SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-KSB
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2007
__TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ____________ to ________________
Commission File Number: 000-52639
CARLATERAL, INC.
(Name of small business issuer in its charter)
NEVADA 20-4158835
(State of or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
112 NORTH CURRIE STREET 89703
CARSON CITY, NV
(Address of principal executive offices) (Zip Code)
Issuers telephone number: (775) 321-8243
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock
(Title of class)
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act ___
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES X NO
Issuer's revenues for most recent fiscal year - $886
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the most recent sale of the Company's
common shares via a private placement offering of the common equity was $16,500
on December 23, 2005.
State the number of shares outstanding of each of the issuer's classes of common
shares at the latest practicable date. As of February 28, 2007 the registrant
had 10,300,000 shares of common shares, $0.001 par value, issued and
outstanding.
1
TABLE OF CONTENTS
Page
Statement Regarding Forward-Looking Information
PART I
Item 1. Description of Business ........................................... 3
Item 2. Description of Property ........................................... 3
Item 3. Legal Proceedings ................................................. 3
Item 4. Submission of Matters to a Vote of Security Holders ............... 4
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters ............................................. 4
Item 6. Management's Discussion and Analysis or Plan of Operation ......... 4
Item 7. Financial Statements............................................... 6
Report of Independent Registered Accounting Firm ................ 7
Balance Sheet ................................................... 8
Statements of Operations ........................................ 9
Statements of Stockholders' Equity .............................. 10
Statements of Cash Flows ........................................ 11
Notes to Financial Statements ................................... 12
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosures ............................ 15
Item 8A. Controls and Procedures ........................................... 15
PART III
Item 9. Directors and Executive Officers, Promoters and Control Persons ... 16
Item 10. Executive Compensation ............................................ 17
Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters ...................... 18
Item 12. Certain Relationships and Related Transactions .................... 18
Item 13. Exhibits .......................................................... 18
Item 14. Principal Accountant Fees and Services ............................ 19
Signatures .................................................................. 19
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-KSB 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 (the "Act") and Section 21E of the
Securities Exchange Act of 1934. 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. We intend that
such forward-looking statements be subject to the safe harbors for such
statements. We wish 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 our control that could cause actual
results and events to differ materially from historical results of operations
and events and those presently anticipated or projected. We disclaim 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.
Available Information
Carlateral, Inc. files annual, quarterly, current reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). You may have read and copy documents referred to in this Annual
2
Report on Form 10-KSB that have been filed with the commission at the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You
may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. You can also obtain copies of our Commission
filing by going to the Commission's website at http://www.sec.gov.
PART I
Item 1. Description of the Business.
BUSINESS DEVELOPMENT: Carlateral, Inc. ("Carlateral") is a development stage
company, incorporated in the State of Nevada on December 9, 2005, to establish
itself as a finance company specializing in sub prime title loans, secured
primarily using automobiles (but also boats, recreational vehicles, machinery
and other equipment) as collateral.
Since inception the company has not been involved in any bankruptcy,
receivership or similar proceeding nor has it been engaged in any material
reclassification, merger, consolidation or purchase or sale of any of its assets
not in the ordinary course of business.
BUSINESS OF ISSUER: Carlateral, Inc. is a development stage company and was
incorporated to enter into the financial services INDUSTRY. Our key demographic
market is comprised of individuals needing short term capital. By "short term"
we mean 30 to 90 days, but we may include loans for longer periods on a
case-by-case basis. Our target consumers are those that either do not meet the
lending criteria of established banks and lending institutions, or do not wish
to incur the delays associated with a lengthy loan application and approval
process.
Carlateral intends to provide title loans and other forms of collateral loans to
individuals on a short term basis. We intend to secure our loans through signed
title transfers, liens, and other agreements whereby we take possession and
ownership of the specified collateral if the loan defaults. If we take
possession and ownership of any collateral we will dispose of it in the most
efficient manner possible to both recoup our investment and to free up capital
for subsequent loans.
Our business offers competitive advantages over banks and other financial
institutions which have significant barriers in place that may make it difficult
for some individuals to secure a loan. Factors such as credit history and
employment may preclude one from getting a loan from many of these financial
institutions. Banks and other financial institutions also have an extensive and
burdensome application and approval process which can discourage people who may
want to borrow only a small amount of money for a short period of time.
Our other competitors include payday loan companies and other title loan
companies. We intend to compete by being friendly and approachable, having a
quick approval process and flexible terms and payments.
The company is operated by its sole officer and director and does not have any
employees.
Item 2. Description of the Property.
Carlateral, Inc. principle address is Suite 112 North Currie Street, Carson
City, Nevada, 89703. Carlateral, Inc. rents shared office space. This property
arrangement satisfies the current needs of Carlateral, Inc. and will be adequate
up to the point that Carlateral, Inc. initiates operations
Item 3. Legal Proceedings.
The Company is not a party to any pending legal proceedings and no such
proceedings are known to be contemplated.
No director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
3
Item 4. Submission of Matters to a Vote of Security Holders.
There have been no matters submitted to the security holders for a vote.
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters.
As of February 28, 2007, the Company had thirty-four (34) active shareholders of
record. The Company has not paid cash dividends and has no outstanding options.
Item 6. Management Discussion, Financial Condition or Plan of Operation.
Overview
Carlateral, Inc. ("Carlateral" the "Company," "we," "us" ) is a development
stage company, incorporated on December 9, 2005, in the State of Nevada, to
establish itself as a finance company specializing in sub prime title loans
secured primarily by automobiles (but also boats, recreational vehicles,
machinery and other equipment) as collateral.
The Company generated loan revenue during the fiscal year ended February 28,
2007 of $886. There was no loan revenue generated in same period in the previous
year.
Total expenses for the fiscal year ending February 28, 2007 were $21,941
resulting in an operating loss for the fiscal year of $21,055. The operating
loss for the fiscal year ending February 28, 2006 was $6,122. The operating loss
for the period is a result of professional fees relating to the preparation of
Securities and Exchange Commission filings and office and general expenses.
Office and general expenses for the fiscal year ending February 28, 2007 were
$4,892 compared to $459 for the same period in 2006 and professional fees for
the fiscal year ending February 28, 2007 were $17,049 compared to $5,663 for the
fiscal year ended February 28, 2006.
Basic net loss per share amounted to $0 for the fiscal year ending February 28,
2007, the same as for the same period in 2006.
Accounts payable for the fiscal year ended February 28, 2007 are $6,358 and were
$3,000 at the year ended February 28, 2006.
As of February 28, 2007 the Director of the Company has advanced $4,475 to
maintain the company's operations. This amount is unsecured, non-interest
bearing and without specific terms of repayment.
Net cash provided through financing for the fiscal year ending February 28, 2007
was $ $4,475 from a shareholder advance. In the fiscal year ended February 28,
2007 the company raised $23,500 from financing through the sale of its common
stock.
On October 20, 2006 the Company filed a registration form SB-2 with the SEC. The
form SB-2 was deemed effective as of December 8, 2006.
As at the fiscal year ended February 28, 2007 the Company had $4,145 of cash. At
the end of the 2006 fiscal year it had $20,378.
Plan of Operation
The Company anticipates that its current cash and cash equivalents and cash
generated from operations will not be sufficient to satisfy its liquidity
requirements for at least the next 12 months. The Company will require
additional funds prior to such time and will seek to sell additional capital
through private equity placements or debt securities or seek alternative sources
of financing. If the Company is unable to obtain this additional financing, it
4
may be required to reduce the scope of its business plan, which could harm its
business, financial condition and operating results. Additional funding may not
be available on favorable terms, if at all.
Should the Company be unable to raise funding under its current business plan
the Company may elect to seek other assets or businesses that would assist in
creating additional share holder value and possibly increase share holder
equity.
During the next twelve months the Company will focus on applying a variety of
strategies to enable it to further its business. These strategies included
identifying potential office locations in metropolitan areas throughout Canada
and the US, researching the legal and regulatory obligations in each
jurisdiction in which we may operate and determining the types and roles of
support staff that would be required to run the business.
From inception the company's business operations have primarily been focused
preparing it's registration statement and on developing our business model and
marketing strategy. The company has been conducting industry market research and
doing an analysis of our competitor's business models and business
methodologies. The company has issued two loans to evaluate its business plan
and marketing strategy. We plan to continue our research to identify the best
locations for our initial office, both in terms of client demographics and the
regulatory environment.
We will engage the services of an attorney to create a loan agreement that meets
the local jurisdiction laws and requirements. The company will require having a
valid loan agreement created prior to opening its business outlets and will
expend approximately $4,000 on this activity.
Concurrently with creating the loan agreement, the company will search for a
suitable office space in the preferred locale based on the results of its
demographic research. To offset expenses incurred during this period, the
company may look at securing a shared space in an office with another
non-competing business. Upon finding the appropriate location, the company will
enter into a lease or sub-lease agreement. We expect that we will have to expend
approximately $5,000 to secure our initial office lease.
The company will purchase a computer system and other office equipment and
supplies for our initial store location. The company estimates that these
equipment expenditures for the office will be $9,500. The company will also
design and have printed all of the necessary forms and agreements used in its
operations, at an estimated cost of $3,000.
The company will identify and hire a commission sales person to staff the
initial office.
The company will research local advertising possibilities, including community
newspapers, radio, yellow pages and established local websites to determine the
most advantageous media for the company's advertising campaigns. The company
expects that that its initial advertising program will cost approximately $8,500
to develop and implement.
The company will research, purchase and implement a loan management system that
can be customized to suit its needs and is scalable so that we will be able to
manage multiple branches from a central location. The system will be installed
at the initial store location and will be capable of being expanded to any
additional locations as they come on line. The company expects to spend about
$27,500 to research and implement the loan management system.
The Company intends to be fully operational within twelve months.
The company does not expect to purchase or sell plant or significant equipment
in the next 12 months. It does plan to hire employees as necessary to manage its
offices as they are established.
Off Balance Sheet Arrangement
As of the date of this Form 10-KSB, the current funds available to the Company
will not be sufficient to continue maintaining a reporting status. The cost to
maintain the reporting status of the Company for the next twelve months has been
estimated at $15,000. Our officer and director, Don Cameron has indicated to the
Company that he may be willing to provide the funds required to maintain the
reporting status in the form of a non-secured loan for the next twelve months as
the expenses are incurred, if no other proceeds are obtained by the Company.
However, there is no contract in place or written agreement securing this
agreement.
Other than the above described situation the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transaction, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee contract, derivative instrument or variable interest; or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support for such
assets.
Item 7. Financial Statements.
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FEBRUARY 28, 2007
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEET
STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
6
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Carlateral Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Carlateral Inc. as of February
28, 2007, and the related statements of operations, stockholders' equity and
cash flows through February 28, 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Carlateral Inc. as of February
28, 2007 and the results of its operations and its cash flows through February
28, 2007, in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has generated no revenue and has not
established operations which raise substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ MOORE & ASSOCIATES, CHARTERED
Moore & Associates Chartered
Las Vegas, Nevada
May 8, 2007
2675 S. JONES BLVD. SUITE 109,LAS VEGAS,NV 89146 (702)253-7511 FAX (702)253-7501
7
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
February 28, February 28,
2007 2006
(Audited) (Audited)
______________________________________________________________________________________________________________________
ASSET
CURRENT ASSET
Cash $ 4,145 $ 20,378
Loans Receivable 3,010 -
______________________________________________________________________________________________________________________
7,155 20,378
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 6,358 $ 3,000
Due to Shareholder 4,475 -
______________________________________________________________________________________________________________________
10,833 3,000
______________________________________________________________________________________________________________________
STOCKHOLDERS' EQUITY (DEFICIT )
Capital stock (Note 4)
Authorized
75,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
10,300,000 shares of common stock 10,300 10,300
Additional paid-in capital 13,200 13,200
Deficit accumulated during the development stage (27,177) (6,122)
______________________________________________________________________________________________________________________
(3,677) 17,378
______________________________________________________________________________________________________________________
$ 7,155 $ 20,378
=======================================================================================================================
The accompanying notes are an integral part of these financial statements
8
CARLATERAL, INC. .
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Cumulative
results of
operations from
December 9,
2005 (date of
3 months ended 12 months ended inception) to
February 28, February 28, February 28,
2007 2007 2007
_________________________________________________________________________________________________________________________
INCOME
Loans revenue $ 886 $ 886 $ 886
EXPENSES
Office and general 1,603 4,892 5,352
Professional fees 8,089 17,049 22,711
_________________________________________________________________________________________________________________________
NET LOSS $ (8,806) $ (21,055) $ (27,177)
=========================================================================================================================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.00) $ (0.00)
=======================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
10,300,000 10,300,000
=======================================================================================================
The accompanying notes are an integral part of these financial statements
9
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (DECEMBER 9, 2005) TO FEBRUARY 28, 2007
Deficit
Accumulated
Additional Share During the
Paid-in Subscription Development
Common Stock Capital Receivable Stage Total
__________________________
Number of Amount
shares
_________________________________________________________________________________________________________________________________
Balance, December 9, 2005 - $ - $ - $ - $ - $ -
Common stock issued for cash at $0.001 per
share
- December 15, 2005 7,000,000 7,000 - - - 7,000
Common stock issued for cash at $0.005 per
share
- December 23, 2005 3,300,000 3,300 13,200 - - 16,500
Net loss - - - - (6,122) (6,122)
_________________________________________________________________________________________________________________________________
Balance February 28, 2006 10,300,000 10,300 13,200 - (6,122) 17,378
Net loss - - - - (21,055) (21,055)
==================================================================================================================================
Balance, February 28, 2007 10,300,000 $ 10,300 $ 13,200 $ - $ (27,177) $ (3,677)
==================================================================================================================================
All share amounts have been restated to reflect the 10:1 forward split in
February 2006. (Refer to Note 4)
The accompanying notes are an integral part of these financial statements
10
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Cumulative
results of
operations from
3 months 12 months inception
ended ended, (December 9,
February 28, February 28, 2005) to
2007 2007 February 28, 2007
__________________________________________________________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,806) $ (21,055) $ (21,055)
Adjustment to reconcile net loss to net cash used in operating activities
Loans Receivable (3,010) (3,010) (3,010)
-accounts payable and accrued liabilities 5,158 6,358 6,358
__________________________________________________________________________________________________________________________________
NET CASH USED IN OPERATING ACTIVITIES (6,658) (17,708) (17,708)
__________________________________________________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock - 23,500 23,500
Advance from Shareholder 4,475 4,475
Retained Earnings (6,122) (6,122)
__________________________________________________________________________________________________________________________________
NET CASH PROVIDED BY FINANCING ACTIVITIES - 21,853 21,853
__________________________________________________________________________________________________________________________________
NET DECREASE IN CASH (6,658) 21,853 21,853
CASH, BEGINNING OF PERIOD 10,804 - -
__________________________________________________________________________________________________________________________________
CASH, END OF PERIOD $ 4,145 $ 4,145 $ 4,145
==================================================================================================================================
Supplemental cash flow information and noncash financing activities: Cash paid
for:
Interest $ - $ - $ -
=================================================================================================================================
Income taxes $ - $ - $ -
=================================================================================================================================
The accompanying notes are an integral part of these financial statements
11
CARLATERAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2007
________________________________________________________________________________
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Carlateral, Inc. (the "Company") is in the initial development stage and has
incurred losses since inception totaling $27,177. The Company was incorporated
on December 9 2005 in the State of Nevada. The fiscal year end of the Company is
February 28. The Company was organized to establish itself as a finance company,
specializing in sub-prime title loans, primarily using automobiles as a form of
loan collateral, but will also include boats, recreational vehicles, machinery
and other equipment. Carlateral intends to open regional and branch offices in
metropolitan areas throughout the United States and Canada. The target market is
individuals needing short term loans.
On February 15, 2006 the Company completed a forward stock split of the
Company's common stock by the issuance of 10 new shares for each 1 outstanding
share of the Company's common stock.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern. The Company is funding its
initial operations by way of issuing Founders' shares and entering into a
private placement offering for 4,000,000 shares at $0.005 per share. As of
February 28, 2007, the Company had sold 10,300,000 shares and had received
$23,500 in proceeds from the sale of the Company's common stock of which
7,000,000 Founders shares were issued at $0.001 per share for net proceeds of
$7,000 and 3,300,000 shares were issued at $0.005 per share for net proceeds of
$16,500 pursuant to the Private Placement Offering.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________
BASIS OF PRESENTATION
These financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
INCOME TAXES
The Company follows the liability method of accounting for income taxes in
accordance with Statements of Financial Accounting Standards ("SFAS") No.109,
"Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax balances. Deferred tax assets and
liabilities are measured using enacted or substantially enacted tax rates
expected to apply to the taxable income in the years in which those differences
are expected to be recovered or settled. The effect on deferred tax assets and
12
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment.
NET LOSS PER SHARE
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet date.
Non-monetary assets and liabilities are translated at exchange rates prevailing
at the transaction date. Revenue and expenses are translated at average rates of
exchange during the period. Related translation adjustments are reported as a
separate component of stockholders' equity (deficit), whereas gains or losses
resulting from foreign currency transactions are included in results of
operations.
STOCK-BASED COMPENSATION
The Company has not adopted a stock option plan and has not granted any stock
options. Accordingly no stock-based compensation has been recorded to date.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 153, "Exchanges of Non-monetary Assets - An Amendment of APB Opinion No.
29". The guidance in APB Opinion No. 29, "Accounting for Non-monetary
Transactions", is based on the principle that exchanges of non-monetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in that opinion, however, included certain exceptions to that principle. SFAS
No. 153 amends Opinion No. 29 to eliminate the exception for non-monetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of non-monetary assets that do not have commercial substance. A
non-monetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. The
provisions of SFAS No. 153 are effective for non-monetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. Early application is
permitted and companies must apply the standard prospectively. The adoption of
this standard is not expected to have a material effect on the Company's results
of operations or financial position.
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123R, "SHARE-BASED PAYMENT." SFAS No. 123R establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. SFAS No. 123R focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123R requires that the compensation cost relating to
share-based payment transactions be recognized in financial statements. That
cost will be measured based on the fair value of the equity or liability
instruments issued. Public entities that file as small business issuers will be
required to apply SFAS No. 123R in the first interim or annual reporting period
that begins after December 15, 2005. Management is currently evaluating the
impact of the adoption of this standard on our results of operations and
financial position.
13
In March 2005, the SEC staff issued Staff Accounting Bulletin ("SAB") No. 107,
"SHARE-BASED PAYMENT," to give guidance on the implementation of SFAS No. 123R.
Management will consider SAB No. 107 during the implementation of SFAS No. 123R.
In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections." This Statement replaces APB Opinion No. 20, "Accounting Changes,"
and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements,"
and changes the requirements for the accounting for and reporting of a change in
accounting principle. This Statement applies to all voluntary changes in
accounting principle. Management believes this Statement will have no impact on
the financial statements of the Company.
In March 2005, the FASB issued FASB Interpretation ("FIN") No. 47, "Accounting
for Conditional Asset Retirement Obligations, an interpretation of FASB
Statement No. 143." Asset retirement obligations (AROs) are legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal operation of a long-lived
asset, except for certain obligations of lessees. FIN No.47 clarifies that
liabilities associated with asset retirement obligations whose timing or
settlement method are conditional on future events should be recorded at fair
value as soon as fair value is reasonably estimable. FIN No.47 also provides
guidance on the information required to reasonably estimate the fair value of
the liability. FIN No.47 is intended to result in more consistent recognition of
liabilities relating to AROs among companies, more information about expected
future cash outflows associated with those obligations stemming from the
retirement of the asset(s) and more information about investments in long-lived
assets because additional asset retirement costs will be recognized by
increasing the carrying amounts of the assets identified to be retired. FIN
No.47 is effective for fiscal years ending after December 15, 2005. Management
believes this Statement will have no impact on the financial statements of the
Company.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
________________________________________________________________________________
In accordance with the requirements of SFAS No. 107and SFAS No. 157, the Company
has determined the estimated fair value of financial instruments using available
market information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities approximate
their carrying value due to the short-term maturity of the instruments.
NOTE 4 - CAPITAL STOCK
________________________________________________________________________________
The Company's capitalization is 75,000,000 common shares with a par value of
$0.001 per share. No preferred shares have been authorized or issued.
As of February 28, 2007, the Company has not granted any stock options and has
not recorded any stock-based compensation.
As of February 28, 2007, the sole Director had purchased 7,000,000 shares of the
common stock in the Company at $0.001 per share with the proceeds of the Company
totalling $7,000.
PRIVATE PLACEMENT
On December 23, 2005, the Company authorized a Private Placement Offering of up
to 4,000,000 shares of common stock at a price of $0.005 per share. The total
amount to be raised in this financing is $20,000. As of February 28, 2007 the
Company had issued 3,300,000 common shares and had received $16,500 in proceeds
from the sale of its stock.
14
On February 15, 2006, the majority shareholder and the director of the Company
approved a special resolution to undertake a forward split of the common stock
of the Company on a 10 new shares for 1 old share basis.
All references in these financial statements to number of shares, price per
share and weighted average number of common shares outstanding prior to the
forward split have been adjusted to record the effect of the forward split on a
retroactive basis.
NOTE 5 - INCOME TAXES
________________________________________________________________________________
As of February 28, 2007 the Company had net operating loss carry forwards of
approximately $27,177 that may be available to reduce future years' taxable
income and will expire commencing in 2025. Availability of loss usage is subject
to change of ownership limitations under Internal Revenue Code 382. Future tax
benefits which may arise as a result of these losses have not been recognized in
these financial statements, as their realization is determined not likely to
occur and accordingly, the Company has recorded a full valuation allowance for
the deferred tax asset relating to these tax loss carryforwards.
NOTE 6 - RELATED PARTY TRANSACTION
________________________________________________________________________________
As of February 28, 2007, the Company received advances from a director of the
Company in the amount of $4,475. The amount due to the related party is
unsecured and non-interest bearing with no set terms of repayment.
Item 8. Changes in and Disagreements on Accounting and Financial Disclosures.
None
Item 8A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer, Don Cameron conducted
an evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as defined in Rules 13a-15(e) and Rule
15d-15(e) under the Exchange Act. Based upon his evaluation as of February 28,
2007 he concluded that those disclosure controls and procedures are effective.
Internal Control over Financial Reporting
There have been no changes in the Company's. internal control over financial
reporting during the fiscal year ended February 28, 2007 that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
Management's Report on Internal Control over Financial Reporting
Carlateral's management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act. Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
15
We have assessed the effectiveness of the Company's internal control over
financial reporting as of the fiscal year end dated February 28, 2007. In making
the assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in "Internal Control-Integrated
Framework." Based on that assessment, we have concluded that, as of fiscal year
ended February 28, 2007, our internal control over financial reporting is
effective based on those criteria.
Our assessment of the effectiveness of its internal control over financial
reporting as of the fiscal year ended February 28, 2007 has been audited by
Moore & Associates, Chartered, an independent registered accounting firm, as
stated in their report, which is included herein.
PART III
Item 9. Directors, Executive Officers, Promoters, and Control Persons and
Corporate Governance.
Identification of Directors and Executive Officers
Name Age Term Served Title
____________ ___ _______________ ________________________________
Don Cameron 53 Since inception President, Secretary Treasurer,
Principal Executive Officer
Principal Financial Officer
and sole member of the Board of
Directors
There are no other persons nominated or chosen to become directors or executive
officers, nor do we have any employees other than above mentioned officer and
director.
Our directors hold office until the next annual meeting of shareholders and the
election and qualification of their successors. Directors receive no
compensation for serving on the board of directors other than the reimbursement
of reasonable expenses incurred in attending meetings. Officers are appointed by
the board of directors and serve at the discretion of the board.
Officer and Director Background:
DON CAMERON, PRESIDENT, CEO, DIRECTOR, SECRETARY/TREASURER
Mr. Cameron earned a Bachelor of Arts (Honors) in Economics (1975) and a
Bachelor of Law (1979) from the University of British Columbia and was called to
the Bar in British Columbia in 1980. Mr. Cameron attended an Executive
Management course at Stanford University in 1997 and the Program on Negotiation
at Harvard University in 1998.
Prior to practicing law, Mr. Cameron worked on the Pierce Royal Commission on
Forest Resources. Mr. Cameron practiced law with the law firm of Worrall Scott &
Page as an associate (1981 - 1985) and as a partner from (1986 - 1993),
specializing in corporate transactions. During this time Mr. Cameron developed
expertise in acquisitions and divestitures, various forms of debt and equity
financings, executive employment contracts, and litigation related thereto.
Mr. Cameron left the practice of law to pursue entrepreneurial activities,
moving to San Diego in 1993 and was the sole founder of Interactive Telesis Inc,
a firm specializing in interactive voice response (IVR) services and the
16
deployment of automated speech recognition (ASR) technologies. During Mr.
Cameron's tenure with ITI he held the positions of Chairman, Chief Executive
Officer and Director. Over a six year period, ITI grew to $5 million in revenue,
and secured several Fortune 100 customers. Mr. Cameron created all
product/service offerings, was directly responsible for raising all of the
funding required to sustain ITI's growth, and recruited talented senior
personnel at important stages in the development of the business.
In 2002 Mr. Cameron was the sole founder and CEO of ConferTel, a Carlsbad-based
teleconferencing provider. ConferTel has approximately 1,300 customers
throughout the U.S. and Canada and has been profitable since late 2004.
From December 2005 to present Mr. Cameron has been the founder and President of
Carlateral, Inc.
Mr. Cameron is not a director of any other reporting company.
Significant Employees
The Company does not, at present, have any employees other than the current
officer and director. We have not entered into any employment agreements, as we
currently do not have any employees other than the current officers and
directors.
Family Relations
There are no family relationships among the Directors and Officers of
Carlateral, Inc.
Involvement in Legal Proceedings
No executive Officer or Director of the Company has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding that is currently pending.
No executive Officer or Director of the Company is the subject of any pending
legal proceedings.
No Executive Officer or Director of the Company is involved in any bankruptcy
petition by or against any business in which they are a general partner or
executive officer at this time or within two years of any involvement as a
general partner, executive officer, or Director of any business.
Item 10. Executive Compensation.
Our current executive officer and director does not receive any compensation and
have not received any restricted shares awards, options, or any other payouts.
As such, we have not included a Summary Compensation Table.
There are no current employment agreements between the Company and its executive
officer or director. Our executive officer and director has agreed to work
without remuneration until such time as we receive sufficient revenues necessary
to provide proper salaries to the officer and compensat the director for
participation. Our executive officer and director have the responsibility to
determine the timing of remuneration for key personnel based upon such factors
as positive cash flow to include shares sales, product sales, estimated cash
expenditures, accounts receivable, accounts payable, notes payable, and a cash
balance of not less than $50,000 at each month end. When positive cash flow
reaches $15,000 at each month end and appears sustainable, the board of
directors will re-address compensation for key personnel and enact a plan at
that time which will benefit the Company as a whole. At this time, management
cannot accurately estimate when sufficient revenues will occur to implement this
compensation, or the exact amount of compensation.
17
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Related Stockholder Matters.
The following table sets forth certain information with respect to the
beneficial ownership of our common shares as it relates to our named director
and executive officer, and each person known to the Company to be the beneficial
owner of more than five percent (5%) of said securities, and all of our
directors and executive officers as a group:
Name and Position Shares Percent Security
_______________________ _________ _______ ________
Don Cameron
President and Director 7,000,000 67.9% Common
==============================================================================
Officers and Directors as
a Group (1) 7,000,000 67.9% Common
The address for Don Cameron is 1720 30th Street, West Vancouver, BC V7V 2X3
Canada.
The above referenced common shares were paid for and issued in December 2005,
for consideration of $0.001 per share total consideration of $7,000.
Item 12. Certain Relationships and Related Transactions.
Currently, there are no contemplated transactions that the Company may enter
into with our officers, directors or affiliates. If any such transactions are
contemplated we will file such disclosure in a timely manner with the Commission
on the proper form making such transaction available for the public to view.
The Company. has no formal written employment agreement or other contracts with
our current officer, and there is no assurance that the services to be provided
by him will be available for any specific length of time in the future. Mr.
Cameron anticipates devoting at a minimum of ten to fifteen percent of his
available time to the Company's affairs. The amounts of compensation and other
terms of any full time employment arrangements would be determined, if and when,
such arrangements become necessary.
Item 13. Exhibits.
The following exhibits are incorporated into this Form 10-KSB Annual Report:
Exhibit No. Description
___________ _____________________________________________________________
3.1 Articles of Incorporation [1]
3.2 By-Laws of Carlateral, Inc. [2]
31.1 Certification of Chief Executive Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2 Certification of Chief Financial Officer Pursuant to Rule
13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934*
32.1 Certification of Chief Executive Officer under Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
18
32.2 Certification of Chief Financial Officer under Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002**
[1] Incorporated by reference from the Company's SB-2 filed with the Commission
on October 20, 2006.
[2] Incorporated by reference from the Company's SB-2 filed with the Commission
on October 20, 2006.
* Included in Exhibit 31.1
** Included in Exhibit 32.1
Item 14. Principal Accountant Fees and Services.
During the fiscal year ended February 28, 2007 we incurred approximately $5,900
in fees to our principal independent accountants for professional services
rendered in connection with the audit of financial statements for the fiscal
year ended February 28, 2007. For review of our financial statements for the
quarters ended May 31, 2006, August 31, 2006 and November 30, 2006.
During the fiscal year ended February 28, 2007, we did not incur any other fees
for professional services rendered by our principal independent accountants for
all other non-audit services which may include, but not limited to, tax related
services, actuarial services or valuation services.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Carlateral, Inc.
Dated: May 18, 2007 /s/ DON CAMERON
_________________________________
Don Cameron
President, Secretary Treasury,
Principal Executive Officer and
Principal Financial Officer and
Sole Director