UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: December 31, 2009
Commission File Number: 000-50385
Catalyst Lighting Group, Inc.
-----------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 84-1588927
------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
190 Lakeview Way
Vero Beach, FL 32963
--------------------
(Address of Principal Executive Offices and Zip Code)
(772) 231-7544
--------------
(Registrant's Telephone Number, including Area Code)
N/A
---
(Former Name or Former Address, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. 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
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | | Accelerated filer | |
Non-accelerated filer | | Smaller reporting company |X|
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |X| No | |.
As of January 7, 2010, there were 4,331,131 shares of common stock, par value
$0.0001 per share, outstanding.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements: 1
Balance Sheets as of December 31, 2009 (unaudited) and September 30, 2009 2
Statements of Operations for the Three Months Ended December 31, 2009 and 2008
(unaudited) 3
Statements of Changes in Stockholders' Equity (Deficit) for the Three Months
Ended December 31, 2009 (unaudited) and the Year Ended September 30, 2009 4
Statements of Cash Flows for the Three Months Ended December 31, 2009 and 2008
(unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
Item 4T. Controls and Procedures 22
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings 23
Item 1A. Risk Factors 23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits 24
Signatures 25
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
Statements made in this Form 10-Q (the "Quarterly Report") that are not
historical or current facts are "forward-looking statements" made pursuant to
the safe harbor provisions of Section 27A of the Securities Act of 1933, as
amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements often can be identified by the
use of terms such as "may", "will", "expect", "believe", "anticipate",
"estimate", "approximate", or "continue", or the negative thereof. Catalyst
Lighting Group, Inc. (the "Company") intends that such forward-looking
statements be subject to the safe harbors for such statements. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond the control of the Company that could
cause actual results and events to differ materially from historical results of
operations and events and those presently anticipated or projected. These
factors include adverse economic conditions, entry of new and stronger
competitors, inadequate capital and unexpected costs. The Company disclaims any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
1
Catalyst Lighting Group, Inc.
Condensed Balance Sheets
December 31 September 30,
2009 2009
(unaudited)
----------- -----------
Assets
Current assets
Cash and cash equivalents $ 9,833 $ 14,477
----------- -----------
Total current assets 9,833 14,477
----------- -----------
Total assets $ 9,833 $ 14,477
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Accrued expenses $ 12,300 $ 9,300
----------- -----------
Total current liabilities 12,300 9,300
----------- -----------
Stockholders' equity
Preferred stock, $0.0001 par value; 10,000,000 shares
authorized; no shares issued and outstanding -- --
Common stock, $0.0001 par value; 200,000,000 shares
authorized; 4,331,131 shares issued and outstanding 433 433
Additional paid-in capital 4,150,986 4,150,986
(Deficit) accumulated (4,153,886) (4,146,242)
----------- -----------
Total stockholders' equity (2,467) 5,177
----------- -----------
Total liabilities and stockholders' equity $ 9,833 $ 14,477
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
Catalyst Lighting Group, Inc.
Condensed Statements of Operations
Three Months Ended
December 31
2009 2008
(Unaudited) (Unaudited)
----------- -----------
Revenue $ -- $ --
Operating expenses
General and administrative 7,644 9,598
----------- -----------
Total operating expenses 7,644 9,598
----------- -----------
Loss from operations (7,644) (9,598)
Other income (expense)
Interest expense -- --
----------- -----------
Net (loss) $ (7,644) $ (9,598)
=========== ===========
Net (loss) per share - basic
and diluted NIL* NIL*
=========== ===========
Weighted average number of
shares of outstanding - basic
and diluted 4,331,131 4,331,131
=========== ===========
* Less than $.01 per share
The accompanying notes are an integral part of these financial statements.
3
Catalyst Lighting Group, Inc.
Condensed Statements of Changes in Stockholders' Equity (Deficit)
for the Three Months Ended December 31, 2009 (unaudited)
and the Year Ended September 30, 2009
Preferred Stock Common Stock Additional Total
------------------------- ------------------------- Paid-In Accumulated Stockholders'
Shares Amount Shares Amount Capital (Deficit) Equity (Deficit)
----------- ----------- ----------- ----------- ----------- ----------- ---------------
Balances at October 1, 2008 -- $ -- 4,331,131 $ 433 $ 4,150,986 $(4,122,374) $ 29,045
Net loss -- -- -- -- -- (23,868) (23,868)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances at September 30, 2009 -- $ -- 4,331,131 $ 433 $ 4,150,986 $(4,146,242) $ 5,177
Net loss -- -- -- -- -- (7,644) (7,644)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances at December 31, 2009 -- $ -- 4,331,131 $ 433 $ 4,150,986 $(4,153,886) $ (2,467)
*after giving retroactive effect to 1-for-10 reverse stock split and the reduction in the par value of common stock from
$.01 to $.0001 which was completed September 25, 2007.
The accompanying notes are an integral part of these financial statements.
4
Catalyst Lighting Group, Inc.
Condensed Statements of Cash Flows
Three Months Ended
December 31
2009 2008
(Unaudited) (Unaudited)
-------- --------
Cash Flows From Operating Activities
Net (loss) $ (7,644) $ (9,598)
Changes in operating assets and liabilities:
Accounts payable and accrued expenses 3,000 7,176
-------- --------
Net cash (used in) operating activities (4,644) (2,422)
-------- --------
Cash Flows From Investing Activities
Net cash provided by investing activities -- --
-------- --------
Cash Flows From Financing Activities
Net cash provided by financing activities -- --
-------- --------
Net increase (decrease) in cash (4,644) (2,422)
Cash and cash equivalents, beginning of period 14,477 35,295
-------- --------
Cash and cash equivalents, end of period $ 9,833 $ 32,873
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ -- $ --
The accompanying notes are an integral part of these financial statements.
5
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
1. Basis of Presentation and Organization
The accompanying unaudited condensed financial statements of Catalyst
Lighting Group, Inc. (the "Company") are presented in accordance with the
requirements for Form 10-Q and Regulation S-X. Accordingly, they do not
include all of the disclosures required by generally accepted accounting
principles. In the opinion of management, all adjustments (all of which
were of a normal recurring nature) considered necessary to fairly present
the financial position, results of operations, and cash flows of the
Company on a consistent basis, have been made.
These results have been determined on the basis of generally accepted
accounting principles and practices applied consistently with those used in
the preparation of the Company's financial statements. Operating results
for the three months ended December 31, 2009 are not necessarily indicative
of the results that may be expected for the year ending September 30, 2010.
The Company recommends that the accompanying condensed financial statements
for the interim period be read in conjunction with the Company's financial
statements for the year ended September 30, 2009 and 2008 included in the
Company's Annual Report on Form 10-K as filed on or about November 13,
2009.
Organization and Business
The Company was incorporated in the State of Delaware on March 7, 2001. On
August 27, 2003, the Company completed the reverse acquisition of Whitco
Company, L.P. ("Whitco"). Whitco was a wholly owned subsidiary of the
Company and was engaged in the manufacture and sale of area lighting poles
to distributors throughout the United States of America.
On March 15, 2006, Whitco voluntarily filed for protection under Chapter 11
of the U.S. bankruptcy laws. On April 25, 2006, the bankruptcy court
approved a sale of Whitco's assets (other than cash and accounts
receivable) used in its area lighting pole business. The assets were sold
free and clear of any liens and encumbrances to a third party purchaser
pursuant to Section 363 of the U.S Bankruptcy Code. The purchaser issued a
common stock purchase warrant to acquire shares of the purchaser's common
stock as consideration for the assets purchased ("Purchase Warrant").
On May 16, 2006, Whitco filed a motion to convert its bankruptcy case to a
Chapter 7 liquidation proceeding. This motion was granted by the bankruptcy
court on July 13, 2006. In connection with the liquidation, the Purchase
Warrant and Whitco's cash and accounts receivable were assigned and
distributed to Whitco's secured creditor (the "Entity"). As part of the
Chapter 7 bankruptcy proceedings, no assets were available for distribution
to unsecured creditors and, accordingly, these unsatisfied obligations were
relieved as part of the liquidation in accordance with the provisions of
Chapter 7 of U.S. bankruptcy laws.
Since Whitco's liquidation in bankruptcy, the Company has had nominal
assets and nominal business operations and its business strategy has been
to investigate and, if such investigation warrants, acquire a target
company or business seeking the perceived advantages of being a publicly
6
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
held corporation. In furtherance of this business strategy, on July 25,
2006, the Company voluntarily filed for protection under Chapter 11 of the
U.S. bankruptcy laws. The Company subsequently determined to withdraw from
bankruptcy court protection and, on motion made by the U.S. trustee, the
bankruptcy court ordered the case dismissed on January 9, 2007. Since the
dismissal of the Company's bankruptcy case, the Company has settled its
outstanding liabilities with creditors and is now in a position to actively
seek a target company. In addition, effective February 22, 2007, the
Company experienced a change in control and its management changed,
pursuant to a Securities Purchase Agreement by and between the Company and
KIG Investors I, LLC ("Investor"). See Note 3.
On June 23, 2008, the Company entered into a letter of intent with Organic
Bouquet, Inc. and Organic Style Limited., pursuant to which the Company
intends to combine with Organic either through a merger between Organic and
a wholly owned subsidiary of the Company, or an exchange of shares of stock
of Organic for shares of common stock of the Company. On August 18, 2008,
the Company terminated the letter of intent since the parties had not
executed definitive and final agreements by July 31, 2008.
The Company's principal business objective for the next 12 months and
beyond such time will be to achieve long-term growth potential through a
combination with a business rather than immediate, short-term earnings. The
Company will not restrict its potential candidate target companies to any
specific business, industry or geographical location and, thus, may acquire
any type of business.
Basis of Presentation
The accompanying financial statements include the accounts of the Company.
The operations of Whitco, prior to the disposition of Whitco's assets, are
excluded from continuing operations.
Going Concern
Since inception, the Company and its former subsidiary have a cumulative
net loss of $4,153,886. Since inception, the Company has also been
dependent upon the receipt of capital investment or other financing to fund
its operations. The Company currently has no source of operating revenue,
and has only limited working capital with which to pursue its business
plan, which contemplates the completion of a business combination with an
operating company. The amount of capital required to sustain operations
until the successful completion of a business combination is subject to
future events and uncertainties. It may be necessary for the Company to
secure additional working capital through loans or sales of common stock,
and there can be no assurance that such funding will be available in the
future. These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
The accompanying financial statements have been presented on the basis of
the continuation of the Company as a going concern and do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classifications of liabilities that might
be necessary should the Company be unable to continue as a going concern.
7
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as well as the reported amounts of revenues and expenses.
Actual results could differ from these estimates.
Income Taxes
The Company accounts for income taxes in accordance with Accounting
Standards Codification Topic 740, Income Taxes ("Topic 740"), which
requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
A valuation allowance is recognized to reduce the net deferred tax asset to
an amount that is more likely than not to be realized.
Topic 740 provides guidance on the accounting for uncertainty in income
taxes recognized in a company's financial statements. Topic 740 requires a
company to determine whether it is more likely than not that a tax position
will be sustained upon examination based upon the technical merits of the
position. If the more-likely-than-not threshold is met, a company must
measure the tax position to determine the amount to recognize in the
financial statements.
The Company performed a review of its material tax positions. At the
adoption date of October 1, 2007, the Company had no unrecognized tax
benefits as a result of tax positions taken in a prior period. During the
fiscal quarters ended December 31, 2009 and 2008, there were no increases
or decreases in unrecognized tax benefits as a result of tax positions
taken during those fiscal quarter, there were no decreases in unrecognized
tax benefits relating to settlements with taxing authorities, and there
were no reductions to unrecognized tax benefits as a result of a lapse of
the applicable statute of limitations. As of December 31, 2009, the Company
had no unrecognized tax benefits that, if recognized, would affect the
effective tax rate. As of December 31, 2009, the Company has no tax
positions for which it is reasonably possible that the total amounts of
unrecognized tax benefits will significantly increase or decrease within 12
months of the reporting date. Generally, the Company's tax years ended
September 30, 1999 and after remain subject to examination by major taxing
jurisdictions.
The Company has elected to classify any interest or penalties recognized
with respect to any unrecognized tax benefits as income taxes. During the
fiscal quarters ended December 31, 2009 and 2008, the Company did not
recognize any amounts for interest or penalties with respect to any
unrecognized tax benefits. As of December 31, 2009, no amounts for interest
or penalties with respect to any unrecognized tax benefits have been
accrued.
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid instruments
with an original maturity of three months or less at the date of purchase.
8
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
Fair Value of Financial Instruments
On July 1, 2008, the Company adopted Accounting Standards Codification
Topic 820, Fair Value Measurements and Disclosures ("Topic 820"). Topic 820
defines fair value, establishes a three-level valuation hierarchy for
disclosures of fair value measurement and enhances disclosure requirements
for fair value measures. The three levels are defined as follows:
o Level 1 inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active
markets.
o Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs
that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial
instrument.
o Level 3 inputs to valuation methodology are unobservable and
significant to the fair measurement.
The fair value of the Company's cash and cash equivalents, accrued
liabilities and accounts payable approximate carrying value because of the
short-term nature of these items.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards
Codification Section 605-10-S99, Revenue Recognition, Overall, SEC
Materials ("Section 605-10-S99"). Section 605-10-S99 requires that four
basic criteria must be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred or services
rendered; (3) the fee is fixed and determinable; and (4) collectibility is
reasonably assured. The Company had no operations and no revenue for the
fiscal quarters ended December 31, 2009 and 2008.
Net Loss Per Share
Basic loss per share (EPS) is calculated by dividing the loss available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. The Company currently has no
dilutive securities and as such, basic and diluted loss per share are the
same for all periods presented.
Comprehensive Loss
Comprehensive loss is defined as all changes in stockholders' equity,
exclusive of transactions with owners, such as capital investments.
Comprehensive loss includes net loss, changes in certain assets and
liabilities that are reported directly in equity such as translation
adjustments on investments in foreign subsidiaries and unrealized gains
(losses) on available-for-sale securities. For the quarter ended December
31, 2009, the Company's comprehensive loss was the same as its net loss.
Stock Compensation for Services Rendered
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of Accounting Standards Codification Topic
718, Compensation - Stock Compensation ("Topic 718") and Accounting
Standards Codification Section 505-50, Equity, Equity-Based Payments to
9
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
Non-employees ("Section 505-50"). All transactions in which goods or
services are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is
more reliably measurable. The measurement date of the fair value of the
equity instrument issued is the earlier of the date on which the
counterparty's performance is complete or the date on which it is probable
that performance will occur.
Recently Issued Accounting Pronouncements
In March 2008, the FASB issued amendments to Accounting Standards
Codification Sections 815-10-15 and 815-10-65, Derivatives and Hedging,
Overall. These amendments expand the disclosure requirements by requiring
qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of, and
gains and losses on, derivative instruments, and disclosures about credit
risk-related contingent features in derivative agreements. These amendments
are effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.
In April 2008, the FASB issued amendments to Accounting Standards
Codification Section 350-10 through 30, Intangibles - Goodwill and Others.
These amendments modify the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset. These amendments are effective for the
Company's fiscal year beginning October 1, 2009, with early adoption
prohibited.
In May 2008, the FASB issued amendments to Accounting Standards
Codification Section 470-20, Debt, Debt with Conversion and Other Options
which clarifies the treatment of convertible debt instruments that may be
settled in cash upon conversion (including partial cash settlement). These
amendments also specify that issuers of such instruments should separately
account for the liability and equity components in a manner that will
reflect the entity's nonconvertible debt borrowing rate when interest cost
is recognized in subsequent periods. These amendments are effective for the
Company's fiscal year beginning October 1, 2009.
In June 2008, the FASB amended Accounting Standards Codification Section
260-10, Earnings per Share, Overall. These amendments address whether
instruments granted in share-based payment transactions are participating
securities prior to vesting and, therefore, need to be included in
computing earnings per share under the two-class method. These amendments
require companies to treat unvested share-based payment awards that have
non-forfeitable rights to dividend or dividend equivalents as a separate
class of securities in calculating earnings per share. These amendments
will be effective for the Company's fiscal year beginning October 1, 2009,
with early adoption prohibited.
In May 2009, the FASB amended Accounting Standards Codification Section
855-10, Subsequent Events, Overall. These amendments establish the general
standards of accounting for, and disclosure of, events that occur after the
balance sheet date, but before financial statements are issued or available
to be issued. These amendments are effective for interim and fiscal periods
ending after June 15, 2009. The Company has evaluated subsequent events for
the period from December 31, 2009, the date of these financial statements,
through January 13, 2010, which represents the date the Company intends to
file these financial statements with the Securities and Exchange
10
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
Commission. Pursuant to the requirements of Accounting Standards
Codification Section 855-10, there were no events or transactions occurring
during this subsequent event reporting period that require recognition or
disclosure in these financial statements. With respect to this disclosure,
the Company has not evaluated subsequent events occurring after January 13,
2010.
In June 2009, the FASB issued Accounting Standards Update No. 2009-01,
Generally Accepted Accounting Principles--amendments based on--Statement of
Financial Accounting Standards No. 168--The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles,
amending Accounting Standards Codification Section 105, Generally Accepted
Accounting Principles ("Update No. 2009-01") which identifies the sources
of accounting principles and the framework for selecting the principles
used in the preparation of financial statements. Update No. 2009-01 is
effective for interim and fiscal periods ending after September 15, 2009.
In August 2009, the FASB issued Accounting Standards Update No. 2009-04,
Accounting for Redeemable Equity Instruments--Amendment to Section
480-10-S99 (SEC Update), amending Accounting Standards Codification Section
480-10-S99, Distinguishing Liabilities from Equity, Overall ("Update No.
2009-04"), which requires certain securities that are redeemable for cash
or other assets to be classified outside of permanent equity if they are
redeemable (1) at a fixed or determinable price on a fixed or determinable
date, (2) at the option of the holder, or (3) upon the occurrence of an
event that is not solely within the control of the issuer. Update No.
2009-04 is effective for interim and fiscal periods ending after August 26,
2009.
In August 2009, the FASB issued Accounting Standards Update No. 2009-05,
Fair Value Measurements and Disclosures (Topic 820)--Measuring Liabilities
at Fair Value, amending Accounting Standards Codification Section 820-10,
Fair Value Measurements and Disclosures, Overall ("Update No. 2009-05"),
which provides clarification of the fair value measurement of liabilities
in circumstances in which a quoted price in an active market for the
identical liability is not available. Update No. 2009-05 is effective for
interim and fiscal periods ending after August 26, 2009.
In September 2009, the FASB issued Accounting Standards Update No. 2009-06,
Income Taxes (Topic 740)--Implementation Guidance on Accounting for
Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic
Entities, amending Accounting Standards Codification Section 740, Income
Taxes ("Update No. 2009-06"), which provides implementation guidance on
accounting for uncertainty in income taxes. The implementation guidance
applies to all non-government entities, and the disclosure amendments apply
only to non-public entities. Update No. 2009-06 is generally effective for
interim and fiscal periods ending after September 15, 2009.
In January 2010, the FASB issued Accounting Standards Update No. 2010-01,
Equity (Topic 505)--Accounting for Distributions to Shareholders with
Components of Stock and Cash, a consensus of the FASB Emerging Issues Task
Force ("Update No. 2010-01"). The amendments in this Update clarify that
the stock portion of a distribution to shareholders that allows them to
elect to receive cash or stock with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the aggregate
is considered a share issuance that is reflected in earnings per share
11
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
prospectively and is not a stock dividend for purposes of applying Topics
505 and 260 (Equity and Earnings per Share). Update No. 2010-01 is
generally effective for interim and fiscal periods ending on or after
December 15, 2009, and should be applied on a retrospective basis.
The adoption of these new Standards, when effective, did not have, and is
not expected to have, a material effect on the Company's financial
position, results of operations, or cash flows.
3. Change of Control Transactions; Creditor Settlements
On August 22, 2007, the Company entered into a stock purchase agreement
with the Investor pursuant to which the Investor purchased 1,572,770 shares
of convertible preferred stock for a purchase price of $157,277, or $0.10
per share ("Preferred Stock Purchase").
On August 23, 2007, in accordance with the terms of the stock purchase
agreement, the existing officers and two of the Company's directors
resigned, and Kevin R. Keating, the sole remaining director, was appointed
Chief Executive Officer, Chief Financial Officer, President, Secretary and
Treasurer.
Kevin R. Keating is the father of Timothy J. Keating, the principal member
of Keating Investments, LLC. Prior to the liquidation and dissolution of
the Investor, Keating Investments, LLC was the managing member of the
Investor, and Timothy J. Keating was the manager of the Investor.
The Preferred Stock Purchase was completed on September 12, 2007. The
preferred shares were automatically convertible into the Company's common
stock at such time as the Company completed a 1-for-10 reverse stock split
("Reverse Split"). The Reverse Split was completed on September 25, 2007,
and the Investor was issued 2,562,015 shares of common stock, on a
post-split basis, upon cancellation of the preferred stock. The proceeds of
the Preferred Stock Purchase were used to pay outstanding liabilities of
the Company.
In connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company entered into agreements with a number of creditors
for a cash settlement of amounts owed to them by the Company. Pursuant to
these cash settlements, the Company paid an aggregate of $30,277 in
complete satisfaction of $191,092 in accrued liabilities, resulting in
income from the discharge of indebtedness of $160,815 in the fourth quarter
of the year ending September 30, 2007.
In connection with and as a condition of the closing of the Preferred Stock
Purchase, the Company also entered into agreements with a number of
creditors for the issuance of common stock in complete settlement of
amounts owed to them for services rendered. Pursuant to these equity
settlements, the Company issued an aggregate of 71,086 shares of common
stock, on a post-split basis, valued at $7,109 or approximately $0.10 per
share, in satisfaction of accrued liabilities totaling $73,260, resulting
in income from discharge of indebtedness of $66,151 being recorded in the
fourth quarter of the year ending September 30, 2007.
In connection with and as a condition of the closing of the Preferred
Stock Purchase, the Company also entered into an agreement with the
Entity for the issuance of common stock in complete settlement of amounts
owed to it for certain loans and accrued interest. Pursuant to this
equity settlement, the Company issued 1,083,172 shares of common stock,
on a post-split basis, valued at $108,317 or approximately $0.10 per
share, in satisfaction of principal under notes of $820,024 and accrued
12
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
interest of $121,095, resulting in income from discharge of indebtedness of
$832,802 being recorded in the fourth quarter of the year ending September
30, 2007.
In consideration of the above equity settlements, each creditor was granted
piggy back registration rights for the shares of common stock received in
the settlement.
Further, as part of the cash and equity settlements, any creditor holding
warrants to purchase shares of the Company's common stock agreed to the
cancellation of such warrants. Accordingly, warrants to purchase 82,367
shares of common stock, on a post-split basis, were cancelled.
4. Stockholders' Equity
Common Stock
Pursuant to certain settlement agreements, on September 14, 2007, the
Company issued an aggregate of 71,086 shares of common stock, on a
post-split basis, valued at $7,109 or approximately $0.10 per share, in
satisfaction of accrued liabilities owed to certain service providers
totaling $73,260, resulting in income from discharge of indebtedness of
$66,151 being recorded.
Pursuant to a settlement agreement with the Entity, on September 14, 2007,
the Company issued 1,083,172 shares of common stock, on a post-split basis,
valued at $108,317 or approximately $0.10 per share, in satisfaction of
principal under notes of $820,024 and accrued interest of $121,095,
resulting in income from discharge of indebtedness of $832,802 being
recorded.
On September 14, 2007, the Company issued 86,654 shares of its common
stock, on a post-split basis, to Kevin R. Keating, the sole officer and
director of the Company, for services rendered to the Company valued at
$8,665, or $0.10 per share.
On September 14, 2007, the Company issued 86,654 shares of its common
stock, on a post-split basis, to Garisch Financial, Inc. for consulting
services rendered to the Company valued at $8,665, or $0.10 per share.
On September 14, 2007, the Company issued 20,000 shares of its common
stock, on a post-split basis, to a former officer and director of the
Company, for consulting services rendered to the Company valued at $2,000,
or $0.10 per share.
On September 25, 2007, following the completion of the Reverse Split, the
Company automatically converted its outstanding Preferred Stock and issued
the Investor 2,562,015 shares of common stock, on a post-split basis. On
January 9, 2009, the shares of the Company's common stock held by the
Investor were distributed to the Investor's members (including Keating
Investments, LLC) pro rata based on their respective ownership interests in
the Investor and as a part of the liquidation and dissolution of the
Investor.
All of the foregoing shares of common stock issued by the Company were
issued under an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended ("Securities Act"). As such, the shares
of common stock so issued are restricted shares, and the holder thereof may
not sell, transfer or otherwise dispose of such shares without registration
under the Securities Act or an exemption therefrom. The Company has granted
13
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
piggyback registration rights to each of the recipients of the foregoing
stock issuances with respect to the above shares. In addition, demand
registration rights have been granted to the Investor and its transferees
and the Entity.
Preferred Stock
On August 27, 2007, the Company's Board of Directors designated 1,600,000
shares of preferred stock as Series A Convertible Preferred Stock
("Preferred Stock"). Each share of Preferred Stock was automatically
convertible into 16.28982 shares of fully paid and non-assessable common
stock upon the Company's completion of a reverse stock split. The holders
of Preferred Stock were entitled to vote the number of shares of common
stock they were entitled to upon conversion on all matters presented to a
vote of the common stockholders.
On August 22, 2007, the Company entered into a stock purchase agreement
with the Investor pursuant to which the Investor purchased 1,572,770 shares
of Preferred Stock for a purchase price of $157,277 ("Preferred Stock
Purchase"). The Preferred Stock Purchase was completed on September 12,
2007. The shares of Preferred Stock were automatically convertible into the
Company's common stock at such time as the Company completed a 1-for-10
reverse stock split ("Reverse Split"). The Reverse Split was completed on
September 25, 2007, and the Investor was issued 2,562,015 shares of common
stock, on a post-split basis, upon cancellation of the Preferred Stock.
Reverse Stock Split
On September 25, 2007, the Company completed a 1-for-10 reverse stock split
of its outstanding common stock. The Reverse Split provided for the round
up of fractional shares and the special treatment of certain shareholders
as follows:
a. shareholders holding less than 100 shares of common stock as
of the record date will not be affected by the Reverse Split and will
hold the same number of shares both before and after the Reverse
Split;
b. shareholders holding 1,000 or fewer shares of common stock,
but at least 100 shares of common stock as of the record date will
hold 100 shares of common stock following the Reverse Split; and
c. all fractional shares as a result of the Reverse Split will be
rounded up.
In connection with the Reverse Split, effective September 25, 2007, the
Company also amended its certificate of incorporation to reduce the par
value of its common stock and preferred stock from $0.01 to $0.0001 per
share and to increase the number of authorized shares of common stock from
40,000,000 to 200,000,000 shares.
As of December 31, 2009, after giving effect to the Reverse Split, there
were 4,331,131 shares of common stock, par value $0.0001 per share, issued
and outstanding. Except as otherwise noted, all references to shares of the
Company's common stock shall refer to the shares of common stock after
giving effect to the Reverse Split and the reduction of the par value per
share.
14
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
Option Plans
As of October 1, 2005, there were issued and outstanding options to
purchase 9,828 shares of the Company's common stock, on a post-split basis,
and there were 140,172 options available for issuance under the 2003 Stock
Option Plan. During the fiscal year ended September 30, 2006, the options
to purchase 9,828 shares of common stock under the 2003 Stock Option Plan
were cancelled. On September 13, 2007, following the closing of the
Preferred Stock Purchase, the 2003 Stock Option Plan was terminated by the
Company's Board of Directors.
Stock Purchase Warrants
As of October 1, 2005, there were issued and outstanding warrants to
purchase 86,410 shares of the Company's common stock, on a post-split
basis. During the fiscal year ended September 30, 2007, the Company entered
into settlement agreements with certain creditors who held warrants to
purchase 82,366 shares of common stock. As part of these settlement
agreements, these warrants were cancelled.
On March 26, 2008, warrants to purchase 710 shares, on a post split basis,
of the Company's common stock at an exercise price of $31.25 expired
without being exercised.
On December 10, 2009, warrants to purchase 3,334 shares, on a post split
basis, of the Company's common stock at an exercise price of $30.00 expired
without being exercised.
5. Related Party Transactions
On September 14, 2007, the Company issued 86,654 shares of its common
stock, on a post-split basis, to Kevin R. Keating, the sole officer and
director of the Company, for services rendered to the Company valued at
$8,665, or $0.10 per share.
On September 14, 2007, the Company issued 20,000 shares of its common
stock, on a post-split basis, to a former officer and director of the
Company, for consulting services rendered to the Company valued at $2,000,
or $0.10 per share.
On August 22, 2007, the Company entered into a revolving loan agreement
with Keating Investments, LLC ("Lender"). Pursuant to this agreement, the
Lender agreed to make advances to the Company from time to time at the
request of the Company. The advances outstanding were not to exceed
$30,000. The Company was required to repay the outstanding advances in full
on or before October 22, 2007. The advances bear interest commencing
September 22, 2007 at a rate of 6% per annum. The Lender made advances of
$25,000 and $5,000 on August 27, 2007 and September 5, 2007, respectively.
The advances were used for working capital purposes and to pay certain
accrued liabilities and service providers. On September 19, 2007, these
advances were repaid in full from the proceeds of the Preferred Stock
Purchase. Keating Investments, LLC was formerly the managing member of the
Investor.
Management Agreement
On October 1, 2007, the Company and Vero entered into an agreement
whereby Vero will provide to the Company a broad range of managerial and
administrative services for a fixed fee of $1,000 per month, for an
initial period of twelve months. At the end of the initial twelve month
term, the agreement will continue to remain in effect until terminated in
writing by either party. For the quarters ended December 31, 2009 and
15
Catalyst Lighting Group, Inc.
Notes to Condensed Financial Statements
December 31, 2009
2008, the Company recorded $3,000 and $3,000, respectively, of managerial
and administrative expenses associated with this agreement which are
included as a component of general and administrative expenses in the
accompanying condensed statements of operations. As of December 31, 2009
and 2008, the Company had accrued and unpaid management fees owed to Vero
of $12,000 and $9,000, respectively.
16
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward-Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) in regard to the plans and objectives of
management for future operations. Such statements involve known and unknown
risks, uncertainties and other factors that may cause actual results,
performance or achievements of Catalyst Lighting Group, Inc. ("we", "us", "our"
or the "Company") to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. The Company's plans
and objectives are based, in part, on assumptions involving the continued
expansion of business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance the forward-looking
statements included in this Quarterly Report will prove to be accurate. In light
of the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
Reorganization and Change of Control
The Company completed its reorganization in September 2007
("Reorganization") and settled all of its outstanding liabilities with creditors
outside the jurisdiction of the bankruptcy courts. As part of the
Reorganization, on August 22, 2007, the Company entered into a stock purchase
agreement with KIG Investors I, LLC ("KIG Investors") pursuant to which KIG
Investors purchased 1,572,770 shares of convertible preferred stock for a
purchase price of $157,277, or $0.10 per share ("Preferred Stock Purchase"). On
August 23, 2007, in accordance with the terms of the stock purchase agreement,
the existing officers and two of the Company's directors resigned, and Kevin R.
Keating, the sole remaining director, was appointed Chief Executive Officer,
Chief Financial Officer, President, Secretary and Treasurer of the Company.
Kevin R. Keating is the father of Timothy J. Keating, the principal member of
Keating Investments, LLC. Prior to the liquidation and dissolution of KIG
Investors, Keating Investments, LLC was the managing member of KIG Investors,
and Timothy J. Keating was the manager of KIG Investors.
The Preferred Stock Purchase was completed on September 12, 2007. The
preferred shares were automatically convertible into the Company's common stock
at such time as the Company completed a 1-for-10 reverse stock split ("Reverse
Split"). The Reverse Split was completed on September 25, 2007, and KIG
Investors was issued 2,562,015 shares of common stock, on a post-reverse split
basis, upon cancellation of the preferred stock. The proceeds of the Preferred
Stock Purchase were used to pay outstanding liabilities of the Company.
On January 9, 2009, the shares of the Company's common stock held by KIG
Investors were distributed to KIG Investors' members (including Keating
Investments, LLC) pro rata based on their respective ownership interests in KIG
Investors and as a part of the liquidation and dissolution of KIG Investors.
As part of the Reorganization, the Company entered into agreements with a
number of creditors for a cash settlement of amounts owed to them by the
Company. Pursuant to these cash settlements, the Company paid an aggregate of
$30,277 in complete satisfaction of $191,092 in accrued liabilities, resulting
in income from the discharge of indebtedness of $160,815 being recorded in the
quarter ended September 30, 2007.
17
As part of the Reorganization, the Company also entered into settlement
agreements with certain service providers for the issuance of common stock in
complete settlement of amounts owed to them for services rendered. Pursuant to
these settlement agreements, the Company issued an aggregate of 71,086 shares of
common stock, on a post-reverse split basis, valued at $7,109 or approximately
$0.10 per share, in satisfaction of accrued liabilities totaling $73,260,
resulting in income from discharge of indebtedness of $66,151 being recorded in
the quarter ended September 30, 2007.
As part of the Reorganization, the Company also entered into a settlement
agreement with Laurus Master Fund, Ltd. ("Laurus"), the Company's secured
creditor, for the issuance of common stock in complete settlement of amounts
owed to it for certain loans and accrued interest. Pursuant to this settlement
agreement, the Company issued 1,083,172 shares of common stock, on a post-split
basis, to Laurus valued at $108,317 or approximately $0.10 per share, in
satisfaction of principal under notes of $820,024 and accrued interest of
$121,095, resulting in income from discharge of indebtedness of $832,802 being
recorded in the quarter ended September 30, 2007.
Current Business of Issuer
Since completion of its Reorganization, the Company's business strategy has
been to investigate and, if such investigation warrants, acquire a target
operating company or business seeking the perceived advantages of being a
publicly held corporation. The Company's principal business objective for the
next 12 months and beyond such time will be to achieve long-term growth
potential through a combination with an operating business rather than
immediate, short-term earnings. The Company will not restrict its potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.
Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the
"Securities Act"), the Company qualifies as a "shell company," because it has no
or nominal assets (other than cash) and no or nominal operations. Management
does not intend to undertake any efforts to cause a market to develop in our
securities, either debt or equity, until we have successfully concluded a
business combination. The Company intends to comply with the periodic reporting
requirements of the Exchange Act for so long as it is subject to those
requirements.
The analysis of new business opportunities will be undertaken by or under
the supervision of Kevin R. Keating, the sole officer and director of the
Company. As of this date, the Company has not entered into any definitive
agreement with any party, nor have there been any specific discussions with any
potential business combination candidate regarding business opportunities for
the Company. The Company has unrestricted flexibility in seeking, analyzing and
participating in potential business opportunities. In its efforts to analyze
potential acquisition targets, the Company will consider the following kinds of
factors:
(i) Potential for growth, indicated by new technology, anticipated market
expansion or new products;
(ii) Competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry
as a whole;
(iii) Strength and diversity of management, either in place or scheduled
for recruitment;
18
(iv) Capital requirements and anticipated availability of required funds,
to be provided by the Company or from operations, through the sale of
additional securities, through joint ventures or similar arrangements
or from other sources;
(v) The cost of participation by the Company as compared to the perceived
tangible and intangible values and potentials;
(vi) The extent to which the business opportunity can be advanced;
(vii) The accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items;
and
(viii) Other relevant factors.
In applying the foregoing criteria, no one of which will be controlling,
management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Due to the Company's limited capital available
for investigation, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
On June 23, 2008, the Company entered into a letter of intent (the "Letter
of Intent") to acquire Organic Bouquet, Inc. ("Organic Bouquet"), a California
corporation, and Organic Style Limited ("Organic Style"), a private limited
company organized under the laws of England and Wales (collectively, Organic
Bouquet and Organic Style are referred to as "Organic"). On August 18, 2008, the
Company terminated the Letter of Intent since the parties had not executed
definitive and final agreements by July 31, 2008.
The Company's principal place of business is located at 190 Lakeview Way,
Vero Beach, FL 32963. Our telephone number is (772) 231-7544.
Plan of Operations
The Company's current business strategy and plan of operation has been to
investigate and, if such investigation warrants, acquire a target operating
company or business seeking the perceived advantages of being a publicly held
corporation. The Company does not currently engage in any business activities
that provide cash flow. The costs of investigating and analyzing business
combinations for the next 12 months and beyond such time will be paid with money
in the Company's treasury or with additional amounts, as necessary, to be loaned
to or invested in the Company by its stockholders, management or other
investors.
During the next 12 months the Company anticipates incurring costs related
to the filing of Exchange Act reports, and consummating a business combination.
The Company believes it will be able to meet these costs through use of funds in
its treasury and additional amounts to be loaned by or invested in the Company
by its stockholders, management or other investors. Currently, however, the
Company's ability to continue as a going concern is dependent upon its ability
to generate future profitable operations and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. The Company's ability to continue as a
going concern is also dependent on its ability to find a suitable target
operating company and enter into a possible business combination with such
operating company. Management's plan includes obtaining additional funds by
equity financing prior to or in connection with a business combination and/or
related party advances; however, there is no assurance of additional funding
being available.
19
The Company may consider an operating business which has recently commenced
operations, is a developing company in need of additional funds for expansion
into new products or markets, is seeking to develop a new product or service, or
is an established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Any target business that is selected may be a financially unstable company
or an entity in its early stages of development or growth, including entities
without established records of sales or earnings. In that event, the Company
will be subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies. In
addition, the Company may effect a business combination with an entity in an
industry characterized by a high level of risk, and, although the Company's
management will endeavor to evaluate the risks inherent in a particular target
business, there can be no assurance that the Company will properly ascertain or
assess all significant risks.
The Company's management anticipates that it will likely be able to effect
only one business combination, due primarily to its limited financing and the
dilution of interest for present and prospective stockholders, which is likely
to occur as a result of the Company's plan to offer a controlling interest to a
target business in order to achieve a tax-free reorganization. This lack of
diversification should be considered a substantial risk in investing in the
Company, because it will not permit us to offset potential losses from one
venture against gains from another.
The Company anticipates that the selection of a business combination will
be complex and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, the Company's management believes that there are numerous firms seeking
even the limited additional capital which we will have and/or the perceived
benefits of becoming a publicly traded corporation. Such perceived benefits of
becoming a publicly traded corporation include, among other things, facilitating
or improving the terms on which additional equity financing may be obtained,
providing liquidity for the principals of and investors in a business, creating
a means for providing incentive stock options or similar benefits to key
employees, and offering greater flexibility in structuring acquisitions, joint
ventures and the like through the issuance of stock. Potentially available
business combinations may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
We may retain any entity to act as a "finder" or a consultant to identify
and/or analyze the merits of potential target businesses.
Results of Operation
For the three months ended December 31, 2008 and 2009, the Company had no
revenues from continuing operations. It is unlikely the Company will have any
revenues unless it is able to effect an acquisition or merger with an operating
company, of which there can be no assurance. It is management's assertion that
these circumstances may hinder the Company's ability to continue as a going
concern.
For the three months ended December 31, 2009, the Company had a net loss of
$7,644, as compared with a net loss of $9,598 for the corresponding period in
2008. For the three months ending December 31, 2009, the Company incurred $7,644
20
of operating expenses, comprised of (a) accounting and audit fees of $2,950, (b)
management fees of $3,000 incurred in relation to a broad range of managerial
and administrative services provided by Vero Management, LLC ("Vero"), (c)
transfer agent fees of $1,181, and (d) Edgar filing fees of $513. For the three
months ending December 31, 2008, the Company incurred $9,598 of operating
expenses, comprised of (a) accounting and audit fees of $4,500, (b) management
fees of $3,000 incurred in relation to a broad range of managerial and
administrative services provided by Vero, (c) transfer agent fees of $1,222, and
(d) Edgar filing fees of $876.
Liquidity and Capital Resources
As of December 31, 2009, the Company had assets equal to $9,833, comprising
exclusively of cash. The Company's current liabilities as of December 31, 2009
included $12,300 of accrued expenses, consisting of $12,000 in management fees
owed to Vero and $300 for fees owed to other service providers.
The following is a summary of the Company's cash flows provided by (used
in) operating, investing, and financing activities for the three months ended
December 31, 2009 and 2008:
Three months ended December 31,
2009 2008
------- -------
Operating activities $(4,644) $(2,422)
Investing activities -- --
Financing activities -- --
------- -------
Net effect on cash $(4,644) $(2,422)
======= =======
The Company currently has nominal assets, no active business operations and
no sources of revenues. The Company is dependent upon the receipt of capital
investment or other financing to fund its ongoing operations and to execute its
business plan of seeking a combination with a private operating company. In
addition, the Company is dependent upon certain related parties to provide
continued funding and capital resources. If continued funding and capital
resources are unavailable at reasonable terms, the Company may not be able to
implement its plan of operations. Our financial statements indicate that without
additional capital, there is substantial doubt as to our ability to continue as
a going concern.
Going Concern
We currently have no source of operating revenue, and have only limited
working capital with which to pursue our business plan, which contemplates the
completion of a business combination with an operating company. The amount of
capital required to sustain operations until the successful completion of a
business combination is subject to future events and uncertainties. It may be
necessary for us to secure additional working capital through loans or sales of
common stock, and there can be no assurance that such funding will be available
in the future. These conditions raise substantial doubt about our ability to
continue as a going concern. Our auditor has issued a "going concern"
qualification as part of his opinion in the Audit Report for the year ended
September 30, 2009, and our unaudited financial statements for the quarter ended
December 31, 2009 include a "going concern" footnote.
Critical Accounting Policies
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires estimates and assumptions that affect the reported amounts of assets
21
and liabilities, revenues and expenses and related disclosures of contingent
assets and liabilities in the financial statements and accompanying notes. The
SEC has defined a company's critical accounting policies as the ones that are
most important to the portrayal of the company's financial condition and results
of operations, and which require the company to make its most difficult and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. We believe that our estimates and assumptions are
reasonable under the circumstances; however, actual results may vary from these
estimates and assumptions. We have identified in Note 2 - "Summary of Accounting
Policies" to the Financial Statements contained in this Quarterly Report certain
critical accounting policies that affect the more significant judgments and
estimates used in the preparation of the financial statements.
Off-Balance Sheet Arrangements
We have not entered into 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 and would be
considered material to investors.
Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide this information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide information required by this Item.
Item 4T. 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 pursuant to the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules, regulations and related forms, and that
such information is accumulated and communicated to our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
As of December 31, 2009, we carried out an evaluation, under the
supervision and with the participation of our principal executive officer and
our principal financial officer of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our
principal executive officer and our principal financial officer concluded that
our disclosure controls and procedures were effective as of the end of the
period covered by this report.
Changes in Internal Controls
There have been no changes in our internal controls over financial
reporting during the quarter ended December 31, 2009 that have materially
affected or are reasonably likely to materially affect our internal controls.
22
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
To the best knowledge of our sole officer and director, the Company is not
a party to any legal proceeding or litigation.
Item 1A. Risk Factors.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K,
the Company is not required to provide information required by this Item. See
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission on November 13, 2009 which identifies and discloses certain risks and
uncertainties including, without limitation, those "Risk Factors" included in
Item 1A of the Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
23
Item 6. Exhibits.
(a) Exhibits required by Item 601 of Regulation S-K.
Exhibit
Number Description
-------------- -----------------------------------------------------------------
2.1* Certificate of Ownership and Merger, as filed with the Delaware
Secretary of State on September 23, 2003
3.1* Certificate of Incorporation, as filed with the Delaware
Secretary of State on March 7, 2001
3.2* Certificate of Designation of Series A Convertible Preferred
Stock, as filed with the Delaware Secretary of State on August
27, 2007
3.3* Certificate of Amendment of Certificate of Incorporation, as
filed with the Delaware Secretary of State on September, 19, 2007
3.4* By-Laws, as amended
10.1* Common Stock Purchase Warrant Issued to John Sanderson dated May
26, 2004
10.2* Common Stock Purchase Warrant Issued to Wilkinson Family Trust
dated December 10, 2004
10.3* Securities Purchase Agreement between KIG Investors I, LLC and
the Company dated August 22, 2007
10.4* Registration Rights Agreement between KIG Investors I, LLC and
the Company dated September 12, 2007
10.5* Settlement and Release Agreement between Feldman Weinstein &
Smith, LLP and the Company dated August 21, 2007
10.6* Settlement and Release Agreement between Halliburton Investor
Relations and the Company dated August 13, 2007
10.7* Form of Registration Rights Agreement between certain Other
Stockholders and the Company dated September 14, 2007
10.8* Settlement and Release Agreement between Laurus Master Fund, Ltd.
and the Company dated August 22, 2007
10.9* Registration Rights Agreement between Laurus Master Fund, Ltd.
and the Company dated September 14, 2007
10.10* Revolving Loan Agreement between Keating Investments, LLC and the
Company dated August 22, 2007
10.11* Consulting Agreement between Garisch Financial, Inc. and the
Company dated September 13, 2007
10.12* Agreement between the Company and Vero Management, LLC, dated as
of October 1, 2007
31.1** Certification of the Company's Principal Executive Officer and
Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, with respect to the registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31,
2009.
32.1** Certification of the Company's Principal Executive Officer and
Principal Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
* Contained in the Company's Form 10-SB filed with the SEC on December 7, 2007.
** Contained in this Quarterly Report.
24
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: January 13, 2010 Catalyst Lighting Group, Inc.
By: /s/ Kevin R. Keating
------------------------
Kevin R. Keating
President, Secretary and Director
25