Attached files

file filename
EX-31.1 - EXHIBIT 31.1 - T5 Corp.gallery10q22811x31_4192011.htm
EX-32.1 - EXHIBIT 32.1 - T5 Corp.gallery10q22811x32_4192011.htm

 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended   February 28, 2011

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 

 
Commission File No. 000-53101

GALLERY MANAGEMENT HOLDING CORP.
 (Exact Name of Small Business Issuer as specified in its charter)
 
Colorado
26-0811822
(State or other jurisdiction
(IRS Employer File Number)
of incorporation)
 

9093 E. Nassau Ave.
 
Denver, Colorado
80237
(Address of principal executive offices)
(zip code)


(303)868-9494
 (Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 [ ]

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 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, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer []                                                      
  Accelerated filer []
Non-accelerated filer   [] (Do not check if a smaller reporting company)
 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]

As of February 28, 2011, registrant had outstanding 22,210,200 shares of the registrant's common stock.

 
 

 

 
FORM 10-Q
 
GALLERY MANAGEMENT HOLDING CORP.
 
TABLE OF CONTENTS
 
 
PART I  FINANCIAL INFORMATION
 
 
Item 1. Financial Statements for the period ended February 28, 2011
 
         Consolidated Balance Sheet (Unaudited)
  5
         Consolidated Statements of Operations (Unaudited)
  6
         Consolidated Statement of Shareholders' Equity
 7
         Consolidated Statements of Cash Flows (Unaudited)
  8
         Notes to Unaudited Financial Statements
  9
   
Item 2. Management’s Discussion and Analysis and Plan of Operation
  10
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  14
   
Item 4. Controls and Procedures
  14
   
Item 4T. Controls and Procedures
  15
   
PART II  OTHER INFORMATION
 
   
  Item 1. Legal Proceedings
  15
   
  Item 1A. Risk Factors  15
   
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  20
   
  Item 3. Defaults Upon Senior Securities
  20
   
  Item 4. Submission of Matters to a Vote of Security Holders
  21
   
  Item 5. Other Information
  21
   
  Item 6. Exhibits
  21
   
Signatures
  22
   
 
 

 
- 2 -

 

PART I FINANCIAL INFORMATION

References in this document to "us," "we," or "Company" refer to GALLERY MANAGEMENT HOLDING CORP. and our subsidiary, Gallery Management, Inc.

 
ITEM 1. FINANCIAL STATEMENTS
 

 

 

GALLERY MANAGEMENT HOLDING CORP.

CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Quarter Ended February 28, 2011

 





 
- 3 -

 


Gallery Management Holding Corp.
Consolidated Financial Statements
(Unaudited)


TABLE OF CONTENTS


 
Page
   
CONSOLIDATED FINANCIAL STATEMENTS    
 
   
Consolidated balance sheet  
5
Consolidated unaudited statement of operations
6
Consolidated statement of shareholders' equity
7
Consolidated unaudited statement of cash flows
8
Notes to consolidated financial statements
9




 
- 4 -

 
 
 
GALLERY MANAGEMENT HOLDINGS CORP.
Consolidated Balance Sheet
(A Development Stage Company)

     
Unaudited
     
Audited
 
   
February
   
November
 
      28, 2011       30, 2010  
ASSETS
               
                 
 Cash
  $ 140     $ 140  
 Accounts receivable
    -       -  
Inventory - artwork
    4,000       4,000  
                 
 Total current assets
    4,140       4,140  
                 
                 
TOTAL ASSETS
  $ 4,140     $ 4,140  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current Liabilities:
               
Accounts payable
  $ 16,326     $ 13,326  
Due to officer
    600       600  
Interest payable
    8,048       7,155  
Payroll taxes payable
    0       0  
Current portion notes payable - related party
    50,000       50,000  
                 
Total current liabilities
    74,974       71,081  
                 
TOTAL LIABILITIES
    74,974       71,081  
                 
SHAREHOLDERS' EQUITY
               
                 
   Preferred stock, par value $.10 per share;  Authorized
               
     1,000,000 shares; issued and outstanding -0- shares.
    -       -  
                 
   Common Stock, par value $.001 per share;  Authorized
               
     50,000,000 shares; issued and outstanding 22,210,200 shares.
    22,210       22,210  
                 
    Capital paid in excess of par value
    42,729       42,729  
                 
    Deficit accumulated during the development stage
    (135,773 )     (131,880 )
                 
TOTAL SHAREHOLDERS' EQUITY
    (70,834 )     (66,941 )
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 4,140     $ 4,140  
 
See Accompanying Notes To These Unaudited Financial Statements.

 
- 5 -

 
 

GALLERY MANAGEMENT HOLDINGS CORP.
Consolidated Unaudited Statement Of Operations
(A Development Stage Company)

     
Unaudited
3 Months
Ended
February
28, 2011
     
Unaudited
3 Months
Ended
February
29, 2010
     
Unaudited
August 15,
2007 (inception)
through February
28, 2011
 
                         
Revenue
  $ -     $ -     $ 14,037  
                         
                         
Operating expenses
                       
Accounting
    3,000       3,250       29,480  
Advertising & promotion
    -       -       2,050  
Bad debt
    -       -       350  
Bank charges
    -       -       60  
Consulting
    -       -       3,105  
Office
    -       337       9,850  
Legal
    -       -       40,700  
Salaries & wages
    -       -       9,028  
Stock transfer fees
    -       -       14,620  
Taxes - payroll
    -       -       762  
                         
Total General and administrative expenses
    3,000       3,587       110,005  
                         
 (Loss) before other expenses
    (3,000 )     (3,587 )     (95,968 )
                         
Other (expenses)
                       
  Interest
    (893 )     (5,603 )     (22,805 )
  Write down of inventory
    -       -       (17,000 )
                         
  Total other expenses
    (893 )     (5,603 )     (39,805 )
                         
     Net (Loss)
  $ (3,893 )   $ (9,190 )   $ (135,773 )
                         
Basic (Loss) Per Share
  $ (0.00 )   $ (0.00 )   $ (0.01 )
                         
Weighted Average Common Shares
                       
 Outstanding
    22,210,200       22,210,200       22,210,200  
 
See Accompanying Notes To These Unaudited Financial Statements.

 
- 6 -

 



GALLERY MANAGEMENT HOLDINGS CORP.
 (A Development Stage Company)
Consolidated Statement of Shareholders' Equity


   
Number Of
Common
Shares Issued
   
Common
Stock
   
Capital Paid
in Excess
of Par Value
   
Retained
Earnings
(Deficit)
   
Total
 
                                         
Balance at August 15, 2007 (Inception)
    -     $ -     $ -     $ -     $ -  
                                         
August 15, 2007 issued 100,000 shares
                                       
  for  services valued at $100 or $.001 per share
    100,000       100               -       100  
                                         
August 16, 2007 issued 33,000
                                       
 shares of par value $.001 common stock
                                       
 for cash of $33 or $.001 per share.
    33,000       33       -               33  
                                         
August 16, 2007 issued 1,006,000
                                       
 shares of par value $.001 common stock
                                       
 for services valued at $1,006 or $.001 per share
    1,006,000       1,006       -               1,006  
                                         
August 16, 2007 Issuance of shares to founder
                                       
  for art work inventory valued at $21,000
    20,900,000       20,900       100               21,000  
                                         
October 2007 issued 4,200
                                       
 shares of par value $.001 common stock
                                       
 for cash of $1,050 or $.25 per share
    4,200       4       1,046               1,050  
                                         
November 2007 issued 167,000
                                       
 shares of par value $.001 common stock
                                       
 for cash of $41,750 or $.25 per share
    167,000       167       41,583               41,750  
                                         
Net (Loss)
    -       -       -       (49,924 )     (49,924 )
                                         
Balance at November 30, 2007
    22,210,200     $ 22,210     $ 42,729     $ (49,924 )   $ 15,015  
                                         
Net (Loss)
    -       -       -       (33,160 )     (33,160 )
                                         
Balance at November 30,2008
    22,210,200     $ 22,210     $ 42,729     $ (83,084 )   $ (18,145 )
                                         
Net (Loss)
    -       -       -       (19,876 )     (19,876 )
                                         
Balance at November 30,2009
    22,210,200     $ 22,210     $ 42,729     $ (102,960 )   $ (38,021 )
                                         
Net (Loss)
    -       -       -       (28,920 )     (28,920 )
                                         
Balance at November 30,2010
    22,210,200     $ 22,210     $ 42,729     $ (131,880 )   $ (66,941 )
                                         
Net (Loss)
    -       -       -       (3,893 )     (3,893 )
                                         
Balance at February 28, 2011 (Unaudited)
    22,210,200     $ 22,210     $ 42,729     $ (135,773 )   $ (70,834 )

See Accompanying Notes To These Unaudited Financial Statements.


 
- 7 -

 


GALLERY MANAGEMENT HOLDINGS CORP.
Consolidated Unaudited Statement Of Cash Flows
(A Development Stage Company)

   
Unaudited
3 Months
Ended
February
28, 2011
   
Unaudited
3 Months
Ended
February
29, 2010
   
Unaudited
August 15,
2007 (inception)
through February
28, 2011
 
                   
Net (Loss)
  $ (3,893 )   $ (9,190 )   $ (135,773 )
                         
Adjustments to reconcile decrease in net assets to net cash
                       
 provided by operating activities:
                       
                         
                         
  Stock issued for services
    -       -       22,106  
  Increase in inventory
    -       -       (4,000 )
  Acreted interest
    -       -       10,750  
  (Increse) Decrease in accounts receivavble
    -       -       -  
  Increase (Decrease) in accounts payable
    3,000       (1,164 )     16,326  
  Increase (Decrease) in due to officer
    -       -       600  
  Increase (Decrease) in payroll taxes payable
    -       -       -  
  Increase in interest payable
    893       853       8,048  
                         
 Net cash (used) in operation activities
    -       (9,501 )     (81,943 )
                         
Cash flows from investing activities:
                       
      -       -       -  
                         
 Net cash (used) in investing activities
    -       -       -  
                         
Cash flows from financing activities:
                       
   Issuance of common stock
    -       -       42,833  
   Notes payable
    -       9,500       39,250  
   Issuance of common stock
    -       -       -  
                         
 Net cash provided from financing activities
    -       9,500       82,083  
                         
Net increase in cash
    -       (1 )     140  
Cash at beginning of period
    140       189       -  
Cash at end of period
  $ 140     $ 188     $ 140  
                         
Supplemental disclosure information:
                       
Stock issued for services and art work
  $ 22,106     $ 22,106     $ 22,106  
                         
Cash paid for interest
  $ -     $ -     $ -  
Cash paid for income taxes
  $ -     $ -     $ -  

See Accompanying Notes To These Unaudited Financial Statements.


 
- 8 -

 


GALLERY MANAGEMENT HOLDING CORP.
Notes To Unaudited Financial Statements
For The Three Month Period Ended February 28, 2011


Note 1 - Unaudited Financial Information

The unaudited financial information included for the three month interim period ended February 28, 2011 was taken from the books and records without audit. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to reflect properly the results of the interim periods presented. The results of operations for the three month period ended February 28 2011 are not necessarily indicative of the results expected for the fiscal year ended November 30, 2011.

Note 2 - Financial Statements

For a complete set of footnotes, reference is made to the Company’s Report on Form 10-KSB for the year ended November 30, 2010 as filed with the Securities and Exchange Commission and the audited financial statements included therein.
 

 
- 9 -

 


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.

Narrative Description of the Business 

Gallery Management Holding Corp. organized as a corporation under the laws of the State of Colorado on August 15, 2007.

We have two lines of business. We provide consulting services in the management of art galleries in  the Denver, Colorado metropolitan area. We also plan to market fine art, antiques and collectibles on a retail consignment basis, on the internet through our subsidiary, Gallery Management, Inc. Our primary outlet is anticipated to be ebay where we believe that we will receive maximum marketing exposure with minimal expense. Our subsidiary plans to acquire fine art, antiques and collectibles to be marketed on the internet solely on a consignment basis. We do not plan to carry an inventory. We have no definitive plans to be involved in any other activities at the present time other than our present proposed business.

Our headquarters are located at 9093 E. Nassau Ave., Denver, Colorado 80237. Our phone number at our headquarters is (303) 868-9494. Our fiscal year end is November 30.

Our plan is to make a profit by December 31, 2011. Our company has a limited history of operations with respect to our consulting business and has no history operating an Internet gallery.

We are a development stage company. We act as both a management consultant to art galleries and plan to develop an Internet gallery. We earn income by selling our products.

If we are not successful in our operations we will be faced with several options:

1.   
Cease operations and go out of business;

2.   
Continue to seek alternative and acceptable sources of capital;

3.   
Bring in additional capital that may result in a change of control; or

4.   
Identify a candidate for acquisition that seeks access to the public marketplace and its financing sources


 
- 10 -

 


            Currently, we believe that we have sufficient capital to implement our proposed business operations or to sustain them through December 31, 2011. If we can become profitable, we could operate at our present level indefinitely. To date, we have never had any discussions with any possible acquisition candidate nor have we any intention of doing so.

      We plan to operate out of one office in Colorado. We have no specific plans at this point for additional offices.   

Results of Operations

The following discussion involves our results of operations for the three months ending February 28, 2011, for the three months ending February 28, 2010 and the period from inception through February 28, 2011.

For the three months ended February 28, 2011, we had total revenues of $-0-. For the three months ended February 28, 2010, we had total revenues of $-0-. From inception through February 28, 2011, we had total revenues of $14,037.

Our operating expenses consisted primarily of general and administrative expenses. General and administrative expenses for the three months ended February 28, 2011 were $3,000. General and administrative expenses for the three months ended February 28, 2010 were $3,587.  General and administrative expenses were $110,005 for the period from inception through February 28, 2011. The major components of these general and administrative expenses were payments to consultants, professional fees, and maintenance supplies. While our general and administrative expenses will continue to be our largest expense item, we have brought this expense in line with our revenues for the three months ending February 28, 2011  and we believe that in the coming fiscal year we can control this expense as we reduce payments to consultants and professional fees.

We had a net loss of $3,893 for the three months ended February 28, 2011. We had a net loss of $9,190 for the three months ended February 28, 2010. We had a net loss of $135,773 for the period from inception through February 28, 2011.
 
      Because we pay minimal salaries, and our major professional fees have been paid for the year, operating expenses are expected to remain fairly constant.
 
      To try to operate at a break-even level based upon our current level of proposed business activity, we believe that we must generate approximately $35,000 in revenue per year. However, if our forecasts are inaccurate, we will need to raise additional funds. In the event that we need additional capital, Ms. Nelson has agreed to loan such funds as may be necessary through December 31, 2011 for working capital purposes.
 
      On the other hand, we may choose to scale back our operations to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current operations. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, the development of new or enhanced services or products, appropriate responses to competitive pressures, or the acquisition of complementary businesses, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.
 
      We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect approximately $35,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business.


 
- 11 -

 

Liquidity and Capital Resources

As of February 28, 2011, we had cash or cash equivalents of $140 compared to $188 as of February 28, 2010.

Net  cash used in operating activities was $-0- for the three months ended February 28, 2011.  Net cash used in operating activities was $9,501 for the three months ended February 28, 2010. Net cash used in operating activities was $81,943 for the period from inception through February 28, 2011. We anticipate that overhead costs in current operations will remain fairly constant as we develop revenue.

Cash flows used in investing activities were $-0- for all relevant periods.

Cash flows provided by financing activities were $-0- for the three months ended February 28, 2011. Cash flows provided by financing activities were $9,500 for the three months ended February 28, 2010. Cash flows provided from financing activities were $82,083 for the period from inception through February 28, 2011. All cash flows were related to our recent securities sales activity and to loans.

Over the next twelve months we do not expect any material our capital costs to develop operations. We plan to buy office equipment to be used in our operations.

We believe that we have sufficient capital in the short term for our current level of operations. This is because we believe that we can attract sufficient product sales and services within our present organizational structure and resources to become profitable in our operations. Additional resources would be needed to expand into additional locations, which we have no plans to do at this time. We do not anticipate needing to raise additional capital resources in the next twelve months In the event that we need additional capital, Ms. Nelson has agreed to loan such funds as may be necessary through December 31, 2011 for working capital purposes.

Our principal source of liquidity will be our operations. We expect variation in revenues to account for the difference between a profit and a loss. Also business activity is closely tied to the U.S. economy, particularly the economy in Denver, Colorado. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop both a consulting practice and an internet gallery business along with our ability to generate revenues.

 In any case, we try to operate with minimal overhead. Our primary activity will be to seek to develop clients for our services and, consequently, our sales. If we succeed in developing clients for our services and products and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful.

Plan of Operation

Our plan is to make a profit by December 31, 2011. Our company has a limited history of operations with respect to our consulting business and has no history operating an Internet gallery.

We are a development stage company. Our plan is to act as both a management consultant to art galleries and an Internet gallery. We plan to earn income by selling our products.

If we are not successful in our operations we will be faced with several options:

1.   
Cease operations and go out of business;

2.   
Continue to seek alternative and acceptable sources of capital;

3.   
Bring in additional capital that may result in a change of control; or

4.   
Identify a candidate for acquisition that seeks access to the public marketplace and its financing sources
 

 
- 12 -

 



            Currently, we believe that we have sufficient capital to implement our proposed business operations or to sustain them through December 31, 2011. If we can become profitable, we could operate at our present level indefinitely. To date, we have never had any discussions with any possible acquisition candidate nor have we any intention of doing so.

       We plan to operate out of one office in Colorado. We have no specific plans at this point for additional offices.   

Proposed Milestones to Implement Business Operations
 
At the present time, we plan to operate from one location in Denver, Colorado. Our plan is to make our operation profitable by December 31, 2011. We estimate that we must generate approximately $35,000 in revenues per year to be profitable.

We believe that we can be profitable or at break even by the end of our next fiscal year, assuming sufficient revenues. Based upon our current plans, we have adjusted our operating expenses so that cash generated from operations and from working capital financing is expected to be sufficient for the foreseeable future to fund our operations at our currently forecasted levels. To try to operate at a break-even level based upon our current level of anticipated business activity, we believe that we must generate approximately $35,000 in revenue per year. However, if our forecasts are inaccurate, we may need to raise additional funds. Our resources consist of our available cash.  In addition, Ms. Nelson agreed to loan such additional funds as may be necessary through December 31, 2011 for working capital purposes. On the other hand, we may choose to scale back our operations to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current operations. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, the development of new or enhanced services and products, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.

We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect approximately $35,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business.
 
              In the next 12 months, we do not intend to spend any material funds on research and development and do not intend to purchase any large equipment.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements with any party.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 
- 13 -

 


The accounting policies that we follow are set forth in Note 2 to our financial statements as included in this prospectus. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.
 
Recently Issued Accounting Pronouncements
 
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 123R "Share Based Payment." This statement is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R addresses all forms of share based payment ("SBP") awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. Under SFAS No. 123R, SBP awards result in a cost that will be measured at fair value on the awards' grant date, based on the estimated number of awards that are expected to vest. This statement is effective for public entities that file as small business issuers, as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. We adopted this pronouncement during the first quarter of 2005.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets - An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for non-monetary exchanges of similar productive assets and replace it with a broader exception for exchanges of non-monetary assets that do not have "commercial substance." SFAS No. 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 on its effective date did not have a material effect on our consolidated financial statements.

In March 2005, the FASB issued Financial Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations - an Interpretation of FASB Statement No. 143", which specifies the accounting treatment for obligations associated with the sale or disposal of an asset when there are legal requirements attendant to such a disposition. We adopted this pronouncement in 2005, as required, but there was no impact as there are no legal obligations associated with the future sale or disposal of any assets.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections — A Replacement of APB Opinion No. 20 and SFAS Statement No. 3". SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle by requiring retrospective application to prior periods' financial statements of the change in accounting principle, unless it is impracticable to do so. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not expect the adoption of SFAS No. 154 to have any impact on our consolidated financial statements.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

None.


ITEM 4. CONTROLS AND PROCEDURES

Not applicable.



 
- 14 -

 

ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Identified in connection with the evaluation required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of this chapter that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.


ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information in this document before deciding to invest in shares of our common stock.

The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating result. In this case, the trading price of our common stock could decline and you might lose all or part of your investment.

Risks Related to Our Business and Industry

We have no substantial operating history, and have never been profitable.  As a result, we may never become profitable, and, as a result, we could go out of business. We have negative stockholders equity.

We were organized as a corporation on August 15, 2007.  We have no substantial operating history.  Our sales depend upon the number of customers we can generate.  From our inception on August 15, 2007 through February 28, 2011, we generated $14,037 in revenue. We had a net loss of $135,773 for this period. At February 28, 2011 we had a negative stockholders’ equity of $70,834. We cannot guarantee we will ever develop a substantial number of customers. Even if we develop a substantial number of customers, there is no assurance that we will become a profitable company. We may never become profitable, and, as a result, we could go out of business.


 
- 15 -

 

Because we had incurred operating losses from our inception, our accountants have expressed doubts about our ability to continue as a going concern.
 
For the period ended November 30, 2010, our accountants have expressed doubt about our ability to continue as a going concern as a result of our continued net losses. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:
 
·   
  our ability to generate substantial operations;
·   
  our ability to locate clients who will purchase our gallery services; and
·   
  our ability to generate substantial revenues.

Based upon current plans, we may incur operating losses in future periods because we may, from time to time, be incurring expenses but not generating sufficient revenues. We expect approximately $35,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues will cause us to go out of business.

 Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.

We have a limited operating history, based no revenues and a lack of profitability. These factors make it difficult to evaluate our business on the basis of historical operations. As a consequence, our past results may not be indicative of future results. Although this is true for any business, it is particularly true for us because of our limited operating history. Reliance on historical results may hinder our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses. For example, if we overestimate our future sales for a particular period or periods based on our historical growth rate, we may increase our overhead and other operating expenses to a greater degree than we would have if we correctly anticipated the lower sales level for that period and reduced our controllable expenses accordingly. If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses, which may result in a decline in our stock price.

We have a lack of liquidity and will need additional financing in the future. Additional financing may not be available when needed, which could delay, indefinitely postpone, or prevent our successful development.

We are only minimally capitalized. Because we are only minimally capitalized, we expect to experience a lack of liquidity for the foreseeable future in our proposed operations. We will adjust our expenses as necessary to prevent cash flow or liquidity problems. However, we expect we will need additional financing of some type, which we do not now possess, to fully develop our operations. We expect to rely principally upon our ability to raise additional financing, the success of which cannot be guaranteed. We will look at both equity and debt financing, including loans from our principal shareholder. However, at the present time, we have no definitive plans for financing in place, other than the funds which may be loaned to us by Ms. Nelson, our President. In the event that we need additional capital, Ms. Nelson has agreed to loan such funds as may be necessary through December 31, 2011 for working capital purposes. To the extent that we experience a substantial lack of liquidity, our development in accordance with our proposed plan may be delayed or indefinitely postponed, our operations could be impaired, we may never become profitable, fail as an organization, and our investors could lose some or all of their investment.

As a company with limited operating history, we are inherently a risky investment. An investor could lose his entire investment.

We have a limited operating history. Because we are a company with a limited history, the operations in which we engage in, the internet gallery business, is an extremely risky business. An investor could lose his entire investment.


 
- 16 -

 

Because we are small and do not have much capital, we must limit our operations. A company in our industry with limited operations has a smaller opportunity to be successful. If we do not make a profit, we may have to suspend or cease operations.

Because we are small and do not have much capital, we must limit our operations. We must limit our operations to the Denver, Colorado metropolitan area as the only geographical area in which we operate. Because we may have to limit our operations, we may not generate sufficient sales to make a profit. If we do not make a profit, we may have to suspend or cease operations.

Our success will depend upon our ability to develop relationships with our clients and customers. If we cannot develop sufficient relationships, we may never become profitable.  An investor could lose his entire investment.

We have two lines of business. We provide consulting services in the management of art galleries and plan to market fine art, antiques and collectibles on a retail consignment basis, on the internet through our subsidiary, Gallery Management, Inc  Our  performance  depends,  in large  part,  on our  ability  to develop relationships with potential consulting services clients and with customers who will purchase merchandise  in  sufficient  quantities.. We have no long-term contracts or other contractual assurances of consulting services or of supply, pricing or access to new products. We may never develop sufficient consulting services clients, which would negatively impact our proposed operations. Also because customers of merchandise often collect specific product lines, our inability to obtain particular merchandise on consignment could have a material adverse effect on our financial condition and results of operations. There can be no assurance that we will be able to acquire desired merchandise in sufficient quantities on terms  acceptable to us, or that an  inability to acquire  suitable merchandise, or the loss of one or more key sources of supply to us,  will not have a material adverse effect on our financial condition and results of operations. As a result, we may never become profitable. An investor could lose his entire investment.

Intense competition in our market could prevent us from developing revenue and prevent us from achieving annual profitability. In either situation, we may never become profitable, fail as an organization, and our investors could lose some or all of their investment.

The secondary market for fine art, antiques and collectibles is intensely competitive.  Competition  is expected  to   intensify  in the future,  which may result in price  reductions,  fewer customer  orders,  reduced gross margins and loss of  market  share.  We are aware of a number of other  companies  that are presently  retailing fine art,  antiques   and/or  collectibles  online.  We believe that there will be an  increasing number of online  retailers of fine art,  antiques and  collectibles of the types we offer and, in the instance of certain reproductions, identical to the reproductions we offer. Some of our competitors may be able to secure  merchandise from suppliers on more favorable terms, fulfill customer orders more efficiently and adopt more aggressive pricing or inventory availability policies than we can.

Our business has a seasonal fluctuation in sales, which can develop fluctuating quarterly results in our operations.

The gallery industry can be subject to seasonal variations in demand. For example, we expect that most of our operations will see the greatest demand during the winter holiday shopping period. Consequently, we expect to be most profitable during the fourth quarter of our fiscal year.  Quarterly results may also be materially affected by the timing of new product introductions, the gain or loss of significant  customers or product  lines and  variations in merchandise  mix. Accordingly, our  performance  in any  particular  quarter may not be indicative of the results that can be expected for any other quarter or for the entire year.  Significant  deviations  from  projected  demand for merchandise  could have a material  adverse  effect on our  financial condition  and  quarterly or annual  results of  operations.


 
- 17 -

 

We expect to be directly affected by fluctuations in the general economy.

Demand for art and other collectible merchandise is affected by the general economic conditions in the United States.  When economic conditions are favorable and discretionary  income increases,  purchases of non-essential items like  art and other collectible  merchandise  generally  increase.  When economic conditions are less favorable,  sales of art and other collectible  are generally lower. In addition, we may experience more  competitive  pricing  pressure  during  economic  downturns.   Therefore, any significant  economic downturn or any future changes in consumer spending habits could have a material  adverse effect on our  financial  condition and results of operations.

We expect our products to be subject to changes in customer taste.

The markets for our products are subject to changing customer tastes and the need to create and market new products.  Demand for collectibles is influenced by the popularity of certain themes, cultural and demographic trends, marketing and advertising  expenditures  and general economic conditions.  Because these factors can change rapidly, customer demand also can shift quickly.  Some collectibles appeal to customers for only a limited  time.  The success  of new  product  introductions  depends on various factors, including product selection and quality, sales and marketing efforts, timely production and delivery and consumer acceptance. We may not always be able to respond  quickly  and  effectively  to changes in customer taste and demand due to the amount of time and financial  resources  that may be required to bring new  products to market.  If we were to  materially misjudge the market,  certain of our consignments may remain  unsold.  The inability to respond  quickly to market  changes  could have a material  adverse effect on our  financial  condition  and results of  operations.

There are risks associated with an internet marketing strategy.

We have not  previously  conducted  marketing  programs according to practices  common to the Internet industries,  including practices such as the systematic  measurement of the response rates generated from its databases or the categorization of entries in the databases by past behavior.  The costs for a new  information  technology system to effect such integration  could be substantial,  as could the amount of time needed to acquire and implement  such a system.  The inability to develop the various  databases  successfully,  or in a timely and cost effective manner, could have a material  adverse effect on our  financial  condition and results  of  operations.

We may be affected by sales tax considerations from various states.

Various states are  increasingly  seeking to impose  sales or use taxes on inter-state mail order sales and are aggressively  auditing sales tax returns of mail order  businesses.  Complex legal issues  arise in these areas,  relating, among other things, to the required nexus of a business with a particular state, which may permit the state to require a business to collect such taxes. Although we believe that we can adequately provide for sales taxes on mail order  sales,  there can be no  assurance  as to the effect of actions  taken by state tax  authorities  on our financial condition or results of operations. In the future,  we may be required to collect  sales tax on sales made to  customers in all of the states in which we conducts our operations. The imposition of sales taxes on mail order sales  generally has a negative effect on mail order sales levels. All of the factors cited above may negatively  affect our financial condition  and  results of  operations  in the future.  Any such impact  cannot currently be quantified.

Our proposed business will be concentrated in only two segments.

We plan to be in the art and collectibles business through consignment sales over the Internet and in the consulting business for gallery management.  Our proposed operations, even if successful, will in all likelihood result in the operation of only two businesses. Our lack of diversity into a number of areas may subject us to economic fluctuations within our par­ticular businesses or industry and therefore increase the risks associated with our proposed operations.


 
- 18 -

 

There are factors beyond our control which may adversely affect us. Our investors could lose some or all of their investment.

Our operations may also be affected by factors which are beyond our control, principally general market conditions and changing client preferences.  Any of these problems, or a combination thereof, could have affect on our viability as an entity. We may never become profitable, fail as an organization, and our investors could lose some or all of their investment.

Our success will be dependent upon our management’s efforts. We cannot sustain profitability without the efforts of our management. An investor could lose his entire investment.

Our success will be dependent upon the decision making of our directors and executive officers. These individuals intend to commit as much time as necessary to our business, but this commitment is no assurance of success. The loss of Ms. Nelson, our President, would harm our operations. We have no written employment agreements with Ms. Nelson. We have not obtained key man life insurance on the lives of any of our officers or directors.

We have limited experience as a public company.  Our inability to operate as a public company could be the basis of your losing your entire investment in us.

We have limited experience as a public company. We have limited experience in complying with the various rules and regulations which are required of a public company. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations which are required of a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.

Our stock has a limited public trading market and there is no guarantee a significant trading market will ever develop for our securities. You may not able to sell your shares when you want to do so, if at all.

There has been, and continues to be, a limited public market for our common stock. We trade on the OTC Bulletin Board under the trading symbol GMHC. An active trading market for our shares  has not, and may never develop or be sustained. If you purchase shares of common stock, you may not be able to resell those shares at or above the initial price you paid. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, including the following:

 
actual or anticipated fluctuations in our operating results;

 
changes in financial estimates by securities analysts or our failure to perform in line with such estimates;

 
changes in market valuations of other companies, particularly those that market services and products such as ours;

 
announcements by us or our competitors of significant innovations,  acquisitions, strategic partnerships, joint ventures or capital commitments;

 
departures of key personnel.

As restrictions on resale end, the market price of our stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them.


 
- 19 -

 

Applicable SEC rules governing the trading of “Penny Stocks” limit the liquidity of our common stock, which may affect the trading price of our common stock. You may not able to sell your shares when you want to do so, if at all.
 
Our common stock is currently quoted in the OTC Bulletin Board and trades well below $5.00 per share. As a result, our common stock is considered a “penny stock” and is subject to SEC rules and regulations that impose limitations upon the manner in which our shares can be publicly traded.  These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock and the associated risks.  Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination for the purchaser and receive the written purchaser’s agreement to a transaction prior to purchase.  These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.

The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations. You may not able to sell your shares when you want to do so, at the price you want, or at all.

The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock.

Buying low-priced penny stocks is very risky and speculative. You may not able to sell your shares when you want to do so, if at all.

The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, 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 spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.
 
We do not expect to pay dividends on common stock.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock in the foreseeable future. Earnings, if any, that we may realize will be retained in the business for further development and expansion.
 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.


 
- 20 -

 


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5.  OTHER INFORMATION

None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  Exhibits
The following financial information is filed as part of this report:

(a)           (1) FINANCIAL STATEMENTS

(2) SCHEDULES

(3) EXHIBITS. The following exhibits required by Item 601 to be filed herewith are incorporated by reference to previously filed documents:

 
 
Exhibit
Number
 
 
Description
   
3.1*
Articles of Incorporation
   
3.2*
Bylaws
   
21.1*
List of Subsidiaries
   
31.1
Certification of CEO/CFO pursuant to Sec. 302
   
32.1
Certification of CEO/CFO pursuant to Sec. 906

            * Previously filed with Form SB-2 Registration Statement, January 28, 2008.

Reports on Form 8-K. No reports have ever been filed under cover of Form 8-K.

 
 
- 21 -

 
 
 

 
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.

 

     
 
Gallery Management Holding Corp.
  
  
  
Date:  April 20, 2011
By:    
/s/ Darlene Nelson
Darlene Nelson
Chief Executive Officer
Chief Financial Officer
 
 
 
 

 
- 22 -