The
Company could incur additional expenditures relating to the abandonment,
restoration and reclamation of the West Caroline 8-18-35-11W5
well. As of November 30, 2009 the Company had cash on hand
of $61,144 and accounts payable and accrued liabilities of
$21,337. The Company has sufficient funds on hand to maintain
its current operations.
Results
of Operations
The
Company had no revenues for the three month period ending November 30, 2009, as
was the case in the corresponding three month period ending November 30,
2008. Professional fees, which include accounting and consulting
fees, increased by $48,484 to $53,926 as compared to the previous period ending
November 30, 2008 of $5,442, as a result of increased fees related to our
potential acquisition and increased operations. General and administrative
expenses for the three month period ended November 30, 2009, totaled $4,624, as
compared to $730 for the three month period ended November 30,
2008. These amounts were generally related to routine accounting,
administrative, clerical expenses, and filing fees and the fact that operations
have increased. Basic and diluted loss per share for the three month period
ended November 30, 2009 was $nil as compared to $nil in 2008.
Off-balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
ITEM
3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4T. CONTROLS AND
PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management, under supervision and with the participation of the Chief Executive
Officer and the Chief Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures, as defined under Exchange Act Rule
13a-15(e). Based upon this evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that, as of November 30, 2009, because of
the material weakness in our internal control over financial reporting (“ICFR”)
described below, our disclosure controls and procedures were not
effective.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to our management, including our principal
executive officer and our principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined under Exchange Act Rules 13a-15(f)
and 14d-14(f). Our internal control over financial reporting is
designed 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.
All
internal control systems, no matter how well designed, have inherent limitations
and may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can only provide reasonable assurance with
respect to financial reporting reliability and financial statement preparation
and presentation. In addition, projections of any evaluation of
effectiveness to future periods are subject to risk that controls become
inadequate because of changes in conditions and that the degree of compliance
with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of November 30, 2009. In making the assessment,
management used the criteria issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on its assessment, management concluded that,
as of November 30, 2009, the Company’s internal control over financial reporting
was not effective and that material weaknesses in ICFR existed as more fully
described below.
As
defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial
Reporting that is Integrated with an Audit of Financial Statements” established
by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness
is a deficiency or combination of deficiencies that results in more than a
remote likelihood that a material misstatement of annual or interim financial
statements will not be prevented or detected. In connection with the
assessment described above, management identified the following control
deficiencies that represent material weaknesses as of November 30,
2009:
1. Lack
of an independent audit committee due to the fact that we have only one
independent director. We do not have sufficient members of the Board
who are independent directors and therefore we do not have an audit
committee. These factors may be counter to corporate governance
practices as defined by the various stock exchanges and may lead to less
supervision over management;
2. Outsourcing
of the accounting operations of our Company. Because there are no employees in
our administration, we have outsourced all of our accounting functions to an
independent firm. The employees of this firm are managed by
supervisors within the outsource firm and are not answerable to the Company’s
management. This is a material weakness because it could result in a
disjunction between the accounting policies adopted by our Board of Directors
and the accounting practices applied by the firm;
3. Insufficient
written policies and procedures for accounting and financial reporting with
respect to the requirements and application of US GAAP and SEC disclosure
requirements.
Changes
in Internal Control over Financial Reporting
As of
November 30, 2009, management assessed the effectiveness of our internal control
over financial reporting and based on that evaluation, they concluded that
during the quarter ended and to date, the internal controls and procedures were
not effective due to deficiencies that existed in the design or operation of our
internal controls over financial reporting. However, management
believes these weaknesses did not have an effect on our financial
results. During the course of their evaluation, we did not discover
any fraud involving management or any other personnel who play a significant
role in our disclosure controls and procedures or internal controls over
financial reporting.
Due to a
lack of financial and personnel resources, we are not able to, and do not intend
to, immediately take any action to remediate these material
weaknesses. We will not be able to do so until, if ever, we acquire
sufficient financing and staff to do so. We will implement further controls as
circumstances, cash flow, and working capital permit. Notwithstanding
the assessment that our ICFR was not effective and that there were material
weaknesses as identified in this report, we believe that our financial
statements contained in our Quarterly Report on Form 10-Q for the period ended
November 30, 2009, fairly present our financial position, results of operations
and cash flows for the periods covered thereby in all material
respects.
Management
believes that the material weaknesses set forth above were the result of the
scale of our operations and are intrinsic to our small
size. Management believes these weaknesses did not have an
effect on our financial results.
We are
committed to improving our financial organization. As part of
this commitment, we will, as soon as funds are available to the Company (1)
appoint outside directors to our board of directors sufficient to form an audit
committee who will undertake the oversight in the establishment and monitoring
of required internal controls and procedures; (2) create a position to segregate
duties consistent with control objectives and to increase our personnel
resources. We will continue to monitor and evaluate the effectiveness
of our internal controls and procedures and our internal controls over financial
reporting on an ongoing basis and are committed to taking further action and
implementing additional enhancements or improvements as necessary and as funds
allow.
This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to the temporary rules of
the Securities and Exchange Commission that permit the Company to provide only
management’s report in this quarterly report.
There
were no changes in our internal control over financial reporting during the
quarter ended November 30, 2009, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL
PROCEEDINGS
The
Company is not a party to any legal proceedings and is not aware of any pending
legal proceedings as of the date of this Form 10-Q.
ITEM
1A. RISK FACTORS
Not
Applicable
ITEM
2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered
Sales of Equity Securities
There
were no unregistered sales of equity securities during the three month period
ending November 30, 2009.
During
the three month period covered by this report on Form 10-Q the Company undertook
a forward split of both its issued and authorized shares and issued a stock
dividend to its shareholders of record as of November 2, 2009, whereby the
Company issued 8 additional shares for every one share currently
held. The distribution was completed on November 9,
2009.
Use
of Proceeds from First Registration Statement
On August
13, 2008 our Registration Statement on Form S-1 under Commission file number
333-151228 was declared effective, enabling us to offer up to 1,500,000 shares
of common stock of our company at a price of $0.10 per share. On November 12,
2008 we accepted subscriptions for the entire offering from 47 investors,
raising a total of $150,000. No commissions were paid on any of the
above issuance. As of the date of this filing, there are 25,200,000
issued and outstanding shares of common stock of which 2,700,000 shares are held
by our officers and directors.
Following
is the use of proceeds for actual expenses incurred for our account from August
13, 2008 to November 30, 2009 in connection with the issuance and distribution
of the securities. Proceeds used were both from existing working capital and
from the funds raised under the offering, with $26,200 being settled from
working capital on hand, and the balance from offering proceeds:
Expense
|
|
Amount
of direct or indirect payments to directors, officers, general partners,
10% shareholders or affiliates of the Issuer
$
|
|
|
Amount
of direct or indirect payments to others
$
|
|
Transfer
agent
|
|
|
0 |
|
|
|
0 |
|
Legal
and Accounting
|
|
|
0 |
|
|
|
13,200 |
|
Costs
of the offering
|
|
|
0 |
|
|
|
25,000 |
|
Office
and Administration
|
|
|
0 |
|
|
|
0 |
|
Total
|
|
|
0 |
|
|
|
38,200 |
|
Following
is a table detailing the use of net offering proceeds of $138,000 after
deduction of funds paid from offering proceeds in connection with the costs of
the offering.
Expenses
|
|
Amount of direct or indirect payments to
directors, officers, general partners, 10% shareholders or affiliates of
the Issuer
$
|
|
|
Amount
of direct or indirect payments to others
$
|
|
Exploration
and development activities
|
|
|
0 |
|
|
|
0 |
|
Legal
and Accounting
|
|
|
0 |
|
|
|
55,143 |
|
Consulting
|
|
|
0 |
|
|
|
18,046 |
|
Office
Furniture, Equipment and Supplies
|
|
|
0 |
|
|
|
0 |
|
Miscellaneous
Administration Expenses
|
|
|
0 |
|
|
|
3,667 |
|
TOTAL
|
|
|
0 |
|
|
|
76,856 |
|
The
proceeds from our offering are to be used to fund our operations as described in
the S-1 offering document incorporated for reference herein.
ITEM
3. DEFAULTS UPON SENIOR
SECURITIES
Not
Applicable
ITEM
4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. OTHER
INFORMATION
Not
Applicable
ITEM
6. EXHIBITS
Number
|
Description
|
|
3.1
|
Articles
of Incorporation.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
3.2
|
Bylaws.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
5
|
Legal
Opinion
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
10.1
|
Farm-Out
Agreement dated July 9, 2007 between Dar Energy Inc. and SLAP,
Inc.
|
Incorporated
by reference to the Exhibits attached to the Corporation’s Form S-1 filed
with the SEC on May 29, 2008
|
31.1
|
Section
302 Certification - Principal Executive Officer
|
Filed
herewith
|
31.2
|
Section
302 Certification - Principal Financial Officer
|
Filed
herewith
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
Filed
herewith
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
Filed
herewith
|
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 thereunto
duly authorized.
|
SLAP,
Inc.
|
|
|
Date:
December 30, 2009
|
/s/
David Wehrhahn
|
|
Name:
David Wehrhahn
|
|
Title:
President/CEO, Principal Executive Officer
|
|
|
Date:
December 30, 2009
|
/s/
Kelly Warrack
|
|
Name:
Kelly Warrack
|
|
Title:
CFO, Principal Financial Officer
|