SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON
, D.C.
20549
FORM 10-Q
[ x ] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2008
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from
____________ to ______________
Commission File Number 0-30595
PACIFIC LAND & COFFEE
CORPORATION
(Exact Name of small business issuer
as specified in the charter)
Delaware
33-0619256
(State or other Jurisdiction
of
( IRS Employer Identification No.)
Incorporation or Organization)
500 Alakawa St.
#220C
, Honolulu, HI
96817
(Address of Principal Executive
Offices)
(808) 478-9894
(Issuers Telephone Number, including
Area Code)
Indicate by check mark whether
the Registrant (i) 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 shorter period that the
Registrant was required to file such reports) and (ii) has been
Subject to such filing
requirements for the past 90 days.
Yes [X]
No [ ]
Indicate by check mark whether
the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes [
] No [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
o
|
Accelerated
filer
|
o
|
Non-accelerated
filer (Do not check if a smaller reporting company)
|
o
|
Smaller
reporting company
|
þ
|
Indicate the number of shares outstanding of each of the
issuers classes of common equity, as of
the latest practicable
date.
Common Stock, $.001 par
value
12,760,433
Title of
Class
Number
of Shares outstanding
at December 31, 2008
|
|
|
PACIFIC LAND & COFFEE
CORPORATION
|
|
|
|
|
(A
Development Stage Company)
|
|
|
|
|
CONSOLIDATED
BALANCE SHEET
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31,
|
March
31,
|
|
|
|
|
|
|
2008
|
2008
|
|
|
|
|
|
|
Unaudited
|
Audited
|
Current
Assets
|
|
|
|
|
|
|
Cash in Bank
|
|
|
|
4,871
|
18,542
|
|
Accounts receivable less
allowance for doubtful accounts of $6,016 and $8,373
|
|
22,003
|
19,591
|
|
Other
Receivable
|
|
|
|
29,600
|
29,600
|
|
Income Tax
Receivable
|
|
|
0
|
44,880
|
|
|
|
|
|
|
----------------
|
---------------
|
|
Total Current
Assets
|
|
|
56,474
|
112,613
|
|
|
|
|
|
|
----------------
|
--------------
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
Equipment
|
|
|
|
189,157
|
191,689
|
|
Leasehold
Improvements
|
|
|
9,316
|
9,316
|
|
Less: Accumulated
Depreciation
|
|
(131,664)
|
(110,910)
|
|
|
|
|
|
|
----------------
|
---------------
|
|
Total
Fixed Assets
|
|
|
66,809
|
90,095
|
|
|
|
|
|
|
----------------
|
---------------
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
Rent Deposit
|
|
|
|
12,908
|
12,908
|
|
P
Patents, net of
amortization
|
|
|
|
|
|
of $605,747 and
$537,989
|
|
|
493,479
|
561,237
|
|
Research/License
Agreement
|
|
|
170,000
|
170,000
|
|
|
|
|
|
|
----------------
|
----------------
|
|
Total Other Assets
|
|
|
676,387
|
744,145
|
|
|
|
|
|
|
----------------
|
----------------
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
799,670
|
946,853
|
|
|
|
|
|
|
========
|
========
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial
statements
|
2
|
|
|
LIABILITIES &
STOCKHOLDER'S DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec.
31
|
March
31,
|
|
|
|
|
|
|
2008
|
2008
|
|
|
|
|
|
|
Unaudited
|
Audited
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts Payable
|
|
|
|
370,220
|
299,868
|
|
Credit Line
|
|
|
|
24,690
|
19,953
|
|
Payroll & Excise Taxes
Payable
|
|
|
8,612
|
3,371
|
|
Accrued Interest
|
|
|
|
63,258
|
63,258
|
|
Note Payable - Jones
Day
|
|
|
145,980
|
145,980
|
|
Current Portion of Long Term
Debt - Note
|
|
13,492
|
13,177
|
|
Shareholder
Advances
|
|
|
178,500
|
0
|
|
|
|
|
|
|
----------------
|
----------------
|
|
Total Current
Liabilities
|
|
|
804,752
|
545,607
|
|
|
|
|
|
|
----------------
|
----------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities
|
|
|
|
|
|
|
Note Payable - net of current
portion - Note
|
12,316
|
23,190
|
|
|
|
|
|
|
----------------
|
---------------
|
|
Total Long Term
Liabilities
|
|
|
12,316
|
23,190
|
|
|
|
|
|
|
----------------
|
---------------
|
|
|
|
|
|
|
|
|
Non-Controlling
Interest
|
|
|
|
72,428
|
103,304
|
|
|
|
|
|
|
|
|
Stockholder's
Deficit
|
|
|
|
|
|
|
Preferred Stock - 1,000,000
shares authorized;
|
|
|
|
Par value of $.001 per share;
900,000 shares
|
|
|
|
issued and
outstanding
|
|
|
900
|
900
|
|
Common Stock - 50,000,000
shares authorized;
|
|
|
|
Par value of $.001 per share;
12,760,433 shares
|
|
|
|
issued and
outstanding
|
|
|
12,760
|
12,514
|
|
Capital in excess of par
value
|
|
|
623,519
|
659,226
|
|
Deficit accumulated during the
development stage
|
(727,005)
|
(397,888)
|
|
|
|
|
|
|
---------------
|
--------------
|
|
Total Stockholder's
Deficit
|
|
|
(89,826)
|
274,752
|
|
|
|
|
|
|
----------------
|
--------------
|
|
TOTAL LIABILITIES &
STOCKHOLDER'S DEFICIT
|
799,670
|
946,853
|
|
|
|
|
|
|
========
|
=======
|
The accompanying notes are an integral part of the financial
statements
3
|
|
|
(A Development Stage
Company)
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATION
|
|
|
|
|
|
For the Three and Nine Months Ended
December 31, 2008 and 2007
|
|
|
|
|
|
and for
the Period
from Inception (February 14, 2003) Through September 30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
14,
|
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Nine Months
Ended
December 31
|
|
2003
Through
Dec.
31
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$
|
77,411
|
$
|
97,671
|
$
|
225,605
|
$
|
213,088
|
$
|
706,230
|
|
|
|
|
|
------------
|
|
-----------
|
|
-------------
|
|
----------
|
|
--------------
|
|
Total Revenues
|
|
|
77,411
|
|
97,671
|
|
225,605
|
|
213,088
|
|
706,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
|
|
46,111
|
|
56,752
|
|
137,985
|
|
113,352
|
|
455,190
|
|
|
|
|
|
------------
|
|
------------
|
|
-------------
|
|
-----------
|
|
--------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
31,300
|
|
40,919
|
|
87,620
|
|
99,736
|
|
251,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General & Administrative
Expenses
|
121,555
|
|
119,712
|
|
481,093
|
|
293,002
|
|
1,118,374
|
|
|
|
|
|
--------------
|
|
------------
|
|
--------------
|
|
-----------
|
|
---------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss from
Operations
|
|
(90,255)
|
|
(78,793)
|
|
(393,473)
|
|
(193,266)
|
|
(867,334)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
(101)
|
|
(6,653)
|
|
(1,580)
|
|
(13,068)
|
|
(26,263)
|
|
|
|
|
|
------------------
|
|
-------------
|
|
-------------
|
|
-------------
|
|
---------------
|
|
Total Other Income
(Expense)
|
(101)
|
|
(6,653)
|
|
(1,580)
|
|
(13,068)
|
|
(26,263)
|
|
|
|
|
|
------------------
|
|
--------------
|
|
-------------
|
|
-------------
|
|
---------------
|
Net Loss before
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest
|
|
(90,356)
|
|
(85,446)
|
|
(395,053)
|
|
(206,334)
|
|
(893,597)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Controlling
Interest
|
|
18,475
|
|
26,655
|
|
65,936
|
|
26,655
|
|
121,712
|
|
|
|
|
|
------------------
|
|
------------
|
|
--------------
|
|
-------------
|
|
----------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before Income
Tax
|
|
(71,881)
|
|
(58,791)
|
|
(329,117)
|
|
(179,679)
|
|
(771,885)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Tax
(Benefit)
|
0
|
|
0
|
|
0
|
|
0
|
|
(44,880)
|
|
|
|
|
|
------------------
|
|
--------------
|
|
---------------
|
|
--------------
|
|
------------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
$
|
(71,881)
|
$
|
(58,791)
|
$
|
(329,117)
|
$
|
(179,679)
|
$
|
(727,005)
|
|
|
|
|
|
============
|
|
=========
|
|
==========
|
|
=========
|
|
==========
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per
Share
|
|
$
|
(0.01)
|
$
|
(0.01)
|
$
|
(0.03)
|
$
|
(0.05)
|
$
|
(0.01)
|
|
|
|
|
|
============
|
|
=========
|
|
==========
|
|
=========
|
|
==========
|
Weighted Average Shares
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
12,760,420
|
|
4,882,785
|
|
12,651,301
|
|
3,918,251
|
|
4,951,260
|
|
|
|
|
|
============
|
|
============
|
|
============
|
|
============
|
|
============
|
|
|
4
|
|
|
|
|
|
|
|
|
PACIFIC LAND & COFFEE CORPORATION
|
|
|
|
|
|
|
(A Development Stage Company)
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
For the Nine
Months Ended December 31, 2008 and 2007
|
|
|
|
|
and for the Period from Inception (February 14, 2003) Through December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
14,
|
|
|
|
|
|
|
For
the Nine Months Ended
|
|
2003
through
|
|
|
|
|
|
|
December
3111
|
|
|
|
Dec.
31
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
$
|
(329,117)
|
$
|
(179,679)
|
$
|
(727,005)
|
|
Adjustments to reconcile net
loss to net cash provided by
|
|
|
|
|
|
|
operating
activities
|
|
|
|
|
|
|
|
|
|
Non-controlling interest income
adjustment
|
|
(65,936)
|
|
(26,655)
|
|
(121,712)
|
|
|
Depreciation &
amortization
|
|
|
93,000
|
|
11,506
|
|
141,437
|
|
|
Bad Debt
|
|
|
|
(2,357)
|
|
725
|
|
14,613
|
|
|
Stock Issued for payment of
fees
|
|
|
0
|
|
82,158
|
|
128,783
|
|
|
Contributed Capital - noncash
fair market value of start-up
|
|
|
|
|
|
|
|
and organization
services and costs
|
|
---
|
|
---
|
|
1,000
|
|
|
(Increase) Decrease in
accounts receivable
|
|
(2,412)
|
|
(15,302)
|
|
(7,333)
|
|
|
(Increase) Decrease in
short-term advances
|
0
|
|
8,246
|
|
1,039
|
|
|
(Increase) Decrease in
income tax receivables
|
44,880
|
|
0
|
|
0
|
|
|
(Increase) Decrease in
rent deposit
|
|
---
|
|
---
|
|
(2,252)
|
|
|
Increase( Decrease) in
bank overdraft
|
|
---
|
|
---
|
|
---
|
|
|
Increase (Decrease) in accounts
payable
|
|
70,352
|
|
(174,650)
|
|
(122,379)
|
|
|
Increase (Decrease) in payroll
and excise tax payable
|
5,241
|
|
21,852
|
|
8,334
|
|
|
Increase (Decrease) in accrued
interest
|
|
0
|
|
1,993
|
|
4,648
|
|
|
|
|
|
|
------------------
|
|
---------------
|
|
-------------
|
|
|
Net Cash Used by
Operating Activities
|
|
(186,349)
|
|
(269,806)
|
|
(680,827)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Investing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
------------------
|
|
---------------
|
|
----------------
|
|
|
Net Cash Used by
Investing Activities
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing
Activities
|
|
|
|
|
|
|
|
|
|
Net proceeds from credit
line
|
|
|
4,737
|
|
(13)
|
|
222
|
|
|
Proceeds from the sale of
stock/contributed cash
|
0
|
|
445,000
|
|
471,480
|
|
|
Proceeds from notes payable -
related party
|
|
0
|
|
31,500
|
|
49,700
|
|
|
Proceeds from advances from
officer (net)
|
|
178,500
|
|
11,010
|
|
213,040
|
|
|
Repayments of long term note
payable
|
|
(10,559)
|
|
(7,430)
|
|
(25,006)
|
|
|
Repayments of note payable -
related party
|
|
0
|
|
(6,400)
|
|
0
|
|
|
Repayments of other
liabilities
|
|
|
0
|
|
(326,608)
|
|
(328,278)
|
|
|
|
|
|
|
------------------
|
|
------------------
|
|
---------------
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by
Financing Activities
|
172,678
|
|
147,059
|
|
381,158
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in
Cash
|
|
|
(13,671)
|
|
(122,747)
|
|
(299,669)
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Cash
Balance
|
|
|
18,542
|
|
1,401
|
|
0
|
|
Cash acquired in merger with
Coscina Brothers Coffee Co.
|
0
|
|
0
|
|
1,418
|
|
Cash acquired in merger with
Integrated Coffee Technologies
|
0
|
|
303,123
|
|
303,122
|
|
|
|
|
|
|
------------------
|
|
------------------
|
|
---------------
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Cash
Balance
|
|
$
|
4,871
|
$
|
181,777
|
|
4,871
|
|
|
|
|
|
|
============
|
|
============
|
|
=========
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash
Flow Information
|
|
|
|
|
|
|
|
Cash paid during the year for
interest
|
|
|
|
|
|
|
|
|
Cash paid during the year for
income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Acquisitions
|
|
|
|
|
|
|
|
|
|
Fair value of assets
acquired
|
$
|
|
$
|
|
$
|
1,275,343
|
|
|
Issuance of debt/assumption of
liabilities
|
|
|
|
|
(1,170,013)
|
|
|
Common Stock issued at
Acquisition
|
|
|
|
|
|
(76,441)
|
|
|
Non-Controlling
Interest
|
|
|
|
|
|
|
(28,889)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of the financial statements
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific
Land
and Coffee Corporation
(A Development Stage
Company)
Notes to Condensed Financial
Statements
December 31,
2008
Note
1
Interim Financial Statements
The accompanying financial statements have been
prepared by the Company without audit.
In the opinion of management, all adjustments (which include normal recurring
adjustments)
necessary to present fairly the financial position as of December 31, 2008, and
the results
of operations and cash flows for the nine months ended December 31, 2008, and
for the period
from inception thru December 31, 2008.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Companys March 31,
2008 audited financial statements. The results of operations for the nine
months ended December 31, 2008, are not necessarily indicative of the results of
operations to be expected for the full fiscal year.
Note
2
Going Concern
The Company has limited operating capital with limited revenue from
operations. Realization of a major portion of the assets is dependent upon
the Companys ability to meet its future financing requirements, and the success
of future operations. These factors raise substantial doubt about the
Companys ability to continue as a going concern. The financial statements
do not include any adjustment that might result from the outcome of this
uncertainty.
Note
3
Property and Equipment
Property and equipment is carried at cost and summarized as follows:
Accumulated
Cost
Depreciation
Net
Equipment
$ 189,157 $
(122,348)
$ 66,809
Leasehold
Improvements
9,316 (
9,316)
-0-
Total
$ 198,473 $
(131,664)
$ 66,809
For the nine months ended December 31, 2008, depreciation expense is $
23,286. The equipment was part of the assets consolidated into the Company
and the current statements only reflect a portion of the total depreciation
expense on the equipment for the current year. Of the $63,057 property and
equipment account $ 60,557 has been capitalized under a capital lease discussed
below. As of December 31, 2008 the total accumulated depreciation
associated with the capital lease was $ 38,681.
6
Note 4
Intangible Assets
Patents and licenses are carried at cost and summarized as follows:
Accumulated
Cost
Amortization
Net
Patents
$
1,099,226
$
531,936
$ 567,290
Licenses
170,000
73,811
96,189
Total
$
1,269,226
$
605,747
$ 663,479
Note
5
Long Term Debt
The Company has a capital lease due to a finance company with interest at 10%
due in monthly installments of $1,289, through October, 2010. This note is
secured by the Companys equipment.
Maturities of long- term debt are as follows:
Year Ending
Dec.
31,
2009
$ 13,492
2010
12,316
2011
-0-
-----------
Total
$
25,808
======
Note
6
Related Party Transactions
One officer of the Company has advanced personal funds to the Company to assist
in
meeting operating cash needs. There are no stated terms for these
advances, and it is anticipated at a future date that the advances will be
converted to shares of common stock, though the timing and amount of such
conversion is indeterminable at this time. At December 31, 2008, the
Company owed him $ 178,500.
Note
7
Recent
Accounting Pronouncements
In December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141 (revised 2007), Business Combinations (FAS 141R) and
Statement of Financial Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51
(FAS 160). These new standards are the U.S. GAAP outcome of a joint
project with the International Accounting Standards Board (IASB).
FAS 141R applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and will significantly
change the accounting for business combinations in a number of areas, including
the treatment of contingent consideration, acquisition costs, intellectual
property, research and development, and restructuring costs. FAS 160
establishes reporting requirements that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners. The
Company is currently evaluating the impact of adopting FAS 141R and
FAS 160 on its Consolidated Financial Statements which are effective for
the Company at the beginning of its fiscal year 2010.
7
In
March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133 (FAS 161), which requires
enhanced disclosures about a companys derivative and hedging activities. The
Company currently is evaluating the impact of the adoption of the enhanced
disclosures required by FAS 161 which is effective for the Company at the
beginning of its fiscal year 2010.
In
May 2008, the FASB issued Statement of Financial Accounting Standards
No. 162, The Hierarchy of Generally Accepted Accounting Principles
(FAS 162). The new standard is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with generally accepted accounting principles (GAAP) for
nongovernmental entities in the United States. FAS 162 is effective
60 days following SEC approval of the Public Company Accounting Oversight
Board Auditing amendments to AU Section 411, The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles. The Company is
currently evaluating the impact, if any, of adopting FAS 162, on its
Consolidated Financial Statement
In
May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee
Insurance Contracts an Interpretation of FASB Statement No. 60 (SFAS
163). SFAS 163 clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement of premium
revenue and claim liabilities. This Statement also requires expanded
disclosures about financial guarantee insurance contracts. SFAS 163 is
effective for fiscal years beginning on or after December 15, 2008, and interim
periods within those fiscal years. The Company does not expect that the
adoption of SFAS 163 will have a material impact on its financial
statements.
Item
2 MANAGEMENTS DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
We did not receive revenues from operations in our specialty coffee segment until the quarter ended September 30,2003. We sell roasted blends to various customers and we broker green bean orders as well. With respect to coffee brokerage orders, we do not take ownership of the green beans, but only receive a commission on the sale. This contrasts with the sales of roasted blend, in which we purchase the materials and resell to the purchaser.
Managements experience in the coffee industry is typical of coffee brokerage and small specialty coffeeoperations, we do not have long term sales contracts. We do not have any written contracts for the sale of our product. We produce and ship as purchase orders are received. We must wait for future purchase orders to make sales in the future. Because coffee prices are variable and demand can also be variable, we believe that selling under long term contracts would not be practicable in our industry. Our invoices are due net 30 days, but currently we are receiving payment immediately on shipment. The sales in the quarter and for the nine months ended December 31, 2008 were $ 77,411 and $ 225,605, respectively, compared to $ 97,671 and $ 213,088 for the same periods in 2007. The gross margin as a percentage of sales decreased from 47% to 39% due to a cost increases from suppliers not passed on. Our general and administrative expenses primarily consisted of legal and professional fees related to our status as a public company. These expenses increased in 2008 primarily due to higher costs associated with our public company status.
Our tropical plant segment has not yet realized significant revenues.
Our
nematode resistant variety is ready for sales but the genetically
modified coffee
plants will not be ready for sale during the next 12 months. We anticipate
the
need for about $2 million in funding to complete development of the
tropical
plant varieties and to increase marketing of our coffee blends. We
received
$37,000 in advances from an officer during
the quarter and $ 5,000 subsequent to
the
end of the period.
8
We are seeking $2 million in funding for 12 months of our business plan as
follows:
Marketing
$ 200,000
General and Administration $
400,000
Research and Development $
1,400,000
We
do not have any agreements or understandings with respect to sources of
capital. We have not identified any potential sources. Investors
cannot expect that we will be able to raise any funds whatsoever. Even if we are
able to find one or more sources of capital, its likely that we will not be
able to raise the entire amount required initially, in which case our
development time will be extended until such full amount can be obtained.
Even if we are successful in obtaining the required funding, we probably will
need to raise additional funds at the end of 12 months.
Information
included in this report includes forward looking statements, which can be
identified by the use of forward-looking terminology such as may, will, expect,
anticipate, believe, estimate, or continue, or the negative thereof or other
variations thereon or comparable terminology. The statements in "Risk Factors"
and other statements and disclaimers in this report constitute cautionary
statements identifying important factors, including risks and uncertainties,
relating to the forward-looking statements that could cause actual results to
differ materially from those reflected in the forward-looking statements.
Since
we have not yet generated significant and consistent revenues, we are a
development stage company as that term is defined in paragraphs 8 and 9 of SFAS
No. 7. Our activities to date have been limited to seeking capital;
seeking supply contracts and development of a business plan. Our auditors
have included an explanatory paragraph in their report on our financial
statements for the year ended March 31, 2008, relating to the uncertainty of our
business as a going concern, due to our lack of operating history or current
revenues, its nature as a start up business, management's limited experience and
limited funds. We do not believe that conventional financing, such as bank
loans, is available to us due to these factors. Management believes that
it will be able to raise the required funds for operations from one or more
future offerings, in order to effect our business plan. No terms
have been discussed, and we can neither predict the price or terms of any
offering nor the amount of dilution existing shareholders may experience as a
result of such offering.
9
Forward looking information
Our future operating results are subject to many factors, including:
our ability to
complete development of our tropical plant varieties;
the impact of
rapid and persistent fluctuations in the price of coffee beans;
general economic conditions and conditions which affect the market for coffee
and coffee producers;
our success in
implementing our business strategy or introducing new products;
our ability to
attract and retain customers;
the effects of
competition from other coffee manufacturers and other beverage alternatives;
changes in tastes
and preferences for, or the consumption of, coffee;
our ability to
obtain additional financing; and
other risks which
we identify in future filings with the SEC.
In
some cases, you can identify forward-looking statements by terminology such as
"may," "should," "could," "predict," "potential," "continue," "expect,"
"anticipate," "future," "intend," "plan," "believe," "estimate" and similar
expressions (or the negative of such expressions). Any or all of our forward
looking statements in this annual report and in any other public statements we
make may turn out to be wrong. They can be affected by inaccurate assumptions we
might make or by known or unknown risks and uncertainties. Consequently, no
forward looking statement can be guaranteed. In addition, we undertake no
responsibility to update any forward-looking statement to reflect events or
circumstances which occur after the date of this report.
Critical
Accounting Policies
Our
discussion and analysis of results of operations and financial condition are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. We evaluate our estimates on an ongoing basis, including those
related to provisions for uncollectible accounts receivable, inventories,
valuation of intangible assets and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
The
accounting policies that we follow are set forth in Note 1 to our financial
statements. These accounting policies conform to accounting principles generally
accepted in the United States, and have been consistently applied in the
preparation of the financial statements.
Off-Balance
Sheet Arrangements
We
have no off balance sheet arrangements.
Recently
Enacted Accounting Pronouncements
10
In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141 (revised 2007), Business Combinations (FAS 141R) and
Statement of Financial Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51
(FAS 160). These new standards are the U.S. GAAP outcome of a joint
project with the International Accounting Standards Board (IASB).
FAS 141R applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and will significantly
change the accounting for business combinations in a number of areas, including
the treatment of contingent consideration, acquisition costs, intellectual
property, research and development, and restructuring costs. FAS 160
establishes reporting requirements that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners. The
Company is currently evaluating the impact of adopting FAS 141R and
FAS 160 on its Consolidated Financial Statements which are effective for
the Company at the beginning of its fiscal year 2010.
In
March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133 (FAS 161), which requires
enhanced disclosures about a companys derivative and hedging activities. The
Company currently is evaluating the impact of the adoption of the enhanced
disclosures required by FAS 161 which is effective for the Company at the
beginning of its fiscal year 2010.
In
May 2008, the FASB issued Statement of Financial Accounting Standards
No. 162, The Hierarchy of Generally Accepted Accounting Principles
(FAS 162). The new standard is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with generally accepted accounting principles (GAAP) for
nongovernmental entities in the United States. FAS 162 is effective
60 days following SEC approval of the Public Company Accounting Oversight
Board Auditing amendments to AU Section 411, The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles. The Company is
currently evaluating the impact, if any, of adopting FAS 162, on its
Consolidated Financial Statements
In
May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee
Insurance Contracts an Interpretation of FASB Statement No. 60 (SFAS
163). SFAS 163 clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement of premium
revenue and claim liabilities. This Statement also requires expanded
disclosures about financial guarantee insurance contracts. SFAS 163 is
effective for fiscal years beginning on or after December 15, 2008, and interim
periods within those fiscal years. The Company does not expect that the
adoption of SFAS 163 will have a material impact on its financial
statements.
Effect
of Inflation and Foreign Currency Exchange
The
Company has not experienced any effect of inflation in the price of its
products. Nor has it experienced unfavorable profit reductions due to currency
exchange fluctuations or inflation with its foreign customers. All sales
transactions to date have been denominated in U.S. Dollars.
Accounts
Receivable and Allowance for Doubtful Accounts
Trade
and other accounts receivable are reported at face value less any provisions for
uncollectible accounts considered necessary. The Company estimates doubtful
accounts on an item-to-item basis and includes over-aged accounts for any trade
receivable as part of allowance for doubtful accounts, which are generally
accounts that are ninety-days or more overdue. When accounts are deemed
uncollectible, the account receivable is charged off and the allowance account
is reduced accordingly.
Revenue
Recognition
The
Company recognizes revenues in accordance with the Securities and Exchange
Commission, Staff Accounting Bulletin (SAB) number 104,
Revenue
Recognition
. SAB 104 clarifies application of U.S. generally accepted
accounting principles to revenue transactions.
Revenue
on coffee and accessory sales is recognized as products are delivered to the
customer or retailer. That is, the arrangements of the sale are
documented, the product is delivered to the customer or retailer, the pricing
becomes final, and collectability is reasonably assured. The Company may
also recognize revenue from brokered coffee sales. This revenue is
recognized when the transaction is completed based on the contract terms.
Brokered coffee sales shall be recorded as the net commission recognizable to
the Company.
11
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. Disclosure Controls
and Procedures Evaluation of disclosure controls and procedures.
The
Company's principal executive officer and its principal financial officer, based
on their evaluation of the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of June 30, 2008. ,
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 information relating to the
Company, including our consolidated subsidiaries, required to be disclosed in
our SEC reports (i) is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms and (ii) is accumulated and
communicated to management, including our principal executive officer/principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. Our management, including our chief executive officer and chief
financial officer, does not expect that our disclosure controls and procedures
or our internal controls will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints and the benefits of controls must be considered relative to
their costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been
detected.
Changes
in internal controls
. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls subsequent to the date of their
evaluation.
PART II. OTHER INFORMATION
Item
1.
LEGAL PROCEEDINGS
- None
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
Item
6.
EXHIBITS
Exhibits
31.
Certifications, John Hales and Tyrus C. Young, Chairman of
the Board and CFO
respectively.
32.
Certification pursuant to 18 U.S.C. Section 1350 of John Hales and Tyrus C.
Young
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.
PACIFIC LAND AND
COFFEE CORPORATION
Date:
February 13, 2009
By:
/s/ Tyrus C.
Young
Tyrus C. Young
Chief Financial Officer
(chief financial officer
and accounting officer and
duly authorized officer)