ITEM 1. BUSINESS
FORWARD-LOOKING STATEMENTS; This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In addition, Classic Rules Judo Championships, Inc., (formerly Blue Ribbon Pyrocool, Inc.) (the “Company” or “Classic Rules”), may from time to time make oral forward-looking statements. Actual results are uncertain and may be impacted by many factors. In particular, certain risks and uncertainties that may impact the accuracy of the forward-looking statements with respect to revenues, expenses and operating results include without limitation; cycles of customer orders, general economic and competitive conditions and changing customer trends, technological advances and the number and timing of new product introductions, shipments of products and components from foreign suppliers, and changes in the mix of products ordered by customers. As a result, the actual results may differ materially from those projected in the forward-looking statements.
Because of these and other factors that may affect the Company’s operating results, past financial performance should not be considered an indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
History
Blue Ribbon Pyrocool, Inc. was incorporated on the 16th day of November 2005 as a wholly owned subsidiary of Puritan Financial Group, Inc. (which was formerly Blue Ribbon International, Inc.) On March 24, 2008 a special meeting of the Shareholders of Puritan Financial Group, Inc. was held. A quorum representing 90.2% of the issued common shares were present and the Broad of Directors stated that a special meeting of the Board of Directors held earlier that day approved the spinout of Blue Ribbon Pyrocool, Inc.
March 26, 2008 was also set as the record date to establish those Blue Ribbon shareholders who are eligible to participate in the distribution. Classic Rules did not issue shares to anyone other than our stockholders as of March 26, 2008. The special meeting of shareholders was held as scheduled and the distribution was approved by unanimous vote of Blue Ribbon shares represented at the meeting which consisted of approximately 90.2% of the then outstanding stock of Blue Ribbon.
A stock dividend payable in shares of Blue Ribbon Pyrocool (now, Classic Rules) common stock to the shareholders of Puritan Financial has been authorized by Classic Rules and approved by its shareholders. In March 2008, upon approval of its shareholders, Puritan Financial notified its stock transfer agent, Corporate Stock Transfer, that a spin-out company (Blue Ribbon Pyrocool) would be created and that there would be a distribution of 10,449,250 shares of Blue Ribbon common stock, representing all of the issued and outstanding stock of Blue Ribbon, for the benefit of the Puritan Financial shareholders with no action on the part of the shareholders and will be a book entry.
On July 15, 2008 the Board of Directors of Blue Ribbon executed a Corporate Resolution changing the name of Blue Ribbon to Classic Rules Judo Championships, Inc.
On July 15, 2008 the Board of Directors of Classic Rules declared a 10 to 1 reverse split reducing the total number of outstanding shares from 10,449,250 to 1,044,925; but with the effect of rounding up by the transfer agent another 127 shares were added and the total became 1,045,052.
Also on July 15, 2008, the ad hoc committee comprising a quorum of approximately 90.2% of the voting shares executed a Waiver of Notice for a Special Stockholders Meeting to be held on July 15, 2008 for the purpose of approving the distribution of Classic Rules stock to the Eligible Shareholders and to resolve the issuance of 8,705,084 shares to be distributed to the founding investors of Classic Rules.
Classic Rules World Judo Championships, Inc., a wholly owned subsidiary of the Company was incorporated pursuant to the laws of the State of Connecticut on August 13, 2008. The subsidiary was incorporated to act as the accounting and administrative arm of the tournament, named “ Classic Rules World Judo Championships” which held its first tournament on March 21, 2010 in New Rochelle, New York. The second tournament was held on May 7, 2011. The Company has not hosted a tournament since and has shifted its business focus to real estate investing and development .
Our Business
On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments. The Company operates in the real estate investment industry focused on potential investments in the New York City metropolitan area. On March 15, 2017, the Company commenced non-nominal operations in the distressed real estate sector by (1) retaining multiple specialized real estate brokers to locate liens, judgments, fractional interests and mortgages encumbering distressed residential and commercial properties in the New York City area, and (2) beginning to utilize public record search subscriptions to identify distressed assets and senior and subordinate liens, which the Company deems to be overcollateralized by a sufficient margin to recover the purchase price, the collection costs including legal fees, and the Company’s targeted annualized return. The Company has agreed to pay its broker 1% at closing on the purchase of a distressed property, mortgage or lien identified through their efforts. Distressed properties or liens will only be targeted for purchase if the likely recovery value results in an annualized ROI of 25% or better.
Background Information of the Business Plan
The evolution of the extent to establish The Classic Rules Judo Championship series is the following:
Preliminary Background Information
The Company changed its name to Classic Rules Judo Championships and entered into a new business venture of hosting judo competitions on July 15, 2008. On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments. The Company operates in the real estate investment industry focused on potential investments in the New York City metropolitan area.
Government Regulation
The Company is, and will continue to be, subject to several and varying governmental regulations. In general, the Company is subject to environmental, public health and safety, land use, trade and other governmental regulations, and national, state, or local taxation or tariffs. The Company’s management will endeavor to ascertain and comply with all applicable to the business of the Company. However, it may not be possible to predict with any degree of accuracy all applicable regulations or the impact of government regulation, and, compliance with such regulation will require certain efforts and resources of the Company.
a) Penny Stock Regulations: Our shares are "penny stocks" covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.
The FINRA has adopted rules that require that in recommending an investment to a customer, a broker/dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.
Again, the foregoing rules apply to broker/dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker/dealers, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.
b) Blue Sky Restrictions on Resale: If a selling security holder wants to sell shares of our common stock under this registration statement in the United States, the selling security holders will also need to comply with state securities laws, also known as "Blue Sky laws," with regard to secondary sales. All states offer a variety of exemption from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard & Poor's. The broker for a selling security holder will be able to advise a selling security holder which states our common stock is exempt from registration with that state for secondary sales.
Any person who purchases shares of our common stock from a selling security holder under this registration statement who then wants to sell such shares will also have to comply with Blue Sky laws regarding secondary sales. When the registration statement becomes effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify whether it will need to register or it will rely on an exemption there from.
Employees
The Company presently has no employees other than its officer. Management of the Company expects to use consultants, attorneys, and accountants as necessary, and does not anticipate a need to hire any full-time employees until absolutely necessary for the operations of the Company. The need for employees and their availability will be addressed in connection with the scope and requirements of the operations of the Company.
As of December 31, 2016, we had no employees other than our officer and director. We anticipate that we will not hire any employees in the next twelve months, unless we generate significant revenues.
Facilities
Our executive, administrative and operating offices are located at 269 Forest Ave, Staten Island, NY 10301 free of rent. There is no written agreement documenting this arrangement.
We have no policies with respect to investments in real estate or interests in real estate, real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities. The mailing address of Classic Rules Judo is 269 Forest Ave, Staten Island, NY 10301.
Risk Factors
Financial position of the Company, working capital deficit; report of independent auditors. The Company has yet to generate revenue from its real estate investment activities. The Company, which is to be considered as a startup Company is currently developing its business and hopes to generate sustainable revenues through investment into specific real estate developments in New York. The Company makes no assurances that the Company will generate sufficient revenues through its operations and be able to continue as a going concern.
The independent accountant’s report on the Company’s financial statements for the years ended December 31, 2016 and 2015, contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
Risks of Leverage
. The Company has, and likely will continue to, incur substantial borrowings, notes, and/or other Company debt for the purpose of developing Company operations and for financing the expansion and growth of the Company, including the possible acquisition of other companies. Any amounts borrowed will depend among other things, on the condition of financial markets. Acquisitions of equipment, vehicles, or other companies purchased on a leveraged basis generally can be expected to be profitable only if they generate, at a minimum, sufficient cash revenues to pay interest on, and to amortize, the related debt, to cover operating expenses and to recover the equity investment. The use of leverage, under certain circumstances, may provide a higher return to the shareholders but will cause the risk of loss to the shareholders to be greater than if the Company did not borrow, because fixed payment obligations must be met on certain specified dates regardless of the amount of revenues derived by the Company. If debt service payments are not made when due, the Company may sustain the loss of its equity investment in the assets securing the debt as a result of foreclosure by the secured lender. Interest payable on Company borrowings, if any, may vary with the movement of the interest rates charged by banks to their prime commercial customers. An increase in borrowing costs due to a rise in the “prime” or “base” rates may reduce the amount of Company income and cash availability for dividends.