UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------
FORM 10Q
-----------------
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended June 30, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 333-138184
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 51-0431963
----------------------- ---------------------
(State of Incorporation) (IRS Employer ID Number)
2400 Central Avenue, Suite G, Boulder, CO 80301
-----------------------------------------------
(Address of principal executive offices)
303-684-6644
--------------------------
(Registrant's Telephone number)
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 past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, 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 [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 10, 2008, there were 3,230,000 shares of the registrant's common
stock issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Report of Independent Registered Public Accounting Firm F-1
Condensed Balance Sheets - June 30, 2008 and
December 31, 2007 F-2
Condensed Statement of Operations -
Six and Three months ended June 30, 2008 and 2007 F-3
Condensed Statement of Changes in Shareholders' Equity -
June 30, 2008 F-4
Condensed Statement of Cash Flows -
Six months ended June 30, 2008 and 2007 F-5
Notes to the Condensed Financial Statements F-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable
Item 4. Controls and Procedures 3
Item 4T. Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 4
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 4
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 4
Item 4. Submission of Matters to a Vote of Security Holders 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 5
SIGNATURES 6
PART I
ITEM 1. FINANCIAL STATEMENTS
Forward-Looking Statements
We make forward-looking statements in this report that are subject to risks and
uncertainties. These forward-looking statements include information about
possible or assumed future results of our business, financial condition,
liquidity, results of operations, plans and objectives. In some cases, you may
identify forward-looking statements by words such as "may," "should," "plan,"
"intend," "potential," "continue," "believe," "expect," "predict," "anticipate"
and "estimate," the negative of these words or other comparable words. These
statements are only predictions. You should not place undue reliance on these
forward-looking statements. The forward-looking statements are qualified by
their terms and/or important factors, many of which are outside our control,
involve a number of risks, uncertainties and other factors, that could cause
actual results and events to differ materially from the statements made. Such
factors include, among other things, those described elsewhere in this report
and the following:
Criminal procedure court rulings regarding right to privacy;
General economic and business conditions in the United States;
Defects in products could result in litigation and other significant
costs; and
Other factors detailed in our filings with the Securities and Exchange
Commission.
The forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account information
currently available to us. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, including those events
and factors detailed in our filings with the Securities and Exchange Commission,
not all of which are known to us. Neither we nor any other person assumes
responsibility for the accuracy or completeness of these statements. We will
update this report only to the extent required under applicable securities laws.
If a change occurs, our business, financial condition, liquidity and results of
operations may vary materially from those expressed in our forward-looking
statements.
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
(A Development Stage Company)
Index to Financial Statements
Page
-----------
Unaudited Condensed Balance Sheet at June 30, 2008 and....................... F-2
December 31, 2007........................................................
Unaudited Condensed Statements of Operations for the six months ended
June 30, 2008 and 2007................................................... F-3
Unaudited Condensed Statement of Changes in Shareholders' Equity for the
period from December 31, 2007 through June 30, 2008..................... F-4
Unaudited Condensed Statements of Cash Flows for the six months ended
June 30,2008 and 2007................................................... F-5
Notes to Condensed Financial Statements..................................... F-6
F-1
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Condensed Balance Sheets
June 30, December 31,
2008 2007
-------------------- -----------------
Unaudited Derived from
Audited
Statements
Assets
Current assets
Cash............................................................. $ 105,149 313,498
Accounts receivable.............................................. 4,190 9,256
Inventory - raw materials........................................ 7,169 10,057
Prepaid expenses................................................. 1,973 1,494
-------------------- -----------------
Total current assets................................... 118,481 334,305
Equipment........................................................ 26,843 28,810
Intangible assets................................................ 440 --
Deferred charges................................................. 26,043 13,604
-------------------- -----------------
Total assets........................................... $ 171,807 376,719
==================== =================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities......................... $ 6,595 578
Deferred revenue................................................. -- 448
Current portion - capital lease obligation....................... 1,992 1,992
Total current liabilities.............................. 8,587 3,018
Capital lease obligation, less current portion...................... 3,304 4,776
-------------------- -----------------
Total liabilities...................................... 11,891 7,794
-------------------- -----------------
Shareholders' equity
Common stock..................................................... 816,305 816,305
Additional paid-in capital....................................... 134,293 82,030
Deficit accumulated during development stage..................... (790,682) (529,410)
-------------------- -----------------
Total shareholders' equity............................. 159,916 368,925
-------------------- -----------------
Total liabilities and shareholders' equity............. $ 171,807 376,719
==================== =================
See accompanying notes to financial statements
F-2
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Condensed Statements of Operations
(Unaudited)
For the For the
Six Months Ended Three Months Ended
June 30, June 30,
------------------------------- -------------------------------
2008 2007 2008 2007
--------------- -------------- -------------- ---------------
Sales.....................................................$ 48,151 $ 5,049 $ 12,366 $ 3,133
Cost of sales............................................. 32,656 3,588 16,381 1,910
--------------- -------------- -------------- ---------------
Gross profit.......................................... 15,495 1,461 (4,015) 1,223
Expenses
Selling, general and administrative expenses.......... 279,748 143,186 142,936 73,218
--------------- -------------- -------------- ---------------
Loss from operations........................ (264,253) (141,725) (146,951) (71,995)
Other income and (expense)
Interest income....................................... 3,332 12,823 952 6,141
Interest expense...................................... (352) -- (168) (450)
--------------- -------------- -------------- ---------------
Loss before income taxes.................... (261,272) (128,902) 145,999) (65,854)
Income tax provision...................................... -- -- -- --
--------------- -------------- -------------- ---------------
Net loss....................................$ (261,272)$ (128,902)$ (145,999)$ (65,854)
=============== ============== ============== ===============
Basic and diluted loss per share..........................$ (0.08)$ (0.04)$ (0.05)$ (0.02)
=============== ============== ============== ===============
Basic and diluted weighted average
common shares outstanding............................. 3,230,000 3,230,000 3,230,000 3,230,000
=============== ============== ============== ===============
See accompanying notes to financial statements
F-3
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Condensed Statement of Changes in Shareholders' Equity
(Unaudited)
Deficit
Accumulated
Additional During
Common Stock Paid-in Development
----------------------------------
Shares Amount Capital Stage Total
---------------- ---------------- ---------------- ---------------- ----------------
Balance at December 31, 2007.............. 3,230,000 $ 816,305 $ 82,030 $ (529,410) $ 368,925
Stock options granted and vested...... -- -- 52,263 -- 52,263
Net loss.............................. -- -- -- (261,272) (261,272)
---------------- ---------------- ---------------- ---------------- ----------------
Balance at June 30, 2008.................. 3,230,000 $ 816,305 $ 134,293 $ (790,682) $ 159,916
================ ================ ================ ================ ================
See accompanying notes to financial statements
F-4
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Cards, Inc.)
Condensed Statements of Cash Flows
(Unaudited)
For the
Six Months Ended
June 30,
---------------------------------------
2008 2007
----------------- -------------------
Net cash flows used in
operating activities......................................$ (203,391) $ (136,076)
----------------- -------------------
Cash flows from investing activities:
Purchase of property and equipment.......................... (3,086) (519)
Purchase of intangible assets............................... (400) --
----------------- -------------------
Net cash flows used in
investing activities........................... (3,486) (519)
----------------- -------------------
Cash flows from financing activities:
Payments on long term debt.................................. (1,472) --
----------------- -------------------
Net cash flows used by
financing activities........................... (1,472) --
----------------- -------------------
Net change in cash and
cash equivalents...............................$ (208,349) $ (136,595)
Cash and cash equivalents:
Beginning of period.........................................$ 313,498 $ 634,400
----------------- -------------------
End of period...............................................$ 105,149 $ 497,806
================= ===================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes..............................................$ -- $ --
================= ===================
Interest..................................................$ -- $ --
================= ===================
Noncash investing and financing transactions:
Equipment acquired under capital lease....................$ -- $ --
================= ===================
See accompanying notes to financial statements
F-6
TOMBSTONE TECHNOLOGIES, INC.
(Formerly Tombstone Card, Inc.)
(A Development Stage Company)
Note to Condensed Financial Statements
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of the
Company, the accompanying unaudited condensed financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the financial position as of June 30, 2008, the results of operations for
the six months ended June 30, 2008 and 2007, and cash flows for the six months
ended June 30, 2008. These financial statements should be read in conjunction
with the audited financial statements and notes thereto contained in the
Company's annual report on Form 10-KSB for the year ended December 31, 2007.
There have been no updates or changes to our audited financial statements for
the year ended December 31, 2007.
There is no provision for dividends for the quarter to which this quarterly
report relates. The results of operations for the six month ended June 30, 2008
are not necessarily indicative of the results to be expected for the full year.
Reclassification
Certain 2007 amounts have been reclassified to conform with 2008 presentation.
These reclassifications have no effect on net income.
Note 2: Intangible Assets
On May 15, 2008, Tombstone Cards, Inc. (Tombstone) entered into an Intellectual
Property Transfer Agreement with InDis Baltic, a Lithuania company, to purchase
all of the rights, title and interest in and to the technology, intellectual
property and the proprietary technology contained in the computer software known
as OIEPrint. OIEPrint was developed as part of a development agreement between
Tombstone and InDis Baltic. As part of the Intellectual Property Transfer
Agreement, Tombstone agreed to pay the following:
1. $7,500 immediately upon mutual acceptance of Transfer Agreement,
2. $7,500 upon final acceptance of the Technology,
3. 140,000 shares of restricted common stock of Tombstone upon final
acceptance of the Technology,
4. $10,000 in 90 days from the final acceptance of the Technology
As of June 30, 2008, Tombstone made the fist payment of $7,500 for OIEPrint,
which is a deferred charge in the accompanying financial statements. In
addition, Tombstone has agreed to provide InDis Baltic with an exclusive license
to use the OIE technology for the consideration of $1.00. Further, InDis Baltic
has agreed to continue work as a programmer of the software over the next two
phases of development.
Note 3: Shareholders' Equity
A summary of changes in the number of stock options outstanding for the six
months ended June 30, 2008 is as follows:
Weighted Weighted
Average Average
Exercise Exercise Remaining Aggregate
Number Price Price Contractual Intrinsic
of Shares Per Share Per Share Life Value
--------------- --------------- -------------- -------------- ---------------
Outstanding at December 31, 2007............... 1,110,000 - $ - 1.83 years
Granted........................................ 325,000 $0.65 - $1.50 $ 1.02 2.35 years
Exercised...................................... - - - N/A
Cancelled/Expired.............................. (150,000) $ 0.75 $ 0.75 N/A
--------------- --------------- -------------- --------------
Outstanding at June 30, 2008................... 1,285,000 $0.65 - $1.50 $ 0.77 1.83 years $ -
=============== =============== ============== ============== ===============
Excerisable at June 30, 2008................... 1,285,000 $0.65 - $1.50 $ 0.77 1.83 years $ -
=============== =============== ============== ============== ===============
On March 15, 2008, we granted to two consultants, options to purchase 125,000
and 50,000, respectively, shares of our common stock at an exercise price of
$0.65 and $1.00 per share, in exchange for consulting services. The option to
purchase 50,000 shares of our common stock vests on March 15, 2008 and expires
on August 27, 2009, and the option to purchase 125,000 shares of common stock
vests 50 percent on March 15, 2008 and 50 percent on June 16, 2008, and expires
on March 13, 2013. Our Board of Directors valued our common stock at $0.50 per
share on the grant date. We, utilizing appropriate option pricing software,
estimated the fair value of the options at $.2981 and $.0687 per share, for an
aggregate grant-date fair value of $40,697. We recorded $37,263 and $3,435 in
share-based payment in the accompanying financial statements for the three-month
period ended March 31, 2008 and three-month ended June 30, 2008, respectively.
Using the Black-Scholes option-pricing software, we assumed the following in
estimating the fair value of the options at the grant date:
Risk-free interest rate.............. 1.37% to 2.37%
Dividend yield....................... 0.00% to 0.00%
Volatility factor.................... 50.00%
Weighted average expected life....... 1.45 years to 5 years
On April 15, 2008, we granted to one consultant, options to purchase 100,000
shares of our common stock at an exercise price of $1.25, in exchange for
consulting services. The option to purchase 100,000 shares of our common stock
vests immediately on April 15, 2008 and expires on August 28, 2009. Our Board of
Directors valued our common stock at $0.85 per share on the grant date. We,
utilizing appropriate option pricing software, estimated the fair value of the
options at $.1049 per share, for an aggregate grant-date fair value of $10,490.
We recorded $10,490 in share-based payment in the accompanying financial
statements for the six month period ended June 30, 2008.
Using the Black-Scholes option-pricing software, we assumed the following in
estimating the fair value of the options at the grant date:
Risk-free interest rate..................... 1.82% to 2.82%
Dividend yield.............................. 0.00% to 0.00%
Volatility factor........................... 50.00%
Weighted average expected life.............. 1.5 years to 5 years
On June 30, 2008, we granted to one consultant, options to purchase 50,000
shares of our common stock at an exercise price of $1.50, in exchange for
consulting services. The option to purchase 50,000 shares of our common stock
vests immediately on June 30, 2008 and expires on August 29, 2009. Our Board of
Directors valued our common stock at $0.75 per share on the grant date. We,
utilizing appropriate option pricing software, estimated the fair value of the
options at $.0215 per share, for an aggregate grant-date fair value of $1,075.
We recorded $1,075 in share-based payment in the accompanying financial
statements for the six month period ended June 30, 2008.
Using the Black-Scholes option-pricing software, we assumed the following in
estimating the fair value of the options at the grant date:
Risk-free interest rate..................... 2.36% to 3.36%
Dividend yield.............................. 0.00% to 0.00%
Volatility factor........................... 50.00%
Weighted average expected life.............. 1 year to 5 years
During the six months ended June 30, 2008, the Company and one consultant agreed
to cancel the options issued in year 2007. Since the share-based payment expense
was fully recognized in the prior year, this event does not affect the
accompanying financial statements.
Note 4: Income Taxes
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes." The Company incurred
net operating losses during the periods shown on the condensed financial
statements resulting in a deferred tax asset, which was reserved; therefore the
net benefit and expense resulted in $-0- income taxes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2007, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
PLAN OF OPERATIONS
At June 30, 2008, we had cash on hand of $105,149. We intend to use our cash
funds to continue operations. We intend to continue to develop the business
opportunities presented by our OIEPrint(TM) software and our business in the
printing of custom playing cards. The development of the business opportunities
includes continued marketing efforts and product testing over the next twelve
months.
On July 24, 2008, we held our annual shareholders' meeting. At such meeting, the
shareholders' approved the following motions:
- The amendment of the Company's Articles of Incorporation to authorize
a preferred class of stock with such designations and terms as to be
determined by the Board of Directors;
- The amendment of the Company's Articles of Incorporation to change the
Company's name from Tombstone Cards, Inc. to Tombstone Technologies,
Inc.;
- To elect three individuals to the Board of Directors, and
- The approval of the Company's auditors.
In connection with the approval of the above motions, on July 31, 2008, the
Company amended its Articles of Incorporation to authorize a class of preferred
stock and change the Company's name to Tombstone Technologies, Inc.
During the six months ended June 30, 2008, we have focused on the continued
development of our OIEPrint software and conducted the beta testing of such
software. With the completion of the testing of the software, we intend to offer
the software for sale starting September 2008. We will offer two products:
- OIEPrint - is a platform, independent browser-based R (RIA) that
supports template driven design and provides high-resolution PDF
files to the printer; and
- OIEPrint Store - An advanced e-commerce solution that supports
multiple customization options (e.g. paper color, paper weight,
paper finish, collating, binding, shipping, etc.) and dependent
variables (e.g. If you choose "A," you cannot choose "B" but can
choose "C").
Over the next twelve months we intend to develop a third software product,
OIEPrint VDP, a tool for linking database mining with custom printing and 1:1
marketing and release it for sales.
We intend to develop a full suite of online end-to-end solutions for the small
to medium sized commercial and consumer digital print industry. The online
solutions will allow the print shop's customers the ability to design any
graphic item, on-line, and have it sent directly to the digital printer for
processing. The full e-commerce capabilities will allow the print shop customer
to store and manage their graphic items, place and manage their print orders,
and track their order shipping and delivery. The suite will include the VDP
module, mentioned above, which integrates advanced database functionality
necessary for "Variable Data Print," a potential breakthrough in merging data
mining and direct mail services.
While each product will be available as a stand-alone license, we are offering a
fully hosted solution for a monthly fee. Customization and implementation fees
are also anticipated. We will offer the products through the Company, via an
outbound sales staff that utilizes Web-based demos and Web-video in order to
engage customers.
In the continuance of our business operations we do not intend to purchase or
sell any significant assets and we do not expect a significant change in the
number of employees of the Company.
RESULTS OF OPERATIONS
For the Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30,
2007
During the six months ended June 30, 2008, we recognized sales of $48,151
compared to sales of $5,049 during the six months ended June 30, 2007 from the
sale of our customized playing cards and our software products. The increase of
$43,102 was a result of increased marketing and sales activities.
During the six months ended June 30, 2008, we incurred cost of sales of $32,656
compared to cost of sales of $3,588 during the six months ended June 30, 2007.
The increase of $29,068 was a result of the increase in sales of our products.
We recognized a gross profit of $15,495 during the six months ended June 30,
2008 compared to $1,461 during the six months ended June 30, 2007.
During the six months ended June 30, 2008, we incurred operational losses of
$264,253 compared to $141,725 during the six months ended June 30, 2007. The
increase of $122,528 is a result of the $89,174 increase in general and selling
expenses combined with the $47,388 increase expenses incurred as a result of
issuing equity to pay for services. These increases are a result of increased
operational activities over the prior period combined with increase general and
administrative expenses as a result of the Company's Annual Shareholder Meeting.
During the six months ended June 30, 2008, we recognized a net loss of $261,272
compared to a net loss of $128,902 during the six months ended June 30, 2007.
The increase of $132,370 is a result of the increased operational activity
discussed above offset by the increase in sales.
For the Three Months Ended June 30, 2008 Compared to the Three Months Ended June
30, 2007
During the three months ended June 30, 2008, we recognized sales of $12,366
compared to sales of $3,133 during the three months ended June 30, 2007 from the
sale of our customized playing cards. The increase of $9,233 was a result of
increased marketing and sales activities.
During the three months ended June 30, 2008, we incurred cost of sales of
$16,381 compared to cost of sales of $1,910 during the three months ended June
30, 2007. The increase of $14,471 was a result of the increase in sales of
product. We recognized a negative gross profit of ($4,015) during the three
months ended June 30, 2008 compared to $1,223 during the three months ended June
30, 2007.
During the three months ended June 30, 2008, we incurred operational losses of
$146,951 compared to $71,995 during the three months ended June 30, 2007. The
increase of $74,956 is a result of the $54,717 increase in general and selling
expenses combined with the $15,001 increase expenses incurred as a result of
issue equity to pay for services. These increases are a result of increased
operational activities over the prior period.
During the three months ended June 30, 2008, we recognized a net loss of
$145,999 compared to a net loss of $65,854 during the three months ended June
30, 2007. The increase of $80,145 is a result of the increased operational
activity discussed above offset by the increase in sales.
LIQUIDITY AND FINANCIAL CONDITION
Net cash used in operating activities during the six months ended June 30, 2008
and June 30, 2007 were $203,391 and $136,076, respectively. Net cash used in
investing activities during the six months ended June 30, 2008 and June 30, 2007
were $3,486 and $519, respectively. During the six months ended June 30, 2008,
we invested funds of $3,086 in the purchase of property and equipment. Net cash
used in financing activities during the six months ended June 30, 2008 and June
30, 2007 were $1,472 and $0, respectively.
At June 30, 2008, we had total current assets of $118,480, consisting of cash on
hand of $105,149, $4,190 in accounts receivable, $7,169 in inventory and $1,973
in prepaid expenses. At June 30, 2008, we had total current liabilities of
$8,587, consisting of accounts payable and accrued liabilities of $6,595 and the
current portion of lease obligations of $1,992.
During the six months ended June 30, 2008, we granted to four consultants,
options to purchase 325,000 shares of our common stock at an exercise price of
$0.65 to $1.50 per share, in exchange for consulting services. Our Board of
Directors valued our common stock at $0.55 to $0.85 per share on the grant date.
We, utilizing appropriate option pricing software, estimated the fair value of
the options at shown in the below table, for an aggregate grant-date fair value
of $52,263. We recorded $52,263 in share-based payment in the accompanying
financial statements for the six-month period ended June 30, 2008.
Optionee Number of Fair value of Total Total exp recognized
-------- shares options Expenses as of June 30, 2008
--------- ------------- -------- --------------------
Consultant 125,000 $.2981 $37,263 $37,263
Consultant 50,000 $.0687 $3,435 $3,435
Consultant 100,000 $.1049 $10,490 $10,490
Consultant 50,000 $.0215 $1,075 $1,075
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), Messrs. Harris and Cox our Chief Executive
Officer and Chief Financial Officer carried out an evaluation under the
supervision and with the participation of our management, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 15d-14 as of the end of the period covered by this report.
Based on the foregoing evaluation, Messrs. Harris and Cox have concluded that
our disclosure controls and procedures are effective in timely alerting them to
material information required to be included in our periodic SEC filings and to
ensure that information required to be disclosed in our periodic SEC filings is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. 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. Our internal control over financial reporting includes
those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended June 30,
2008. We believe that internal control over financial reporting is effective. We
have not identified any, current material weaknesses considering the nature and
extent of our current operations and any risks or errors in financial reporting
under current operations.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
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 temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended June 30, 2008, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
The Company made the following unregistered sales of its securities from April
1, 2008 through June 30, 2008.
DATE OF TITLE OF NO. OF CLASS OF
SALE SECURITIES SHARES CONSIDERATION PURCHASE
---------- ------------- --------- ---------------------- ---------------------
4/15/08 Options 100,000 Consulting Services Business Associate
---------- ------------- --------- ---------------------- ---------------------
6/30/08 Options 50,000 Consulting Services Business Associate
Exemption From Registration Claimed
All of the sales by the Company of its unregistered securities were made by the
Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). All of the individuals and/or entities listed above that
purchased the unregistered securities were almost all existing shareholders, all
known to the Company and its management, through pre-existing business
relationships, as long standing business associates, and employees. All
purchasers were provided access to all material information, which they
requested, and all information necessary to verify such information and were
afforded access to management of the Company in connection with their purchases.
All purchasers of the unregistered securities acquired such securities for
investment and not with a view toward distribution, acknowledging such intent to
the Company. All certificates or agreements representing such securities that
were issued contained restrictive legends, prohibiting further transfer of the
certificates or agreements representing such securities, without such securities
either being first registered or otherwise exempt from registration in any
further resale or disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 24, 2008, the Company held its Annual Shareholders' Meeting. At the
Meeting, the following items were approved by a majority of the shareholders:
- The amendment of the Company's Articles of Incorporation to authorize
a preferred class of stock with such designations and terms as to be
determined by the Board of Directors;
- The amendment of the Company's Articles of Incorporation to change the
Company's name from Tombstone Cards, Inc. to Tombstone Technologies,
Inc.;
- To elect three individuals to the Board of Directors; and
- The approval of the Company's auditors.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 31.2 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
Exhibit 32.2 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TOMBSTONE TECHNOLOGIES, INC.
(Registrant)
Dated: August 12, 2008 By: /s/ John Harris
-------------------------
John Harris, President &
Chief Executive Officer
Dated: August 12, 2008 By: /s/ Neil Cox
-------------------------
Neil Cox, Chief Financial Officer &
Chief Accounting Officer