Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended December 31, 2010
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission file number: 333-162177
Gulf Shores Investments, Inc.
(Exact name of registrant as specified in its charter)
Nevada 27-0155619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
7985 113th Street, Suite 220
Seminole, FL 33772
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (727) 393-7439
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
February 9, 2011: Common Stock - 78,273,000
2
Gulf Shores Investments, Inc.
Form 10-Q
For the quarterly period ended December 31, 2010
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 18
Item 4. Controls and Procedures 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. (Removed and Reserved) 20
Item 5. Other Information 20
Item 6. Exhibits 20
SIGNATURES
3
PART I
Item I - FINANCIAL STATEMENTS
GULF SHORES INVESTMENTS, INC.
(A Development Stage Company)
Condensed Balance Sheets
(Unaudited)
ASSETS
December 31, June 30,
2010 2010
----------- -------
CURRENT ASSETS
Cash $ - $ 1,449
-------- --------
Total Current Assets - 1,449
-------- --------
TOTAL ASSETS $ - $ 1,449
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses 29,500 31,750
Bank Overdraft 2,675 -
Note Payable - Related Parties 16,500 7,500
-------- --------
Total Current Liabilities 48,675 39,250
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.00001 par value,
20,000,000 shares authorized, 0
shares issued and outstanding
Common stock, $0.00001 par value,
250,000,000 shares authorized,
78,273,000 and 78,273,000 shares
issued and outstanding at December
31, 2010 and June 30, 2010,
respectively. 783 783
Additional paid-in capital 60,327 60,327
Deficit accumulated during the
development stage (109,785) (98,911)
-------- --------
Total Stockholders' Equity (Deficit) (48,675) (37,801)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ - $ 1,449
======== ========
The accompanying notes are an integral
part of these financial statements.
4
GULF SHORES INVESTMENTS, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
From
Inception
Three Months Three Months Six Months Six Months on May 8,
Ended Ended Ended Ended 2009 Through
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009 2010
----------- ----------- ---------- ---------- -----------
REVENUES $ - $ - $ - $ - $ -
OPERATING EXPENSES
Consulting Fees-Related Party - 11,900 - 11,900 25,900
Consulting Fees - 7,000 - 7,000 17,000
Professional Fees 3,710 2,000 5,210 2,000 52,460
General and administrative 3,275 1,572 5,664 3,117 14,425
-------- -------- -------- -------- ---------
Total Operating Expenses 6,985 22,472 10,874 24,017 109,785
-------- -------- -------- -------- ---------
INCOME (LOSS) FROM OPERATIONS (6,985) (22,472) (10,874) (24,017) (109,785)
-------- -------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (6,985) (22,472) (10,874) (24,017) (109,785)
Income tax expense - - - - -
-------- -------- -------- -------- ---------
NET INCOME (LOSS) $ (6,985) $(22,472) $(10,874) $(24,017) $(109,785)
======== ======== ======== ======== =========
BASIC INCOME (LOSS) PER COMMON
SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 78,273,000 74,294,739 78,273,000 73,621,109
========== ========== ========== ==========
The accompanying notes are an integral
part of these financial statements
5
GULF SHORES INVESTMENTS, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
From Inception
Six Months Six Months on May 8,
Ended Ended 2009 Through
December 31, December 31, December 31,
2010 2009 2010
----------- ----------- --------------
OPERATING ACTIVITIES
Net loss $ (10,874) $ (24,017) $(109,785)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Common stock issued for legal
services 250 250
(Decrease) increase in accounts
payable accrued expenses (2,250) (1,575) 29,500
(Decrease) increase in bank overdraft 2,675 - 2,675
--------- --------- ---------
Net Cash Used in Operating Activities (10,449) (25,342) (77,360)
--------- --------- ---------
INVESTING ACTIVITIES
Net Cash Used in
Investing Activities - - -
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from Notes Payable-Related
Parties 10,000 - 17,500
Payments on Notes Payable - Related
Parties (1,000) - (1,000)
Common stock issued for cash 20,860 60,860
--------- --------- ---------
Net Cash Provided by
Financing Activities 9,000 20,860 77,360
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH (1,449) (4,482) -
CASH AT BEGINNING OF PERIOD 1,449 4,729 -
--------- --------- ---------
CASH AT END OF PERIOD $ - $ 247 $ -
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
The accompanying notes are an integral
part of these financial statements.
6
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
The financial statements presented are those of Gulf Shores
Investments, Inc. The Company was originally incorporated under the
laws of the state of Nevada on May 8, 2009. The Company has not
commenced significant operations and, in accordance with ASC Topic 915,
is considered a development stage company. Gulf Shores Investments,
Inc. seeks real estate management opportunities where it believes it
can achieve higher cash flows as a result of its efforts. The
Company's initial focus is on Florida and the southeastern region of
the United States particularly where it perceives there to be the
potential to manage undervalued and distressed properties. The Company
believes it can enhance the value of these properties through the
execution of its strategy. The Company expects to manage real estate
properties in well-located, sometimes under-performing real estate
markets. The Company attempts to identify those markets and submarkets
with job growth opportunities and demand demographics that support
potential long-term value appreciation for the properties it manages.
Interim results are not necessarily indicative of results for a full
year. The information included in this Form 10-Q should be read in
conjunction with information included in the Gulf Shores Investments,
Inc. 2010 Form 10-K filed on October 26, 2010 with the U.S. Securities
and Exchange Commission.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Dividends
---------
The Company has not adopted any policy regarding payment of dividends.
No dividends have been paid during any of the periods shown.
Revenue Recognition
-------------------
Revenues and related expenses from rendering property management
services are recognized when services are completed and billed. In
some situations, we may receive advance payments from our customers.
The Company will defer revenue associated with these advance payments
until it has completed the contracted services.
7
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising Costs
-----------------
The Company's policy regarding advertising is to expense advertising
when incurred. The Company had not incurred any advertising expense as
of December 31, 2010.
Cash and Cash Equivalents
-------------------------
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or
less to be cash equivalents to the extent the funds are not being held
for investment purposes. As at December 31, 2010 the Company had no
cash equivalents.
Basic (Loss) per Common Share
-----------------------------
Basic (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of
common shares during the period. Diluted earnings per share is
calculated by dividing the Company's net income available to common
shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for
any potentially dilutive debt or equity. There are no such common stock
equivalents outstanding as of December 31, 2010.
For the Six Months For the Six Months
Ended December 31, Ended December 31,
2010 2009
------------------ ------------------
Net (Loss) Per Share-Basic
Net (Loss) $ (10,874) $ (24,017)
Weighted Average Shares-Basic 78,273,000 73,621,109
----------- -----------
Net (Loss) Per share-Basic $ (0.00) $ (0.00)
=========== ===========
Net (Loss) Per Share-Diluted
Net (Loss) $ (10,874) $ (24,017)
Weighted Average Shares-Diluted 78,273,000 73,621,109
----------- -----------
Net (Loss) Per share-Diluted $ (0.00) $ (0.00)
=========== ===========
8
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
------------
The Company provides for income taxes under ASC 740 "Accounting for
Income Taxes". ASC 740 requires the use of an asset and liability
approach in accounting for income taxes. Deferred tax assets and
liabilities are recorded based on the differences between the financial
statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be
realized.
The provision for income taxes differs from the amounts which would be
provided by applying the statutory federal and state income tax rate of
39% to net loss before provision for income taxes for the following
reasons:
From Inception
For the Six On May 8, 2009
Months Ended Through
December 31, December 31
2010 2010
------------ --------------
Income tax expense at statutory rate $ (4,241) $ (42,817)
Net deferred tax asset 4,241) 42,817
--------- ---------)
Income tax expense per books $ -) $ -)
========= ==========
Net deferred tax assets consist of the following components as of:
From Inception
For the Six On May 8, 2009
Months Ended Through
December 31, December 31
2010 2010
------------ --------------
NOL carryover $ 4,241) $ 42,817)
Valuation allowance (4,241) (42,817)
-------- ---------
Net deferred tax asset $ - $ -
======== =========
9
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
-------------------------------
The Company continually monitors events and changes in circumstances
that could indicate carrying amounts of long-lived assets may not be
recoverable. When such events or changes in circumstances are present,
the Company assesses the recoverability of long-lived assets by
determining whether the carrying value of such assets will be recovered
through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the
Company recognizes an impairment loss based on the excess of the
carrying amount over the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the
fair value less costs to sell.
Property
--------
The Company does not own or rent any property. Office space is
provided by the Company's president at no charge.
Accounting Basis
----------------
The basis is accounting principles generally accepted in the United
States of America. The Company has adopted a June 30 fiscal year end.
Stock-based compensation
------------------------
In July 2009, the Company issued 75,000 shares of stock as part of our
fee agreement for legal services associated with the Company's S-1
filing. The shares were valued at $0.00333 per share.
The above issuance of stock reflects the effect of the Company's 3 for
1 forward stock split effective on January 5, 2010 (see Note 6).
The Company records stock-based compensation in accordance with ASC 718
(formerly SFAS No. 123R "Share Based Payments"), using the fair value
method. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or
the fair value of the equity instrument issued, whichever is more
reliably measurable. Equity instruments issued to employees and the
cost of the services received as consideration are measured and
recognized based on the fair value of the equity instruments issued.
Recent Accounting Pronouncements
--------------------------------
The company has evaluated all the recent accounting pronouncements and
believes that none of them will have a material effect on the company's
financial statements.
10
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010
2. GOING CONCERN
These financial statements have been prepared on a going concern basis,
which implies that the Company will continue to realize its assets and
discharge its liabilities in the normal course of business. During the
6 month period ending December 31, 2010, the Company recognized no
sales revenue and incurred a net loss of $10,874, and had an
accumulated deficit of $109,785 from inception on May 8, 2009 through
December 31, 2010. The continuation of the Company as a going concern
is dependent upon the continued financial support from its
Shareholders, the ability to raise equity or debt financing, and the
attainment of profitable operations from the Company's future business.
These factors raise substantial doubt regarding the Company's ability
to continue as a going concern. These financial statements do not
include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
3. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following
classes of Capital stock as of December 31, 2010, respectively:
- Preferred stock, $0.00001 par value, 20,000,000 shares authorized
0 shares issued and outstanding.
- Common Stock, $0.00001 par value, 250,000,000 shares authorized
78,273,000 shares issued and outstanding.
COMMON STOCK
On May 8, 2009, we entered into an agreement for the sale of 60,000,000
shares of common stock at a price of $0.00000333 per share. The
Company realized $200 from this subscription.
On May 19, 2009, we entered into an agreement for the sale of
12,000,000 shares of common stock at a price of $0.00333 per
share. The Company realized $40,000 from this subscription.
On July 1, 2009, the Company issued 75,000 shares of stock as part of
our fee agreement for legal services associated with the Company's S-1
filing. The shares were valued at $0.00333 per share.
During the quarter ending September 2009, the Company entered into an
agreement for the sale of 198,000 shares at a price of $0.00333 per
share to 39 different investors. The Company realized $660 from these
subscriptions.
On December 1, 2009, the Company entered into an agreement for the sale
of 6,000,000 at a price of $0.00333 per share. The Company realized
$20,000 from this subscription.
11
GULF SHORES INVESTMENTS, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Condensed Interim Financial Statements
From Inception Through December 31, 2010The above issuance
of stock reflects the effect of the Company's 3 for 1 forward stock
split effective on January 5, 2010 (see Note 5).
The above issuance of stock reflects the effect of the Company's 3 for
1 forward stock split effective on January 5, 2010 (see Note 6).
4. STOCK SUBSCRIPTION RECEIVABLE
In May 2009, the Company issued to its founder 60,000,000 million
shares of its common stock for a price of $.0000033. Payment for the
stock was received on September 23, 2009.
5. RELATED PARTY TRANSACTIONS
Consulting Services - Related Party
The Company's founder and majority shareholder and other related
parties provide various consulting services to the Company for which
they are compensated. For the six months ending December 31, 2010
consultant fees paid were $-0-.
Note Payable - Related Party
Periodically, the Company's founder and majority shareholder provides
loans for administrative and operating expenses. The loans have no
definitive payment terms and bear no interest. The Company will pay
the balance off when it has the available funds.
6. STOCK SPLIT
The company's board of directors authorized a three-for-one stock split
effective on January 5, 2010. Each shareholder of record on January 5,
2010 received two additional shares of common stock for each share held
on that date. All share and related information presented in these
financial statements and accompanying footnotes have been adjusted to
retroactively reflect the increased number of shares resulting from
this action.
7. SUBSEQUENT EVENTS
Management has evaluated all activity since December 31, 2010 through
the date the financial statements are issued, and has concluded that no
subsequent events have occurred that would require recognition in the
Financial Statements or disclosure in the Notes to the Financial
Statements.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
The following plan of operation provides information which management
believes is relevant to an assessment and understanding of our results
of operations and financial condition. The discussion should be read
along with our financial statements and notes thereto. This section
includes a number of forward-looking statements that reflect our
current views with respect to future events and financial performance.
Forward-looking statements are often identified by words like believe,
expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
our predictions.
Liquidity and Capital Resources
-------------------------------
As of December 31, 2010, we had no cash on hand. At December 31, 2010,
we had a bank overdraft of $2,675, compared to a cash balance of $1,449
at year end, June 30, 2010.
Based upon the above, we do not have enough cash to support our daily
operations while we are attempting to commence operations and produce
revenues. We estimate the Company needs an additional $49,000 to
implement its business plans over the next twelve months. We
anticipate we will need a minimum of $39,000 to cover marketing and
operational expenses for the next twelve months. The majority
shareholder has committed to cover any cash shortfalls of the Company,
although there is no written agreement or guarantee. If we are unable
to satisfy our cash requirements we may be unable to proceed with our
plan of operations.
Future financing for real estate management operations may not be
available to us on acceptable terms. To raise equity will require the
sale of stock and the debt financing will require intuitional or
private lenders. We do not have any institutional or private lending
sources identified. If debt financing is not available or not
available on satisfactory terms, we may be unable to continue expanding
our operations. Equity financing will result in a dilution to existing
shareholders.
The foregoing represents our best estimate of our cash needs based on
current planning and business conditions. In the event we are not
successful in reaching our initial revenue targets, additional funds
may be required, and we may not be able to proceed with our business
plan for the development and marketing of our core services. Should
this occur, we will suspend or cease operations.
We anticipate that depending on market conditions and our plan of
operations, we may incur operating losses in the foreseeable future.
Therefore, our auditors have raised substantial doubt about our ability
to continue as a going concern.
13
Investing Activities
--------------------
For the six months ended December 31, 2010 and 2009, we did not pursue
any investing activities.
Financing Activities
--------------------
For the six months ended December 31, 2010, we received proceeds from
notes payable - related party of $10,000 and we made payments on notes
payable - related parties of $1,000. As a result, we had net cash
provided by financing activities of $9,000.
For the six months ended December 31, 2009, we received proceeds from
the sale of common stock of $20,860. As a result, we had net cash
provided by financing activities of $20,860.
Limited Operating History
-------------------------
We have generated no independent financial history and have not
previously demonstrated that we will be able to expand our business
through increased investment in marketing activities. The business is
subject to risks inherent in growing an enterprise, including limited
capital resources and possible rejection of our business model and/or
sales methods.
Future financing may not be available to us on acceptable terms. If
debt financing is not available or not available on satisfactory terms,
we may be unable to continue expanding our operations. Equity
financing will result in a dilution to existing shareholders.
Results of Operations
---------------------
For the three months ended December 31, 2010, we had no revenue.
Expenses for the three months ended December 31, 2010 totaled $6,985
resulting in a net loss of $(6,985). Operating expenses consisted of
professional fees of $3,710 and general and administrative expenses of
$3,275.
For the three months ended December 31, 2009, we had no revenue.
Expenses for the three months ended December 31, 2009 totaled $22,472
resulting in a net loss of $(22,472). Operating expenses consisted of
consulting fees - related party of $11,900, consulting fees of $7,000,
professional fees of $2,000 and general and administrative expenses of
$1,572.
For the six months ended December 31, 2010, we had no revenue.
Expenses for the six months ended December 31, 2010 totaled $10,874
resulting in a net loss of $10,874. Operating expenses consisted of
professional fees of $5,664 and general and administrative expenses of
$5,210.
For the six months ended December 31, 2009, we had no revenue.
Expenses for the six months ended December 31, 2009 totaled $24,017
resulting in a net loss of $24,017. Operating expenses consisted of
14
consulting fees - related party of $11,900, consulting fees of $7,000,
professional fees of $2,000 and general and administrative expenses of
$3,117.
Plan of Operation
-----------------
We have commenced limited operations, but we will require outside
capital to implement our business model. Without outside capital there
can be no assurance we be able to pursue our plan of operation.
1. All business functions will be coordinated and managed by our
founder, including marketing, finance and operations. We intend to
contract with outside professionals to facilitate services for the on-
site management of properties and real estate rehab and maintenance
services that may be required. These services include total property
management responsibilities for the care and upkeep of the
property. We will use independent contractors as leasing agents, as
well as for janitorial services, lawn services and general maintenance
services as required on-site from time to time. The Company has no
outside contracts, but we intend to contract with these professionals
under normal industry terms, which may include lease fees in the 2% -
5% range depending on the nature of the services. There can be no
assurance we will be able to pursue our plan of operations without
outside capital.
2. We will focus on evaluating our performance based on the
following criteria during the next twelve months of operations as the
Company emerges from the development stage:
a. Number of new real estate projects
i. The Company will initially look for distressed and under-
managed projects in Southwest Florida. The Southwest Florida multi-
family residential property market has been hard hit by the recent
economic downturn. Properties in this marketplace are selling at an
average of 33% below 2007 property values. Foreclosed and bank
repossessed real estate owned properties are at an even greater
discount to the previous market highs. We are currently in discussions
with banks and developers of distressed condominium projects in this
market proposing to manage the properties to improve their cash
flow. These negotiations are on-going and subject to the Company
securing management contracts under acceptable terms.
ii. Over the next twelve months, the Company intends to identify at
least ten suitable properties for management.
iii. The Company incurs nominal travel expenses associated with the
search for properties since the Southwest Florida region is nearby its
home office.
We have not entered into any contracts or agreements to manage any
properties. There can be no assurance that we will be able to identify
suitable properties for management or be able to negotiate property
management contracts on favorable terms with the property owners.
15
b. Expense management
i. The Company has a limited operating budget and has maintained
tight expense controls.
ii. Over the next twelve months, the Company anticipates its minimum
need for additional funding is $49,000 to implement its business plans
over the next twelve months. We anticipate operating expenses to be
$24,000 prior to generating revenues. These expenses are estimated at
$2,000 per month primarily travel related cost associated with the
search for properties to manage in Southwest Florida. The Company has
targeted to identify 10 suitable properties for management over the
next twelve months. The Company will also incur $15,000 in marketing
expenses associated with the development of promotional materials and
attendance at trade shows. The Company will incur additional operating
expenses once the Company generates revenues, which are tied to
commissions paid to leasing agents and operating expenses associated
with the upkeep of the properties. The Company plans to hire on a
commission-only basis at such time as the Company has signed property
management contracts, so no additional expenses are created until
revenues are generated. There can be no assurance that we will be able
to align ourselves with professionals for services on a commission-only
basis or that the Company can secure outside financing to pursue its
plan of operation.
c. Achieving positive cash flow
i. After the Company's properties are under management, we will
launch a marketing campaign to attempt generate revenues. There can be
no assurance that we will be able to implement our business development
plans and that we will be successful in negotiating new contracts to
manage properties or attract tenants to utilize the properties.
ii. Over the next twelve months the Company anticipates its minimum
cash needs to be $49,000 prior to generating revenues.
d. Creating strategic alliance relationships
i. The Company intends to contract with outside professionals to
facilitate services for the on-site management of properties and real
estate rehab and maintenance services that may be required. These
services include total property management responsibilities for the
care and upkeep of the property. We will use independent contractors
as leasing agents, as well as for janitorial services, lawn services
and general maintenance services as required on-site from time to time.
ii. Over the next twelve months, the Company intends to hire
additional employees on a commission only basis at such time as the
Company has signed property management contracts, so no additional
expenses are created until revenues are generated. In January, the
Company hired Sanjiv Matta, a Florida licensed real estate professional
to assist the president in furthering the business plan by identifying
16
new properties for management in Southwest Florida. Mr. Matta is a
commission-only employee and no commissions have been paid to him to
date.
iii. The Company has no contracts with outside vendors, but we
intend to contract with these professionals under normal industry
terms, which may include leasing fees in the 2% - 5% range depending on
the nature of the services.
Our growth will be driven by the number of new real estate projects
that we evaluate and contract for management. There is no assurance we
will be able to secure such management contracts for properties or be
able to lease-out such properties on a profitable basis. Certain
competitors may be willing to accept lower fees based on their overhead
structure. As a result, we may have difficulty attracting new
properties to manage and tenants to utilize the properties. There can
also be no assurance that we will be able to align ourselves with
professionals for services on a commission only basis.
3. Our plan of operation includes launching a targeted marketing
campaign focusing on property management trade show participation,
media promotions and public relations once the Company can secure
outside financing. The marketing is estimated to cost $15,000, in
addition to our estimated minimum travel and operating expenses of
$2,000 per month. The majority shareholder has committed to cover any
cash shortfalls of the Company, although there is no written agreement
or guarantee. The majority shareholder, David Dreslin, owns 77% of the
Company and is the Company's president and primary employee. If we are
unable to satisfy our cash requirements we may be unable to proceed
with our plan of operations.
We intend to support our marketing efforts through the development of
high-quality marketing materials and an attractive and informative
website, www.GulfShoresInvestments.com. There can be no assurance we
will be successful in implementing our marketing campaign or that we
will be able to provide our services at lower costs than other property
managers. There can also be no assurance that we will be able to align
ourselves with professionals for services on a commission-only
basis. The development of an on-going marketing campaign will require
the commitment of substantial resources. If additional capital is not
available on acceptable terms, we may not be able to implement our
business development plans or continue our business operations.
4. Over the next 12 month after the initiation of our marketing
campaign, we believe that we will have identified suitable properties
to manage and lease-out to begin to generate revenues from our targeted
marketing approach. This refers to the minimum amount of time that we
estimate will be required to generate revenues based on meetings with
banks and developers in the Southwest Florida property market. Once a
property is identified we will need to negotiate a management contract
with the property owner. Only after a property is identified and
contracted can we begin managing the property for a fee from the
property owners to generate revenues, typically between 5% - 10% of
gross monthly rents. We have not entered into any contracts or
17
agreements to manage any properties. There can be no assurance that we
will be able to identify suitable properties for management or be able
to negotiate property management contracts on favorable terms with the
property owners.
Our future will depend on our ability to identify suitable properties
to manage and our ability to bring our services to the market place,
which requires careful planning of providing a service that meets our
customer's standards without incurring unnecessary cost and
expense. Our operational results can be affected by our ability to
introduce our services or to adjust pricing to try to gain a
competitive advantage. There can be no assurance we will be able to
implement our property management services.
We are still pursuing this plan but to date we have not been able to
raise additional funds through either debt or equity offerings.
Without this additional cash, we have been unable to pursue our plan of
operations and commence generating revenue. We believe that we may not
be able to raise the necessary funds to continue to pursue our business
operations. As a result of the foregoing, we have recently begun to
explore our options regarding the development of a new business plan
and direction. We are currently engaged in the discussions with a
company regarding the possibility of a reverse triangular merger
involving our company. At this stage, no definitive terms have been
agreed to, and neither party is currently bound to proceed with the
merger.
Off-Balance Sheet Arrangements
------------------------------
We have no off-balance sheet arrangements
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The registrant is subject to certain market risks, including changes in
interest rates and currency exchange rates. The registrant does not
undertake any specific actions to limit those exposures.
ITEM 4. CONTROLS AND PROCEDURES
This quarterly report does not include an attestation report of the
registrant's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the registrant's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission
that permit the registrant to provide only management's report in this
quarterly report.
a) Evaluation of Disclosure Controls. David Dreslin, our chief
executive officer and chief financial officer, evaluated the
effectiveness of our disclosure controls and procedures as of the end
of our quarter ended December 31, 2010 pursuant to Rule 13a-15(b) of
the Securities and Exchange Act. Disclosure controls and procedures are
controls and other procedures that are designed to ensure that
18
information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to
be disclosed by us in the reports that we file under the Exchange Act
is accumulated and communicated to our management, as appropriate to
allow timely decisions regarding required disclosure.
The registrant does not have an audit committee. Our management team
consists of only two individuals who lack public company experience.
Our senior management has never had responsibility for managing a
publicly traded company. Such responsibilities include complying with
federal securities laws and making required disclosures on a timely
basis. Our senior management may not be able to implement programs and
policies in an effective and timely manner that adequately respond to
such increased legal, regulatory compliance and reporting requirements,
including the establishing and maintaining internal controls over
financial reporting. Based on his evaluation, Mr. Dreslin concluded
that our disclosure controls and procedures were not effective as of
December 31, 2010.
It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance
that the objectives of the system are met. In addition, the design of
any control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent
limitations of control systems, there can be no assurance that any
design will succeed in achieving its stated goals under all potential
future conditions
b) Changes in internal control over financial reporting. There have
been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting. Our management team will continue to evaluate our
internal control over financial reporting in 2010 as we implement our
Sarbanes Oxley Act testing.
19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. not applicable.
Item 1A. Risk Factors. not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
not applicable.
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. (Removed and Reserved)
Item 5. Other Information. not applicable.
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: February 14, 2011
GULF SHORES INVESTMENTS, INC.
By: /s/David Dreslin
---------------------------
David Dreslin, Principal Executive Officer
Principal Financial Officer
