UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2008
Commission file number 333-138217
SOPAC CELLULAR SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
4438 Vesper Avenue, Suite 2
Sherman Oaks, CA 91403
(Address of principal executive offices, including zip code)
(949)355-4559
(Telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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 [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,700,000 shares as of February 29,
2008
ITEM 1. FINANCIAL STATEMENTS
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
As of As of
February 29, August 31,
2008 2007
-------- --------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 23,166 $ 28,750
-------- --------
TOTAL CURRENT ASSETS 23,166 28,750
-------- --------
TOTAL ASSETS $ 23,166 $ 28,750
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to a Director $ -- $ 200
-------- --------
TOTAL CURRENT LIABILITIES -- 200
-------- --------
TOTAL LIABILITIES -- 200
-------- --------
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares
authorized; 1,700,000 shares issued and outstanding
as of February 29, 2008 and August 31, 2007 1,700 1,700
Additional paid-in capital 38,300 38,300
Deficit accumulated during exploration stage (16,834) (11,450)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 23,166 28,550
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 23,166 $ 28,750
======== ========
See Notes to Financial Statements
2
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Statement of Operations
(unaudited)
--------------------------------------------------------------------------------
July 10, 2006
Three Months Three Months Six Months Six Months (inception)
Ended Ended Ended Ended through
February 29, February 28, February 29, February 28, February 29,
2008 2007 2008 2007 2008
---------- ---------- ---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES -- -- -- -- --
PROFESSIONAL FEES 1,000 750 3,000 4,250 8,750
GENERAL & ADMINISTRATIVE EXPENSES 1,483 603 2,384 2,265 8,084
---------- ---------- ---------- ---------- ----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 2,483 1,353 5,384 6,515 16,834
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (2,483) $ (1,353) $ (5,384) $ (6,515) $ (16,834)
========== ========== ========== ========== ==========
BASIC EARNING (LOSS) PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.01)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,700,000 1,000,000 1,700,000 1,000,000
========== ========== ========== ==========
See Notes to Financial Statements
3
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Statement of Cash Flows
(unaudited)
--------------------------------------------------------------------------------
July 10, 2006
Six Months Six Months (inception)
Ended Ended through
February 29, February 28, February 29,
2008 2007 2008
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,384) $ (6,515) $(16,834)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Due to a Director (200) 2,200 --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (5,584) (4,315) (16,834)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock -- -- 40,000
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- -- 40,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (5,584) (4,315) 23,166
CASH AT BEGINNING OF PERIOD 28,750 4,925 --
-------- -------- --------
CASH AT END OF YEAR $ 23,166 $ 610 $ 23,166
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See Notes to Financial Statements
4
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Notes to Financial Statements
February 29, 2008
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
SOPAC Cellular Solutions Inc. (the Company) was incorporated under the laws of
the State of Nevada on July 10, 2006. The Company was formed to provide wireless
solutions to corporate customers.
The Company is in the development stage. Its activities to date have been
limited to capital formation, organization, development of its business plan and
very limited operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a August 31, year-end.
B. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective July 10, 2006 (inception).
Basic net loss per share amounts is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
C. CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
D. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of 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.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.
5
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Notes to Financial Statements
February 29, 2008
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
NEW ACCOUNTING PRONOUNCEMENTS:
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that "... under some circumstances, items such as idle
facility expense, excessive spoilage, double freight, and rehandling costs may
be so abnormal as to require treatment as current period charges..." This
Statement requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
this Statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. The provisions of this Statement will be effective for the Company
beginning with its fiscal year ending November 30, 2006. Management believes
that the adoption of this Statement will not have any immediate material impact
on the Company.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
152) The amendments made by Statement 152 This Statement amends FASB Statement
No. 66, Accounting for Sales of Real Estate, to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67,
Accounting for Costs and Initial Rental Operations of Real Estate Projects, to
state that the guidance for (a) incidental operations and (b) costs incurred to
sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005, with earlier application encouraged.
The Company believes that the implementation of this standard will not have a
material impact on its financial position, results of operations or cash flows.
6
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Notes to Financial Statements
February 29, 2008
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 13 "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25 "Accounting for Stock Issued to
Employees". The provisions of this Statement will be effective for the Company
beginning with its fiscal year ending November 30, 2006. The Company believes
that the implementation of this standard will not have a material impact on its
financial position, results of operations or cash flows.
In March 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 107 (SAB 107) which provides guidance regarding the
interaction of SFAS 123 (R) and certain SEC rules and regulations. The new
guidance includes the SEC's view on the valuation of share-based payment
arrangements for public companies and may simplify some of SFAS 123 (R)`s
implementation challenges for registrants and enhance the information investors
receive.
In March 2005, the FASB issued FIN 47, Accounting for Conditional Asset
Retirement Obligations, which clarifies that the term `conditional asset
retirement obligation' as used in SFAS 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are conditional on a
future event that may or may not be within the control of the entity. FIN 47
requires an entity to recognize a liability for the fair value of a conditional
asset retirement obligation if the fair value can be reasonably estimated. FIN
47 is effective no later than the end of the fiscal year ending after December
15, 2005. The Company does not believe that FIN 47 will have a material impact
on its financial position or results from operations.
In August 2005, the FASB issued SFAS 154, Accounting Changes and Error
Corrections. This statement applies to all voluntary changes in accounting
principle and to changes required by an accounting pronouncement if the
pronouncement does not include specific transition provisions, and it changes
the requirements for accounting for and reporting them. Unless it is
impractical, the statement requires retrospective application of the changes to
prior periods' financial statements. This statement is effective for accounting
changes and correction of errors made in fiscal year beginning after December
15, 2005.
7
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Notes to Financial Statements
February 29, 2008
NOTE 3. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had limited operations during the period from July 10, 2006
(inception) to February 29, 2008 and generated a net loss of $16,834. This
condition raises substantial doubt about the Company's ability to continue as a
going concern. Because the Company is currently in the development stage and has
minimal expenses, management believes that the company's current cash of $23,166
is sufficient to cover the expenses they will incur during the next twelve
months in a limited operations scenario.
Management plans to raise additional funds through debt or equity offerings as
needed. There is no guarantee that the Company will be able to raise any capital
through any offerings.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Beginning
January 1, 2007 the Company has paid a director $100 per month for use of office
space and services. The sole officer and director of the Company is involved in
other business activities and may, in the future, become involved in other
business opportunities as they become available.
Thus he may face a conflict in selecting between the Company and his other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 6. INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use
of an asset and liability approach in accounting for income taxes.
SFAS No. 109 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. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company to
utilize the loss carry-forward.
8
SOPAC CELLULAR SOLUTIONS INC.
(A Development Stage Company)
Notes to Financial Statements
February 29, 2008
NOTE 7. NET OPERATING LOSSES
As of February 29, 2008, the Company has a net operating loss carryforwards of
approximately $16,834. Net operating loss carryforward expires twenty years from
the date the loss was incurred.
NOTE 8. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
On July 10, 2006 the Company issued a total of 1,000,000 shares of common stock
to one director for cash at $0.005 per share for a total of $5,000.
On April 10, 2007 the Company issued a total of 700,000 shares of common stock
to 26 unrelated shareholders for cash at $0.05 per share for a total of $35,000.
As of February 29, 2008 the Company had 1,700,000 shares of common stock issued
and outstanding.
NOTE 9. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of February 29, 2008:
* Common stock, $ 0.001 par value: 75,000,000 shares authorized;
1,700,000 shares issued and outstanding.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this Form 10-Q that are not historical facts
are "forward-looking statements" which can be identified by the use of
terminology such as "estimates," "projects," "plans," "believes," "expects,"
"anticipates," "intends," or the negative or other variations, or by discussions
of strategy that involve risks and uncertainties. We urge you to be cautious of
the forward-looking statements, that such statements, which are contained in
this Form 10-Q, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No assurances can be
given regarding the achievement of future results, as actual results may differ
materially as a result of the risks we face, and actual events may differ from
the assumptions underlying the statements that have been made regarding
anticipated events.
All written forward-looking statements made in connection with this Form 10-Q
that are attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by these cautionary statements. Given the
uncertainties that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
RESULTS OF OPERATIONS
We are still in our development stage and have generated no revenues to date.
We incurred operating expenses of $2,483 for the three month period ended
February 29, 2008. These expenses consisted of general operating expenses
incurred in connection with the day to day operation of our business and the
preparation and filing of our periodic reports.
10
Our net loss for the three months ended February 29, 2008 and 2007 was $2,483
and $1,353, respectively, with no revenues for either period. Our net loss from
inception through February 29, 2008 was $16,834.
Cash provided by financing activities from inception through the period ended
February 29, 2008 was $40,000 resulting from the sale of common stock to our
director, Mr. Ezra E. Ezra, who purchased 1,000,000 shares of our Common Stock
at $0.005 per share on July 10, 2006 for proceeds of $5,000 and the sale of
700,000 shares at $0.05 pursuant to our SB-2 Registration Statement filed with
the SEC under file number 333-138217, which became effective on November 17,
2006. On April 10, 2007 the offering was completed for proceeds of $35,000.
Our auditors have expressed their doubt about our ability to continue as a going
concern unless we are able to generate profitable operations.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at February 29, 2008 was $23,166, with no outstanding
liabilities. We estimate it will cost $30,000 to fully implement our business
plan. Our director has verbally agreed to loan the company funds to continue
operations in a limited scenario until sales will support operations, but he has
no legal obligation to do so. We are a development stage company and have
generated no revenue since inception to February 29, 2008.
PLAN OF OPERATION
The following criteria for the milestones are based on management's estimates
only. The projected milestones are approximations only and subject to adjustment
based on costs and needs.
11
The company has not as yet been successful in establishing partnerships with
suppliers such as Sprint/Nextel, AT&T and Verizon Wireless. We continue to
pursue at least one such relationship we feel we have the best chance of
achieving success with. We are also attempting to establish partnerships with
"Integrators", where we will refer medium and large businesses clients to them,
with the understanding that, having done so, we will have earned the privilege
of profiting by servicing the customers wireless needs. Using this approach,
once we have a wireless client in hand, we can contact any of the service
providers and present them with our customer "on a platter", as it were. We will
do business with the provider that offers us the best economic deal for the
benefit of the client as well as for our company.
Our two outside salesmen are still dedicated to commencing work once we're set
up to do so. Once operations have resumed, we will attempt to recruit two
additional salespeople before we can begin the process of calling on a select
number of software developers that provide wireless solutions to businesses and,
to arrange to have one or two of their sales/training representatives train our
people in the intricacies of each software package, its benefits to business and
in sales presentations. Training on just one application software, for each
industry, will take anywhere from a month to three months.
After these trainings and the creation of our official website, we will start
the process of prospecting for customers by establishing relations with bankers,
investment banking firms, corporate financiers, law firms, CPA firms and pension
plan managers. We will first start by recruiting each of them to become our
customers first, and then prevail upon them to introduce us to the businesses
they buy, sell or service.
We will continue to search for a Marketing and Sales Vice President and an
IT/Operations Manager. These tasks are difficult since we're a startup, don't
possess the requisite funds to afford to pay such talent (other than via a
percentage of future revenues, as will be negotiated, if and when revenues are
achieved) and since the contribution we will expect from these individuals will
be substantial. These individuals will have to:
12
1. Become intimately familiar with the rate plans the service providers
offer and be able to answer the many questions a customer or provider
will propose.
2. Study every nuance of the various cell phone devices we will sell,
know how to use them to a) work and b) accommodate software our sales
agents will be using.
3. Receive training on the many types of software solutions and
application for each and every industry vertical and create the
framework for training others.
4. Develop a dynamic website that will interface with our Master Agent's
systems and present a valuable shopping and Q &A tool for our
customers.
5. Prepare an Operational Manual and a Compliance Manual for the company.
6. Prepare a list containing the universe of corporate customer
candidates to target and sell to.
All of the above and more will be required from these individuals for our firm
to be regarded as a competitive entity in the business to business arena and
gearing them up to be seamlessly functional, will take the better part of six
months.
We will also begin the process of calling each of a very large number of
business software manufacturers that provide wireless solutions to businesses
across the board. We will attempt to arrange to have these software
manufacturers send one or two representatives of their own to provide us with a
series of training and sales meetings, over a lengthy period of time, for our
own salespeople, once we've been successful in hiring them. We will also attempt
to impose upon these representatives to aid us in making sales calls to
potential, larger business clients.
We will start the process of prospecting business customers both small and
large. Each business lead we develop will require customized solutions, it could
take between 60 days to as much as two years (depending on the size of the
13
business concern and its required solution) before a contract can be entered
into, between the customer, our firm, the service provider and the software
solutions developer.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as of the end of the period
covered by this report. Based on this evaluation, our principal executive
officer and principal financial officer concluded as of the evaluation date that
our disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms relating to our
company, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our original Form SB-2
Registration Statement, filed under SEC File Number 333-138217, at the SEC
website at www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Principal Executive Officer
31.2 Sec. 302 Certification of Principal Financial Officer
32.1 Sec. 906 Certification of Principal Executive Officer
32.2 Sec. 906 Certification of Principal Financial Officer
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 30, 2008.
Sopac Cellular Solutions, Inc.
/s/ Ezra E. Ezra
----------------------------------------------------------
By: Ezra E. Ezra
(Principal Executive Officer, Principal Financial Officer,
Principal Accounting Officer & Sole Director)
15