takedown10q043012.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2012
or
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-54338
TAKEDOWN ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
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Nevada
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26-2801338
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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22 Billiter Street, London, England EC3M 2RY
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(Address of principal executive offices) (Zip Code)
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310-995-1070
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(Registrant’s telephone number, including area code)
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N/A
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(Former name, former address and former fiscal year, if changed since last report)
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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. x YES o 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). x YES o NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. o YES x NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. o YES o NO
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.
82,816,641 common shares issued and outstanding as of May 25, 2012
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PART I - FINANCIAL INFORMATION
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Item 1.
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3
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Item 2.
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13
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Item 3.
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18
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Item 4.
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18
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PART II - OTHER INFORMATION
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Item 1.
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19
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Item 2.
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19
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Item 3.
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Item 4.
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Item 5.
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19
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Item 6.
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20
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21
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The interim financial statements included herein are unaudited but reflect, in management's opinion, all adjustments, consisting only of normal recurring adjustments that are necessary for a fair presentation of our financial position and the results of our operations for the interim periods presented. Because of the nature of our business, the results of operations for the quarterly period ended April 30, 2012 are not necessarily indicative of the results that may be expected for the full fiscal year.
(A Development Stage Company)
Balance Sheets
(Stated in US Dollars)
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As of
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As of
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April 30
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July 31
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2012
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2011
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(Unaudited)
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(Audited)
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Assets
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Current assets
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Total current liabilities
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Loans payable to related party
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Common Stock, $0.001 par value
375,000,000 Common Shares Authorized
82,816,641 and 110,000,000 Common Shares Issued and Outstanding as of April 30, 2012
and July 31, 2011, respectively
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Additional paid-in capital
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Stock subscription receivable
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Deficit accumulated during development stage
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Total stockholders’ deficit
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Total liabilities and stockholders’ deficit
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The accompanying condensed notes are an integral part of these financial statements
(A Development Stage Company)
Statements of Operations
(Stated in US Dollars)
(Unaudited)
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June 12, 2008
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(Date of
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Inception)
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Three Months Ended
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Nine Months Ended
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to
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April 30,
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April 30,
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April 30,
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2012
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2011
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2012
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2011
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2012
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REVENUE
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$ |
- |
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$ |
- |
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$ |
75,000 |
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$ |
- |
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$ |
150,000 |
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EXPENSES
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Business system development
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185,291 |
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81,166 |
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663,372 |
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276,166 |
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1,319,038 |
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Events
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- |
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- |
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90,983 |
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- |
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90,983 |
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Mineral claim impairment loss
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- |
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- |
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- |
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- |
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20,000 |
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Professional fees
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12,852 |
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27,383 |
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44,514 |
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41,695 |
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199,451 |
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Consulting fees
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- |
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10,000 |
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132,500 |
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55,000 |
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193,622 |
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Management fees
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22,500 |
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22,500 |
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97,375 |
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67,500 |
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208,501 |
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Office and administration
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58,457 |
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1,402 |
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78,178 |
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2,409 |
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91,849 |
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Total Expenses
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279,100 |
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142,451 |
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1,106,922 |
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442,770 |
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2,123,444 |
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Net loss from Operations before Other Expense:
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(279,100 |
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(142,451 |
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(1,031,922 |
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(442,770 |
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(1,973,444 |
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Foreign exchange gain (loss)
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(20 |
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- |
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5,763 |
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- |
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5,763 |
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Interest on debt
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(972 |
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(4,280 |
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(972 |
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(7,776 |
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(60,519 |
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Net loss before income tax
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(280,092 |
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(146,731 |
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(1,027,131 |
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(450,546 |
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(2,028,200 |
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Provision for income tax
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- |
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- |
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- |
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- |
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- |
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Net Loss
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$ |
(280,092 |
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$ |
(146,731 |
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$ |
(1,027,131 |
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$ |
(450,546 |
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$ |
(2,028,200 |
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Basic and diluted loss per share
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$ |
(0.00 |
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$ |
(0.00 |
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$ |
(0.01 |
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$ |
(0.00 |
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Weighted average number of shares outstanding
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82,816,641 |
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110,000,000 |
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85,523,630 |
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110,000,000 |
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The accompanying condensed notes are an integral part of these financial statements.
(a development stage company)
Statement of Stockholders' Equity (Deficit)
From Inception (June 12, 2008) to April 30, 2012 - unaudited
(Stated in US Dollars)
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Deficit |
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Accumulated |
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Stock |
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During |
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Total |
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Common Stock
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Paid in
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Stock
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Subscription
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Exploration
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Equity
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Shares
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Amount
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Capital
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Payable
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Receivable
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Stage
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(Deficit)
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Shares issued to founders - June 12, 2008
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Issuance of shares for debt settlement
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Issuance of shares for cash
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Net loss for the nine month period
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The accompanying condensed notes are an integral part of these financial statements
(A Development Stage Company)
Statements of Cash Flows
(Stated in US Dollars)
(unaudited)
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For the nine
months ended
April 30, 2012
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For the nine
months ended
April 30, 2011
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From inception
(June 12, 2008) to
April 30, 2012
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Operating Activities
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Adjustments to reconcile net loss to net cash used in operating activities:
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Accrued interest and fees
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Net cash used in operating activities
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Net cash used in investing activities
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Proceeds from Shareholder Loan
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Proceeds from shares issued for cash
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Loans payable to related party
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Convertible loan subscription
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Proceeds from common stock issued to founder
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Net cash provided by financing activities
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Change in cash for the period
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Cash at beginning of period
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Cancellation of common shares
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The accompanying condensed notes are an integral part of these financial statements
TAKEDOWN ENTERTAINMENT INC.
(a development stage company)
Footnotes to the Financial Statements
April 30, 2012
(unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated under the laws of the State of Nevada on June 12, 2008. On June 30, 2010 the Company changed its name to Takedown Entertainment Inc. (the ‘Company’). The Company is an integrated media and sports entertainment company that acquires, produces and distributes mixed martial arts (MMA) content and programming for North American and International markets.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company follows accounting principles generally accepted in the United States of America. In the opinion of management all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and results of operations for the periods presented, have been reflected herein.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally accepted accounting principles requires 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 the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
REVENUE RECOGNITION
For revenue under certain contracts to provide services, the Company recognizes revenue as it is defined in the contracts.
For revenue under other certain contracts, the Company uses the input-basis percentage of completion method to recognize revenue. Under this method, revenue is recognized based on the ratio of cost incurred to date to the total estimated costs at the completion of the contract.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of April 30, 2012 the Company held $40,784 cash. At the Company’s fiscal year end July 31, 2011 the Company held $111,799 cash. There were no cash equivalents at these dates.
DEVELOPMENT STAGE COMPANY
The Company is considered a development stage company as defined by Accounting Standards Codification ASC 915-205 "Development-Stage Entities". ASC 915-205 requires companies to report their operations, shareholders equity and cash flows since inception through the date that revenues and expenditures are generated from management's intended operations, among other things. The Company has generated minimal operating revenues during the periods presented.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritize the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company's financial instruments consist principally of cash and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
INCOME TAXES
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company has $2,028,200 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes. At April 30, 2012 the Company had no uncertain tax positions.
Net deferred tax assets consist of the following components as of:
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April 30,
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July 31,
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2012
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2011
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BASIC AND DILUTED NET LOSS PER COMMON SHARE
The Company computes loss per share in accordance with "ASC-260", "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations.
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As at April 30, 2012 the Company had no potentially dilutive shares (2011 – nil).
STOCK BASED COMPENSATION
The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has accumulated a loss and has a limited operating history. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
As shown in the accompanying interim financial statements, the Company has incurred a net loss of $2,028,200 for the period from June 12, 2008 (inception) to April 30, 2012 and has generated minimal revenues. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the nine months ended April 30, 2012 the Company accrued management fees payable of $67,500 to a director of the Company for services as an officer of the Company (2011 - $67,500) and paid $53,080 towards the amounts owing to that director. At April 30, 2012 that same director is owed $123,192. This debt to the director is unsecured, non interest bearing and with no fixed terms of repayment.
A shareholder advanced $170,000 to the Company as a loan with no fixed terms of repayment and non interest bearing. At April 30, 2012 the Company recorded $972 in imputed interest expense and a credit to Additional Paid in Capital.
The related party transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
NOTE 5 - COMMON STOCK
The Company issued 110,000,000 shares of common stock (founder’s shares) for $20,000 cash on June 12, 2008.
During the first quarter ended October 31, 2011:
- 30,000,000 shares of common stock were returned to the Company for cancellation;
- 1,527,753 shares of common stock were issued in settlement of debts of $1,146,950; the company converted within the term of the
note, therefore, no gain or loss was recorded on conversion.
- 333,333 shares of common stock were issued for cash of $250,000;
- 220,000 shares of common stock were issued for cash of $60,000;
During the second quarter ended January 31, 2012:
-180,000 shares of common stock were issued for cash of $45,000;
-555,555 shares of common stock were issued for cash of $100,000.
During the third quarter ended April 30, 2012:
-no shares of common stock were issued
STOCK OPTIONS
The Company has in place a stock option plan for the benefit of consultants and employees, if any.
The Company had not granted any options to acquire common shares under the plan at April 30, 2012 (2011 – nil).
NOTE 6 – STOCK PAYABLE
At July 31, 2011 the Company recorded a stock payable of $1,146,950 owing for the development of its website, internet presence and business systems. The amount was part of a convertible line of credit agreement entered into by the Company February 2, 2011 whereby the Company received funds from a lender for approved expenditures in the development of its business plan and includes interest of $59,547. At July 31, 2011 the loan had been converted to shares of common stock of the Company on the basis of the higher of $0.75 per share or fair market value. The Company evaluated the beneficial conversion feature of the line of credit for derivative treatment and it was determined that, pursuant to the conversion terms, there was no beneficial conversion feature or derivative value. During the three months ended October 31, 2011 the Company issued 1,527,753 shares of common stock in settlement of the conversion.
At July 31, 2011 an amount of $181,785 remained available to the Company for draw down and is included in the $1,146,950 line of credit converted to common shares and is recorded as Stock Subscription Receivable. The Company received $75,000 of this receivable leaving a Stock Subscription Receivable balance of $106,785 at April 30, 2012.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
The information set forth in this section contains certain "forward-looking statements," including, among other things, (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes," "anticipates," "intends," or "expects." These forward-looking statements relate to our plans, objectives and expectations for future operations. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.
Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Takedown Entertainment Inc. and our subsidiary Takedown Fight Media Inc., a Nevada corporation, unless otherwise indicated.
Corporate Overview
Our company was incorporated in the State of Nevada on June 12, 2008 as Silver Bay Resources Inc. On June 30, 2010 we changed our name to Takedown Entertainment Inc. to better reflect a change of business direction. In addition, on June 30, 2010 we forward split our issued and authorized shares on the basis of five new shares for one old share.
The Business of Takedown
Our company is an integrated media and sports entertainment company. Our principal business is to deliver the best classic and live mixed martial arts (“MMA”) fights from around the world to a global audience of fight fans. Takedown identified an opportunity to acquire media rights to fight archives and future fights, along with live event inventory, from the world’s leading MMA fight promotions, and generate revenue via advertising sales and distribution. Takedown streamlines the production, distribution, sales and marketing process for MMA fight promoters and content producers, and provides a single cost-effective source of programming for broadcasters and digital media platforms. Takedown is fast becoming an aggregator and distributor of MMA content.
Takedown 2012: More Fights, More Fans, More Revenue
Takedown has established five main objectives for 2012:
1) develop further relationships with MMA fight promoters and sign final rights agreements,
2) expand the management team with experts in production, distribution and sports entertainment,
3) secure International broadcast, pay-per-view and digital media distribution agreements,
4) launch a complete portfolio of revenue generating programming and products, and
5) market the Takedown brand to a global audience of MMA fight fans.
Since we last reported Takedown is signing final license and distribution agreements with MMA promotions in North America and around the world at an average of two per week. This steady growth is sustainable in the coming quarter and through to the end of the year. Distribution agreements for broadcast, pay-per-view and digital media are also being signed in tandem with pace of agreements from MMA promotions. This combination of activity is naturally generating the Takedown programming desired by our international agents and distributors. The effect is that Takedown is fast becoming a recognizable name as a premiere supplier of mixed martial arts content on a global scale.
While MMA is recognized as a fast growing sport, it is still very young. Takedown is well positioned to take advantage of a fragmented global market of MMA fight promotions, dominate the space through media rights consolidation, and ultimately bring fans “The Best MMA Fights from Around the World!”
On January 31, 2011, we entered into a convertible loan agreement with Triumph Capital Inc. Under the terms of the convertible loan agreement, Triumph loaned to our company $1,000,000. On July 31, 2011 the loan, in the amount of $1,037,500, was converted into 1,383,333 shares of common stock (includes accrued interest). During the three months ended October 31, 2011 the 1,383,333 shares were issued.
On July 31, 2011, Triumph provided us with a conversion notice pursuant to an outstanding shareholder loan in the amount of $87,406, which had accrued interest of $20,894 for an aggregate amount due of $108,390. The loan was converted into 144,420 shares of common stock of our company based on a conversion price of $0.75 and the shares were issued.
On August 30, 2011, we entered into a share cancellation agreement with Peter Wudy, a director and officer of our company, for the cancellation of 30,000,000 shares of our common stock held by Mr. Wudy, for no cash consideration. Mr. Wudy continues to hold a further 30,000,000 shares of our common stock.
Plan of Operations
It is anticipated that funding for our MMA projects will come from one or more of the following: engaging in an offering of our stock; engaging in borrowing; locating a joint venture partner or partners.
We had $45,570 in cash on hand as of April 30, 2012. This cash balance is insufficient to fund our levels of operations for the next twelve months. As a result we will be forced to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our business plan. We are a development stage company and have generated minimal revenue to date. Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated sufficient revenues and no revenues are anticipated until we begin meeting the objectives of our business plan. There is no assurance we will ever reach that stage.
At the beginning of 2011 our company entered into a contract with a third party to create and develop all business planning, design, marketing materials and website development required for us to execute our corporate strategy. The planning documents included a corporate business plan, two year financial projections and a communications plan and strategy, all developed in close coordination between our company and the party. The design and marketing materials include a corporate brochure, a business-to-business brochure, and related collateral materials. The website development included: three internal websites – corporate, business-to-business and consumer – plus five niche topic websites, and all of the required social media accounts.
Results of Operations
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April 30, 2012
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July 31, 2011
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Stockholders' Equity (Deficiency)
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Lack of Revenues
We have limited operational history. From our inception on June 12, 2008 to April 30, 2012 we have generated only nominal revenues.
Expenses
Our expenses for the three months ended April 30, 2012 were $279,100 compared to $142,451 during the same period in 2011. Our expenses for the nine months ended April 30, 2012 were $1,106,922 compared to $442,770 during the same period in 2011. The reason for our increase in expenses was the initiation of our business operations upon undertaking our new business focus.
Net Loss
Our net loss for the three months ended April 30, 2012 was $280,092 compared to $146,731 during the same period in 2011. Our net loss for the nine months ended April 30, 2012 was $1,027,131 compared to $450,546 during the same period in 2011. The reason for our increase in net loss was the initiation of our business operations upon undertaking our new business focus. Our net loss was less than our expenses due to a foreign exchange gain on our monetary transactions and a $75,000 accrual to income pursuant to the Allende advertising contract.
Liquidity and Capital Resources
At April 30, 2012 we had cash of $40,784 on hand (April 30, 2011 - $1,829 cash on hand). We are contemplating raising additional capital to finance our business plans. There can be no assurance that we will be able to raise the required financing. During the nine months ended April 30, 2012 we issued 1,288,888 shares of common stock for cash of $455,000.
The future of our company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions.
We estimate that our expenses over the next 12 months will be approximately $1,550,000 as described in the table below. These estimates may change significantly depending on the performance of our products in the marketplace and our ability to raise capital from shareholders or other sources.
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Description
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Estimated
Completion Date
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Estimated Expenses
($)
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Marketing and advertising
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Subcontractor and Consulting fees
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General and administrative expenses
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We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out our business plan.
Future Financings
We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $1,550,000 over the next 12 months to pay for our ongoing expenses. These expenses include legal, accounting and audit fees as well as general and administrative expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities.
There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
We presently do not have any arrangements for additional financing and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.
Off-Balance Sheet Arrangements
We have 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 stockholders.
Critical Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires 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 the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Fair Value of Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritize the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Our company's financial instruments consist principally of cash and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Basic and Diluted Net Loss Per Common Share
Our company computes loss per share in accordance with "ASC-260", "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations.
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. At April 30, 2012 our company had no potentially dilutive shares (2011 – nil).
Stock Based Compensation
Our company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires our company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. Our company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer (also our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our corporate reporting as of the end of the period covered by this quarterly report due to certain deficiencies that existed in the design or operation of our internal controls over financial reporting and that may be considered to be material weaknesses.
Changes in Internal Controls
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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- 1,527,753 shares of common stock were issued in settlement of debts of $1,146,950. All of these shares were issued to one non-US person in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.
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- August 30, 2011: 333,333 shares of common stock were issued for cash of $250,000 to be used for general working capital. All of these shares were issued to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933. September 19, 2011: 20,000 shares of common stock were issued for cash of $10,000 to be used for general working capital. These shares were issued pursuant to an exemption from registration requirements relying on Section 4(2) of the Securities Act of 1933. These shares were issued pursuant to an exemption from registration requirements relying on Section 4(2) of the Securities Act of 1933.
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- October 26, 2011: 200,000 shares of common stock were issued for cash of $50,000 to be used for general working capital. These shares were issued pursuant to an exemption from registration requirements relying on Section 4(2) of the Securities Act of 1933.
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- November 15, 2011: 180,000 shares of common stock were issued for cash of $45,000 to be used for general working capital. These shares were issued pursuant to an exemption from registration requirements relying on Section 4(2) of the Securities Act of 1933.
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- November 30, 2011: 555,555 shares of common stock were issued for cash of $100,000 to be used for general working capital. These shares were issued pursuant to an exemption from registration requirements relying on Section 4(2) of the Securities Act of 1933.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Exhibit Number
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Description
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(3)
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(i) Articles of Incorporation; (ii) By-laws
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3.1
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Articles of Incorporation (Incorporated by reference to our Registration Statement on Form S-1 filed on September 17, 2008).
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3.2
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By-laws (Incorporated by reference to our Registration Statement on Form S-1 filed on September 17, 2008).
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3.3
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Certificate of Amendment (Incorporated by reference to our Current Report on Form 8-K filed on July 1, 2010).
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(10)
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Material Contracts
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10.1
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Director Agreement dated May 1, 2011 between our company and Dr. Allan Noah Fields (Incorporated by reference to our Current Report on Form 8-K filed on May 5, 2011).
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10.2
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Consulting Agreement dated May 1, 2011 between our company and Dr. Allan Noah Fields (Incorporated by reference to our Current Report on Form 8-K filed on May 5, 2011).
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10.3
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Advertising Agreement dated May 12, 2011 between our company and Dr. Diego Allende (Incorporated by reference to our Current Report on Form 8-K filed on May 12, 2011).
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10.4
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Share Cancellation Agreement dated August 30, 2011 between our company and Peter Wudy (Incorporated by reference to our Current Report on Form 8-K filed on August 31, 2011).
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10.5
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Stock Option Plan (Incorporated by reference to our Current Report on Form 8-K filed on September 8, 2011).
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10.6
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Form of Stock Option Agreement (Incorporated by reference to our Current Report on Form 8-K filed on September 8, 2011).
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10.7
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Convertible Loan Agreement dated February 8, 2012 between our company and Triumph Capital Inc (Incorporated by reference to our Current report on Form 8-K filed on February 8, 2012).
|
|
(21)
|
Subsidiaries of the Registrant
|
|
21.1
|
Takedown Fight Media Inc., a Nevada corporation.
|
|
(31)
|
Section 1350 Certifications
|
|
31.1*
|
|
|
(32)
|
Section 906 Certifications
|
|
32.1*
|
|
| 101** |
Interactive Data Files |
| 101.INS |
XBRL Instance Document |
| 101.SCH |
XBRL Taxonomy Extension Schema Document |
| 101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB |
XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document |
|
**
|
Filed herewith.
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.
|
In accordance with the requirements 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.
| |
TAKEDOWN ENTERTAINMENT INC.
|
| |
|
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Date: May 25, 2012
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By: /s/ Peter E. Wudy
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|
| |
Peter E. Wudy, President, Chief Financial Officer and Director
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| |
(Principal Executive Officer, Principal Financial Officer
|
| |
and Principal Accounting Officer)
|