SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
Form 10-QSB
---------------
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2003
OR
( ) 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 [000-30264]
--------------------------------
Acola Corp.
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-3177042
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5503 Blossom Street
Houston, TX 77007
(Address of principal executive offices including zip code)
-----------------------------------
Registrant's telephone number, including area code:
(713) 802-9911
----------------------------
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of January 30, 2004.
Class Outstanding at January 30, 2004
----- -----------------------------
Common Stock,Class A,
$0.001 Par Value 39,505,065
Common Stock,Class B,
$0.001 Par Value 2,000,000
ACOLA CORP. AND SUBSIDIARIES
Table of Contents
PAGE
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 2003 (unaudited) and June 30, 2003
(audited) 3
Condensed Consolidated Statements of Operations
(unaudited) -Three and Six Months Ended December 31,
2003 and 2002 4
Condensed Consolidated Statements of Changes in
Stockholders' Equity (unaudited) - Six Months
ended December 31, 2003 5
Condensed Consolidated Statements of Cash Flows
(unaudited) -Six Months Ended December 31, 2003 and
2002 6
Notes to Condensed Consolidated Financial Statements
(unaudited) 7
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
Item 3. Controls and Procedures 11
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports 12
ACOLA CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2003 June 30, 2003
(Unaudited) (Audited)
------------ -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 882 $ 5,020
Account receivable - Related Party 6,000 8,000
Prepaid expenses - 4,250
---------- -----------
Total current assets $ 6.882 $17,270
Computer software - Net 274 274
INTANGIBLE ASSETS - Net 10 10
---------- -------
TOTAL ASSETS $ 7,166 $ 17,554
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 3,161 $ 5,503
---------- ----------
TOTAL CURRENT LIABILITIES 3,161 5,503
----------- ----------
STOCKHOLDERS' EQUITY
PREFERRED STOCK; $.001 par value,
5,000,000 shares authorized;
and no shares issued and outstanding - -
COMMON STOCK CLASS A; $.001 par
value; 100,000,000 shares authorized;
39,505,065 and 39,755,050 shares issued
and outstanding 39,505 39,755
COMMON STOCK CLASS B; $.001
par value; 2,000,000 shares authorized;
2,000,000 shares issued and outstanding 2,000 2,000
ADDITIONAL PAID-IN CAPITAL 3,569,426 3,566,176
ACCUMULATED DEFICIT (3,606,926) (3,595,880)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY
4,005 12,051
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 7,166 $ 17,554
====== =======
See accompanying notes.
ACOLA CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------------------------
2003 2002 2003 2002
------- ------- -------- --------
EXPENSES
Professional fees $1,941 $ 4,718 $7,247 $ 4,718
General and admin-
istrative expenses 4,339 13,477 4,339 15,183
--------- -------- -------- ---------
6,280 18,195 11,586 19,901
--------- -------- --------- ---------
LOSS FROM
OPERATIONS (6,280) (18,195) (11,586) (19,901)
-------- --------- -------- ---------
OTHER INCOME -
Gain on sale of asset - 59,999 - 59,999
Debt forgiveness - 8,710 540 8,710
INTEREST INCOME - - - -
-------- --------- --------- --------
TOTAL OTHER INCOME - 68,709 540 68,709
-------- --------- -------- --------
NET INCOME (LOSS) $ (6,280) $ 50,514 (11,046) $ 48,808
======= ====== ======= ========
BASIC AND DILUTED LOSS
PER SHARE OF
COMMON STOCK $ NIL $ NIL $ NIL $ NIL
====== ======== ====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Class A 39,438,398 34,805,050 39,421,732 34,805,050
Class B 2,000,000 2,000,000 2,000,000 2,000,000
========== ======= ======== =========
See accompanying notes.
ACOLA CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED DECEMBER 31, 2003
(Unaudited)
Class A Class B Additional Accumulated
Common Common Paid-In Accumulated Total
Stock Stock Capital Deficit
------ ------ ---------- ----------- --------
BALANCE
AT JUNE
30,2003 $39,755 $2,000 $3,566,176 $(3,595,880) $12,051
Issuance
of Common
Stock 100 2,900 3,000
Reclassification
of Common Stock
to additional
paid in capital (350) 350 -
Net loss for
the six
months ended
December 31,
2003 - - - (11,046) (11,046)
BALANCE AT
DECEMBER ------ -------- ---------- ----------- ------
31,2002 $39,505 $2,000 $3,569,426 $(3,606,926) $4,005
====== ====== ========= ========= ======
See accompanying notes
ACOLA CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
---------------------
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income(loss) $(11,046) $48,808
Adjustments to reconcile net
income(loss) to net cash
used in operating activities
Depreciation and amortization 7
Accounts Receivable-related party 2,000
Short term loans - (31,606)
Changes in assets and liabilities:
Miscellaneous receivables - (18,005)
Accounts payable and accrued
expenses 658 (108,992)
Prepaid Director fees 4,250 -
Due to Former Director - (5,614)
Note due to Former Director - (46,107)
--------- ---------
Net cash used in operating activities (4,138) (161,509)
--------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of computer hardware
and software - (297)
Investment in Ozelle Pharmaceuticals,
Inc. Common Stock - 1
--------- -----------
Net cash used by investment
activities - (296)
--------- ----------
CASH FLOW FROM FINANCING
ACTIVITIES
Additional Paid in Capital - 166,952
--------- -----------
Net cash provided by financing
activities - 166,952
--------- ---------
NET INCREASE (DECREASE) IN CASH (4,138) 5,147
CASH - BEGINNING OF PERIOD 5,020 179
----- ---------
CASH - END OF PERIOD $882 $5,326
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Accounts payable and accrued expenses
extinguishments not requiring cash S3,000 $175,662
See accompanying notes.
ACOLA CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INTERIM PERIODS
The accompanying unaudited information has been prepared in accordance
with generally accepted accounting principles in the United States for
interim financial information and with the rules and regulations adopted
by the United States Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Company's management, all adjustments, consisting of normal
recurring items considered necessary for a fair presentation have been
included. These financial statements should be read in conjunction with the
financial statements and notes for the year ended June 30, 2003, included
in the Form 10-KSB. The results of operations for the three and six month
periods ended December 31, 2003 are not necessarily indicative of
operating results for the full year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk Involving Cash
The Company maintains its cash balances in a bank located in the United
States. These balances are insured up to $100,000 by the FDIC.
Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less to be cash equivalents.
Fair Value of Financial Instruments
Financial instruments consist of cash, receivables, and accounts payable.
The carrying amounts approximate fair value because of the short maturity
of these instruments.
Depreciation
The cost of computer software is depreciated over the estimated useful
lives of the related assets. Depreciation is computed using the straight
line and accelerated methods. No depreciation has been recorded in the
accompanying financial statements for the period ended December 31, 2003.
Any adjustment to reflect depreciation expense would not be significant to
the accompanying financial statements. Repair and maintenance costs are
expensed as incurred.
Class A Common Stock
During the period ended December 31, 2003, the Company issued 100,000
shares of Class A common stock with a value of $3,000 to pay outstanding
vendor invoices and reclassified 349,985 Class A common shares to additional
paid in capital in order to reconcile Class A common shares as reflected on
the accompanying balance sheets and statements of changes in stockholders'
equity to the number of shares reflected on the records of the Company's
transfer agent.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the use of
estimates based on management's knowledge and experience. Accordingly,
actual results could differ from those estimates.
Income Taxes
The Company accounts for its income taxes under Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
which requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for temporary differences between the financial statement
and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities.
Earnings (Loss) Per Share
The Company follows SFAS No. 128, "Earnings Per Share" (EPS), which establishes
standards for computing and presenting EPS. Under this standard, Basic EPS is
computed based on weighted average shares outstanding and excludes any potential
dilution. Diluted EPS reflects potential dilution from the exercise or
conversion of securities into common stock or from other contracts to issue
common stock.
Basic earnings (loss) per share include the weighted average number of shares
outstanding during the year. Diluted earnings (loss) per share include the
weighted average number of shares outstanding and dilutive potential common
shares, such as warrants. There are no options or warrants. Therefore basic
and diluted earnings (loss) per share are the same at December 31, 2003 and
2002.
Comprehensive Income
The Company follows SFAS No. 130, "Reporting Comprehensive Income", which is
a more inclusive financial reporting methodology that includes disclosure of
certain financial information that historically has not been recognized in
the calculation of net income.
NOTE 3 - ORGANIZATION CHANGES AND MANAGEMENT PLANS The Company is seeking a
reverse merger partner for the benefit of all of the Company's shareholders
and has signed a Letter of Intent to effect a reverse merger. See Note 6 -
Subsequent Events. There can be no assurance that a transaction will be
consummated.
NOTE 4 - LEGAL PROCEEDINGS
In August 2000 the Company received a letter from an attorney advising that
there is an Order, dated March 10, 1998, for Entry of Default Judgment in
the District Court of Boulder, Colorado against Northern Lights Software, Ltd.
(a Delaware corporation and a predecessor of the Company) in favor of two
alleged former employees of Northern Lights Software, Ltd. (a New York
corporation which was a subsidiary of Northern Lights Software (Delaware)
Ltd.) in the total amount of $74,887. The judgment was apparently for
alleged unpaid wages. The Company believes that the Colorado lawsuit was
brought against the wrong corporation and that the default judgment was
erroneously issued in violation of Colorado statutes, as interpreted by
the Colorado Supreme Court. Based upon a review of the record in the case,
management believes that it would be an error for any court to enforce the
default judgment, and the Company plans to mount a vigorous defense against
any effort to enforce the judgment against the Company.
Other than that stated above, to the best knowledge of the Officers and
Directors of the Company, neither the Company nor any of its Officers or
Directors is a party to any material legal proceeding or litigation and
such persons know of no other material legal proceeding or litigation
contemplated or threatened. Other than that stated above, there are no
judgments against the Company or its Officers or Directors.
Note 5 - INCOME TAXES
The Company has incurred losses since its inception and, therefore, has
not been subject to federal income taxes. The Company may be entitled to
a net operating loss ("NOL") carryforward for income tax purposes. Because
U.S. tax laws limit the time during which NOL and tax credit carryforwards
may be utilized and due to the change in ownership rules relating to NOL
carryforwards, the Company may not be able to take advantage of its NOL
and tax credits for federal income tax purposes. Consequently, it may be
determined at a future date that the net operating loss carryforwards are
not available to offset earnings of the Company and income taxes may be due.
The Company has not provided for this possible contingency as management
is of the opinion that net operating loss carryforwards are available to
offset current income. The accompanying financial statements do not
reflect the utilization of any net operating loss carryforwards or tax
benefits associated with the losses incurred by the Company because it
is not expected at this time that any benefits will accrue to the Company.
NOTE 6 - SUBSEQUENT EVENTS
On January 18, 2004, the Company entered into a Letter of Intent ("LOI")
with Teda Travel Incorporated ("Teda US") and its wholly-owned subsidiary,
Teda Hotels Management Company Limited, a British Virgin Islands corporation
(Teda BVI"), (collectively the "Company"), whereby Acola, Teda US and Teda
BVI will enter into a transaction (the "Transaction"), probably a share
exchange, which would result in the current shareholders of Teda US owning
95.5% of the total issued and outstanding shares of Acola, with the current
shareholders of Acola retaining 4.5% of the common stock outstanding after
the close of the transaction. Subsequent to the signing of the LOI the
Company negotiated an increase in the shares to be issued to the current
shareholders of the Company to 5% of the common stock outstanding after
the closing of the Transaction. At the close of the Transaction, it is
contemplated that all of the current directors and executive officers of
Acola will resign in favor of new directors and executive officers to be
elected by the Teda US Board of Directors. The Transaction is subject to
the negotiation and execution of a definitive Transaction Agreement. The
transaction is expected to close as soon as practicable after the
execution of the Transaction Agreement.
Teda US and Teda BVI are members of the Teda Group of Tianjin, China. Teda
Travel provides hotel and resort management services and invests in real
estate development in China. The Teda Group owns interests in a number of
companies and properties, including hotels, in China.
On January 18, 2004, in anticipation of the above discussed planned merger,
the Board adopted and the stockholders holding a majority of the outstanding
Common Stock approved a resolution to effect a one-for-forty (1:40) reverse
stock split of both the Class B Common Stock and the Class A Common Stock of
Acola (the "Reverse Split").
The Reverse Split is expected to become effective on or about March 8, 2004
(the "Effective Date"). The Reverse Split will take place on the Effective
Date without any action on the part of the holders of all classes of Acola's
common stock and without regard to current certificates representing shares
of all classes of Acola common stock being physically surrendered for
certificates representing the number of shares of all classes of Acola
common stock each stockholder is entitled to receive as a result of the
Reverse Split. New certificates of Acola common stock will not be issued.
The Board has unanimously adopted and the consenting stockholders have
approved a resolution to effect a reclassification of the Class B Common
Stock into the Common Stock (the "Reclassification"). The effect of this
reclassification is to eliminate the special rights provided to holders of
the Class B Common Stock and to have just one class of common stock. The
Class B Common Stock is currently entitled to 100 votes per share on all
matters to be voted on by Acola stockholders. The 2,000,000 shares of
Class B Common Stock currently issued and outstanding, upon the Effective
Date, will be reclassified to 2,000,000 shares of Class A Common Stock,
which will be entitled to only one vote per share and which will also be
subject to the Reverse Split. Thus, the 2,000,000 shares of Class B Common
Stock currently issued and outstanding will ultimately become 50,000 shares
of Acola Class A Common Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Critical Accounting Policies The Company's accounting policies are integral to
understanding the results reported. The Securities and Exchange Commission
(SEC) recently issued guidance for the disclosure of "critical accounting
policies". The SEC defines "critical accounting policies" as those that are
most important to the presentation of a company's financial condition and
results of operations and require management's most difficult, subjective
or complex judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain.
The Company follows financial accounting and reporting policies that are
in accordance with generally accepted accounting principles as more fully
discussed in its Form 10-KSB for the year ended June 30, 2003. Not all
significant accounting policies require management to make difficult,
subjective, or complex judgments. However, the policies and matters noted
below could be deemed to meet the SEC's definition of critical accounting
policies and could have a negative impact on the Company's operations or
financial position should management's assumptions and estimates be
incorrect.
Evaluation of the Company as a going concern-As reflected in the accompanying
financial statements and more fully discussed in the Company's Form 10KSB at
June 30, 2003, the Company has incurred recurring losses, has no operations
and limited liquidity. These matters, among others, indicate strongly that the
Company may not remain a going concern in the future. Because of this,
management is required to evaluate routinely many business decisions that
may impact the ongoing operations of the Company. Depending upon decisions
made by management and the Company's board of directors, the Company may not
remain a going concern in the future. If the Company does not remain a going
concern, it is likely that the Company's shareholders and creditors will not
receive any return of their investment or payment for outstanding goods or
services.
Commitments and contingencies-As reflected in the accompanying financial
statements and more fully discussed in the Company's Form 10KSB, the
Company is subject to the uncertainty of litigation. Although management of
the Company does not believe that, should the matter go to trial, any amounts
will be due by the Company; results from litigation are often unpredictable
as to outcome. Moreover, due to the Company's limited liquidity and access
to additional operating capital, it is possible that should the legal matters
progress to trial, the Company may not have the required resources necessary
to contest the matter at trial.
Net Operating Loss Carryforwards-Based upon management's current assessment
of its net operating loss carryforwards, no benefits of these losses have
been reflected in the Company's financial statements as management does not
currently believe that any benefits will ever accrue to the Company.
The following discussion should be read in conjunction with the Company's
Condensed Consolidated Financial Statements appearing elsewhere in this
report.
Three and six months ended December 31, 2003 and 2002
Revenue:
The Company did not earn any revenue during the three and six month periods
ended December 31, 2003 and December 31, 2002.
Professional Fee Expenses:
Professional fee expenses for the three and six months ended December 31,
2003 were $1,941 and $7,247, primarily to achieve compliance with SEC filing
requirements, compared to the $4,718 for the three and six months ended
December 31, 2002. The Company ceased business operations during 2002.
General and Administrative Expenses:
General and administrative expenses for the three and six months ended
December 31, 2003 were $4,339, a decrease of $9,198 and
$10,844, respectively, from the prior year periods. The decrease is
because the Company's current activities are limited to a spartan program
of keeping the Company in compliance and searching for attractive merger
candidates.
Other Income:
Other income for the three and six months ended December 31, 2003 was $-0-
and $540, respectively, a decrease of $68,709 from the quarter ended
December 31, 2002 and a decrease of $68,169 from the six months ended
December 31, 2002. The decrease was primarily because of the one-time
profit on the sale of the Ozelle stock in the earlier periods. Only $540
of debt forgiveness income was recorded during the six months ended
December 31, 2003.
Prepaid expenses:
Prepaid expenses of $4,250 relating to directors' fees were expensed during
the three months ended December 31, 2003 because it is not expected to be
of value to the Company after the pending merger. (See Note 6 - Subsequent
Events.)
Description of Property:
As of November 13, 2003 the Company maintains its principal place of business
at 5503 Blossom Street, Houston, Texas 77007. This business location is owned
by one of the Company's shareholders and is provided to the Company without
cost. The Company does not own or maintain any additional properties.
New Accounting Standards
The Financial Accounting Standards Board has issued many new accounting
standards that do not have an impact on the Company due to its relatively
dormant condition. Should the Company emerge from its somewhat dormant
condition to an operating entity, it is quite possible that decisions
made by management and the Company's board of directors could result in the
Company's adoption of new accounting standards which could have a negative
impact on the Company's financial position, results of operations and cash
flows. Because the Company is currently not operating, it is not possible to
determine which new standards might apply and what impact, if any, the new
standards might have.
ITEM 3. Controls and Procedures
Evaluation of disclosure controls and procedures. Within 90 days prior to
the date of this report, the Company carried out an evaluation, under the
supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures.
Based on this evaluation, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that
information required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported to the Company's management within the time periods specified in
the Securities and Exchange Commission's rules and forms.
Changes in internal controls. Subsequent to the date of their
evaluation, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect the Company's
disclosure controls and procedures, and there were no corrective actions
with regard to significant deficiencies and material weaknesses based on
such evaluation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In August 2000 the Company received a letter from an attorney advising that
there is an Order, dated March 10, 1998, for Entry of Default Judgment in
the District Court of Boulder, Colorado against Northern Lights Software, Ltd.
(a Delaware corporation and a predecessor of the Company) in favor of two
alleged former employees of Northern Lights Software, Ltd. (a New York
corporation which was a subsidiary of Northern Lights Software (Delaware)
Ltd.) in the total amount of $74,887. The judgment was apparently for
alleged unpaid wages. The Company believes that the Colorado lawsuit was
brought against the wrong corporation and that the default judgment was
erroneously issued in violation of Colorado statutes, as interpreted by
the Colorado Supreme Court. Based upon a review of the record in the case,
management believes that it would be an error for any court to enforce the
default judgment, and the Company plans to mount a vigorous defense against
any effort to enforce the judgment against the Company.
Other than that stated above, to the best knowledge of the Officers and
Directors of the Company, neither the Company nor any of its Officers or
Directors is a party to any material legal proceeding or litigation and
such persons know of no other material legal proceeding or litigation
contemplated or threatened. Other than that stated above, there are no
judgments against the Company or its Officers or Directors.
Item 2. Changes in Securities
On January 18, 2004, the Board adopted and the stockholders holding a
majority of the outstanding Common Stock approved a resolution to effect
a one-for-forty (1:40) reverse stock split of both the Class B Common Stock
and the Class A Common Stock of Acola (the "Reverse Split").
The Reverse Split is expected to become effective on or about March 1, 2004
(the "Effective Date"). The Reverse Split will take place on the Effective
Date without any action on the part of the holders of all classes of Acola's
common stock and without regard to current certificates representing shares
of all classes of Acola common stock being physically surrendered for
certificates representing the number of shares of all classes of Acola
common stock each stockholder is entitled to receive as a result of the
Reverse Split. New certificates of Acola common stock will not be issued.
The Board has unanimously adopted and the consenting stockholders have
approved a resolution to effect a reclassification of the Class B Common
Stock into the Common Stock (the "Reclassification"). The effect of this
reclassification is to eliminate the special rights provided to holders of
the Class B Common Stock and to have just one class of common stock. The
Class B Common Stock is currently entitled to 100 votes per share on all
matters to be voted on by Acola stockholders. The 2,000,000 shares of
Class B Common Stock currently issued and outstanding, upon the Effective
Date, will be reclassified to 2,000,000 shares of Class A Common Stock,
which will be entitled to only one vote per share and which will also be
subject to the Reverse Split. Thus, the 2,000,000 shares of Class B Common
Stock currently issued and outstanding will ultimately become 50,000 shares
of Acola Class A Common Stock.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports
(a) Exhibits:
Exhibit
Number Description
1 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
2 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
(b) Reports on Form 8-K:
The Company has filed one report on Form 8-K since September 30, 2003:
on January 28, 2003 (Letter of Intent for reverse merger).
FORWARD-LOOKING STATEMENTS
The information in this Form 10-QSB includes "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934, and the Private Securities Litigation
Reform Act of 1995. Acola includes this statement for the express purpose of
availing itself of the protections of these safe harbor provisions with
respect to all of the forward-looking statements Acola makes. The forward-
looking statements in this Form 10-QSB reflect Acola's current views with
respect to possible future events and financial performance. They are
subject to certain risks and uncertainties, including without limitation the
absence of significant revenues, financial resources, significant competition
and those other risks and uncertainties discussed herein that could cause
Acola's actual results to differ materially from its historical results or
those that Acola hopes to achieve. In this Form 10-QSB, the words,
"anticipates," "plans," "believes," "expects," "intends," "future" and
similar expressions identify certain forward-looking statements. Please do
not place undue reliance on the forward-looking statements contained in this
Form 10-QSB. Acola undertakes no obligation to announce publicly revisions
Acola may make to these forward-looking statements to reflect the effect of
events or circumstances that may arise after the date of this Form 10-QSB.
All written and oral forward-looking statements made subsequent to the date
of this Form 10-QSB and attributable to Acola or persons acting on its behalf
are expressly qualified in their entirety by this section.
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACOLA CORP.
By: /s/ James N. Baxter
-------------------------
Date: February 17, 2003 James N. Baxter
President
In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- -------- -----------
/s/ James N. Baxter Director, President & CEO, February 17, 2003
--------------------
James N. Baxter (Principal Executive Officer &
Principal Financial Officer)
1
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