KOGETO, INC. - FORM 10-Q

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EX-32.1 - KOGETO, INC.	v223693_ex32-1.htm
EX-31.1 - KOGETO, INC.	v223693_ex31-1.htm

UNITED STATES

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 March 31, 2011

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

For the transition period from to

Commission file number: 000-51997

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA	65-0637308

(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

2174 HEWLETT AVENUE, SUITE 206

MERRICK, NY 11566

(Address of Principal Executive Offices)

(Zip Code)

(516) 377-6311

(Registrant’s Telephone Number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

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 shares outstanding of the Registrant’s common stock as of May 7, 2009 was 692,879 shares.

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

FORM 10-Q

March 31, 2011

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4T.	Controls and Procedures	9

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings	9
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.	Defaults Upon Senior Securities	10
Item 4.	Removed and Reserved	10
Item 5.	Other Information	10
Item 6.	Exhibits	10

SIGNATURES		10

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

The financial statements of Northeast Automotive Holdings, Inc. (the "Company"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-K for the year ended December 31, 2010.

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

	March 31,			December 31,
	2011			2010

ASSETS
Current Assets:
Cash	$	84,101		$	417,948
Inventory		187,905			480,598

Total Current Assets		272,006			898,546

Equipment, net		9,443			10,804
Other assets		3,589			1,800

TOTAL ASSETS	$	285,038		$	911,150

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Customer deposits payable	$	971		$	48,430
Note payable to bank		100,000			100,000
Demand loans payable		-			263,753
Due to stockholders		905			272,640
Accrued expenses		32,252			39,123
Payroll taxes withheld and accrued		1,942			874
Total Current Liabilities		136,070			724,820


Stockholders' equity
Preferred stock, 0.0001 par value, 10,000,000 shares authorized, 10,000,000 issued and outstanding		1,000			1,000
Common stock, .001 par value, 300,000,000 shares authorized, 554,017 shares issued and outstanding March 31, 2011 and December 31, 2010		554			554
Capital Stock to be issued (500,000 Shares)		20,000			20,000
Additional Paid in Capital		3,957,424			3,957,424
Accumulated Deficit		(3,828,834	)		(3,791,472	)
		150,144			187,506
Less: Treasury stock (6,667 common shares)		(1,176	)		(1,176	)
Total Stockholders' Equity		148,968			186,330

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	285,038		$	911,150

See Notes to Unaudited Financial Statements

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three			Three
	Months			Months
	Ended			Ended
	March 31,			March 31,
	2011			2010
	(unaudited)			(unaudited)

Net sales	$	415,776		$	3,553,743

Cost of sales		362,477			3,325,772

Gross profit		53,299			227,971

Operating expenses:
Officers salaries		20,338			-
Selling, general and administrative		64,576			144,402
Total operating expenses		84,914			176,640

Interest expense		4,378			32,238

Profit (loss) from operations		(35,993	)		51,331

Income taxes		1,369			8,344

Net profit (loss)	$	(37,362	)	$	42,987

Net income (loss) per share basic and diluted	$	0.00		$	0.06

Weighted average number of shares outstanding		554,017			692,879

See Notes to Unaudited Financial Statements

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months			Three Months
	Ended			Ended
	March 31, 2011			March 31, 2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)	$	(37,362	)	$	42,987
Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,361			1,362
Changes in operating assets and liabilities:
(Increase) decrease in loans receivable		-			(60,555	)
(Increase) decrease in inventory		292,693			126,418
(Increase) decrease in other assets		(1,789	)		2,800
Increase (decrease) in customer deposits payable		(47,459	)		-
Increase (decrease) in accounts payable		-			(111,578	)
Increase (decrease) in accrued expenses		(6,871	)		(13,766	)
Increase (decrease) in payroll taxes		1,068			218
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		201,641			(12,114	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit		-			(74,938	)
Repayment of stockholders loan		(271,735	)		(83,751	)
Proceeds of demand loans		-			34,068
Repayments of demand loans		(263,753	)		-
Proceeds/(Repayments) on credit card loan		-			1,475
CASH USED IN FINANCING ACTIVITIES		(535,488	)		(123,146	)

NET DECREASE IN CASH		(333,847	)		(135,260	)

CASH
Beginning of year		417,948			341,629

End of period	$	84,101		$	206,369

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Income tax payments	$	-		$	8,344
Interest payments	$	4,378		$	32,238

See Notes to Unaudited Financial Statements.

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 –NATURE OF BUSINESS & BASIS OF PRESENTATION

The Company buys used automobiles at auctions, then repairs, cleans, transports and resells them wholesale throughout the United States.

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis addresses material changes in the results of operations and financial condition of Northeast Automotive Holdings, Inc. and Subsidiaries (the “Company” or “we”) for the periods presented. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Results of Operations and Financial Condition included in the Company’s Form 10-K for the fiscal year ended December 31, 2010, the unaudited interim Condensed Consolidated Financial Statements and related Notes included in Item 1 of this Report on Form 10-Q (“Form 10-Q”) and the Company’s other SEC filings and public disclosures.

This Form 10-Q may contain “forward-looking statements”. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the Company’s market opportunities, strategies, competition and expected activities and expenditures, and at times may be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “intend”, “continue” and variations of these words or comparable words. Forward-looking statements inherently involve risks and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks described below under “Risk Factors” in Part II, Item 1A. The Company undertakes no obligation to update any forward-looking statements for revisions or changes after the date of this Form 10-Q.

Overview

We are a wholesale automobile sales company which seeks to exploit the inefficiencies and geographic differences in the used vehicle market by purchasing high quality, late model used vehicles from dealers and institutional sellers in Northeastern states and transporting the vehicles for resale in the Pacific Northwest. We are involved only in the wholesale purchase and sale of vehicles acting as a middleman between various dealer and institutional sellers and dealer purchasers. We generally sell our vehicles only through established third-party auctions which act as a marketplace for used vehicles. We thus help align institutional used vehicle sellers and wholesale buyers over a wide geographic area.

Recent Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

For the Three Months Ended March 31, 2011 and March 31, 2010

The following table sets forth certain data derived from the unaudited consolidated statements of operations, expressed as a percentage of net revenues for each of the three month periods ended March 31, 2011 and March 31, 2010.

	Three Months ended March 31,
	2011			2010
Percentage of net revenues:
Net revenues		100	%		100	%
Cost of revenues		87.2	%		93.6	%
Gross profit		12.8	%		6.4	%

Sales, general and administrative expenses		15.5	%		4.1	%
Other operating expenses		5.9	%		1.0	%
Total operating expenses		21.5	%		5.1	%
Profit (loss) from operations		(8.7	)%		1.4	%

Revenues

Revenue for the three month period ended March 31, 2011 were $415,776 a decrease of $3,137,967 or 88% as compared to revenues for the three month period ended March 31, 2010 of $3,553,743. The decrease in revenue was a result of a decrease in the number of vehicles we sold in the three month period in 2011 over 2010. Specifically, in the three month period ended March 31, 2011 we sold 22 vehicles at an average sales price of $18,899 as compared to 209 vehicles at an average sales price of $17,004 during the comparable period in 2010.

Cost of Sales and Gross Profit Margin

The Company's cost of sales is composed primarily of the cost of purchasing vehicles for resale. Cost of revenues was $362,477 or 87.2% of net revenues during the three month period ended March 31, 2011 as compared to $3,325,772 or 93.6% for the comparable period in 2010, a decrease of $2,963,295 or 89.1%. Thus, our gross margin was 12.8% for the three month period ended March 31, 2011 as compared to 6.4% for the comparable period in 2010. The decrease in our cost of revenue as a percent of revenue is attributable to a decrease in the cost of the vehicles sold during the three month period ended March 31, 2011 as compared to the comparable period in 2010.

Operating Expenses

Our operating expenses are comprised primarily of salaries, consulting fees and sales, general and administrative expenses.

Sale, General and Administrative

Sale, general and administrative (“SGA”) expenses are composed principally of commission, salaries of administrative personnel, fees for professional services and facilities expenses. These expenses were $64,576 for the three month period ended March 31, 2011 or 15.5% of net revenue as compared to $144,401 or 4.1% of net revenue for the comparable period in 2010, a decrease in such expenses of $79,825 or 55.3%. The decrease in the ratio of SGA expenses to net revenue was primarily due to a decrease in operating expenses.

Other Expenses

Our combined expenses for officers salaries and interest was $24,716 for the three month period ended March 31, 2011 or 5.9% of net revenue compared to the comparable period in 2010 when such expenses were $32,238 or 1.0% of net revenue. The decrease in such expenses is attributable to increased officers’ salaries in 2010 and a decrease in interest expense. The following table shows the changes in the components of these expenses during the comparable periods.

	Three Month Period Ended March 31, 2011		Three Month Period Ended March 31, 2010		Change			Percent Change
Officers Salaries	$	20,338	$	-	$	20,338			(100.0	)%

Interest Expense	$	4,378	$	32,238	$	(27,860	)		(86.4	)%

Operating Gain (Loss)

Operating gain or loss is calculated as our revenues less all of our operating expenses. Our operating (loss) for the three month period ended March 31, 2011 was ($37,362) or (9.0%) of net revenue as compared to an operating gain of $42,987 or 1.2% of net revenue for comparable period in 2010, a decrease of $80,349. This decrease in operating income was primarily as a result of a decrease in gross revenues which was greater than the decrease of operating expense.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, 2011, we had cash and cash equivalents of $84,101 invested in standard bank checking accounts and highly liquid money market instruments. Such investments are subject to interest rate and credit risk. Such risks and a change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operations. As of March 31, 2011, we had an outstanding balance of $100,000 on a bank revolving credit facility which bears interest at a variable rate equal to prime plus 1.0%.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) of our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the CEO concluded that our disclosure controls and procedures were not effective as of March 31, 2011 due to a lack of segregation of duties and an over reliance on consultants in the accounting and financial reporting process.

(b) Changes in Internal Controls Over Financial Reporting

There were no changes that occurred during the quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. REMOVED AND RESERVED

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Principal Accounting Officer

32.1	Section 1350 Certifications of Chief Executive Officer and Principal Accounting Officer

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.

	NORTHEAST AUTOMOTIVE HOLDINGS, INC.

Date: May 20, 2011	By:	/s/ William Solko
		William Solko, Chief Executive Officer

KOGETO, INC. - FORM 10-Q - May 23, 2011

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KOGETO, INC. Reports