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, 2012

 

or

 

¨

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

For the transition period from                 to

 

Commission file number: 000-51997

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

NEVADA		65-0637308
(State or Other Jurisdiction of		(I.R.S. Employer Identification Number)
Incorporation or Organization)

 

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, 2012 was 554,017 shares.

 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

FORM 10-Q

 

March 31, 2012

 

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	10
Item 4T.	Controls and Procedures	10
PART II— OTHER INFORMATION
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Removed and Reserved	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
SIGNATURES		11

 

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, 2011.

 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(UNAUDITED)

 

		March 31,				December 31,
		2012				2011
ASSETS
Current Assets:
Cash		$	1,883			$	5,395
Accounts Receivable- related party			123,052				123,052
Total Current Assets			124,935				128,447
Equipment, net			4,101				5,357
Other assets			2,868				2,868
TOTAL ASSETS		$	131,904			$	136,672
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable to bank		$	100,000			$	100,000
Due to stockholders			51,248				42,584
Accrued expenses			12,750				18,250
Payroll taxes withheld and accrued			-				1,273
Total Current Liabilities			163,998				162,107
Stockholders' deficit
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, 2012 and December 31, 2011			554				554
Capital Stock to be issued (500,000 Shares)			20,000				20,000
Additional Paid in Capital			3,957,424				3,957,424
Retained Deficit			(4,009,896	)			(4,003,237	)
			(30,918	)			(24,259	)
Less: Treasury stock (6,667 common shares)			(1,176	)			(1,176	)
Total Stockholders' Deficit			(32,094	)			(25,435	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	131,904			$	136,672

 

See Notes to Unaudited Financial Statements

 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(UNAUDITED)

 

		Three				Three
		Months				Months
		Ended				Ended
		March 31,				March 31,
		2012				2011
Net sales		$	-			$	415,776
Cost of sales			-				362,477
Gross profit			-				53,299
Operating expenses:
Officers salaries			-				20,338
Selling, general and administrative			6,659				64,576
Total operating expenses			6,659				84,914
Interest expense			-				4,378
Profit (loss) from operations			(6,659	)			(35,993	)
Income taxes			-				1,369
Net profit (loss)		$	(6,659	)		$	(37,362	)
Net income (loss) per share basic and diluted		$	(0.01	)		$	(0.05	)
Weighted average number of shares outstanding			692,879				554,017

 

See Notes to Unaudited Financial Statements

 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(UNAUDITED)

 

		Three Months				Three Months
		Ended				Ended
		March 31, 2012				March 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)		$	(6,659	)		$	(37,362	)
Adjustments to reconcile net profit (loss) to net cash used by operating activities:
Depreciation and amortization			1,256				1,361
Changes in operating assets and liabilities:
(Increase) decrease in inventory			-				292,693
(Increase) decrease in other assets			-				(1,789	)
Increase (decrease) in customer deposits payable			-				(47,459	)
Increase (decrease) in accrued expenses			(5,500	)			(6,871	)
Increase (decrease) in payroll taxes			(1,273	)			1,068
Total adjustments			(5,517	)			239,003
CASH PROVIDED (USED) BY OPERATING ACTIVITIES			(12,176	)			201,641
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of stockholder loans			8,664
Repayment of stockholders loan			-				(271,735	)
Repayments of demand loans			-				(263,753	)
			-				-
CASH PROVIDED (USED)BY FINANCING ACTIVITIES			8,664				(535,488	)
NET INCREASE (DECREASE) IN CASH			(3,512	)			(333,847	)
CASH
Beginning of year			5,395				417,948
End of period		$	1,883			$	84,101
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Income tax payments		$	-			$	-
Interest payments		$	-			$	4,378

 

See Notes to Unaudited Financial Statements.

 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Through May 2011, the Company bought used automobiles at auctions, then repaired, cleaned, transported and resold them wholesale throughout the United States. Since then, there have been no significant operations.

 

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.

 

The accompanying interim financial statements of Northeast Automotive Holdings, Inc. are unaudited.  However, in the opinion of management, the interim data includes all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim period.  The results of operations for the period ended March 31, 2012 are not necessarily indicative of the operating results for the entire year.

 

Going Concern

 

The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has working capital of ($39,063) at March 31, 2012 and an accumulated deficit of ($4,009,896) since inception.

 

While the Company is attempting to produce sufficient revenues, the Company's cash position may not be enough to support the Company's daily operations. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

 

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, 2011, 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.

 

Adopted Accounting Principles

 

In the first quarter of 2009, we adopted Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), “Business Combinations” (SFAS No. 141(R)) as amended by FASB staff position FSP 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” SFAS No. 141(R) generally requires an entity to recognize the assets acquired, liabilities assumed, contingencies, and contingent consideration at their fair value on the acquisition date. In circumstances where the acquisition-date fair value for a contingency cannot be determined during the measurement period and it is concluded that it is probable that an asset or liability exists as of the acquisition date and the amount can be reasonably estimated, a contingency is recognized as of the acquisition date based on the estimated amount. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. In addition, acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful life. SFAS No 141(R) is applicable to business combinations on a prospective basis beginning in the first quarter of 2009. We did not complete any business combinations in the first quarter of 2009.

 

 

In February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2), which delayed the effective date of SFAS No. 157, “Fair Value Measurements” (SFAS No. 157) for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of the first quarter of 2009. Therefore, in the first quarter of 2009, we adopted SFAS No. 157 for non-financial assets and non-financial liabilities. The adoption of SFAS No. 157 for non-financial assets and non-financial liabilities that are not measured and recorded at fair value on a recurring basis did not have a significant impact on our consolidated financial statements.

 

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, 2012 and March 31, 2011

 

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, 2012 and March 31, 2011.

 

		Three Months ended March 31,
		2012				2011
Percentage of net revenues:
Net revenues			-				100	%
Cost of revenues			-				87.2	%
Gross profit			-				12.8	%
Sales, general and administrative expenses			-				15.5	%
Other operating expenses			-				5.9	%
Total operating expenses			-				21.5	%
Profit (loss) from operations			-				(8.7	)%

 

Revenues

Revenue for the three month period ended March 31, 2012 were $-0- a decrease of $415,776 or 100% as compared to revenues for the three month period ended March 31, 2011 of $415,776. The decrease in revenue was a result of a decrease in the number of vehicles we sold in the three month period in 2012 over 2011. Specifically, in the three month period ended March 31, 2012 no vehicles were sold as compared to 22 vehicles at an average sales price of $18,899 during the comparable period in 2011.

 

 

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 $-0- or 100% of net revenues during the three month period ended March 31, 2012 as compared to $362,477 or 87.2% for the comparable period in 2011, a decrease of $362,477 or 100%. Thus, our gross margin was 0.0% for the three month period ended March 31, 2012 as compared to 12.8% for the comparable period in 2011. 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, 2012 as compared to the comparable period in 2011.

 

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 $6,659 for the three month period ended March 31, 2012 or 0.00% of net revenue as compared to $64,576 or 15.5% of net revenue for the comparable period in 2011, a decrease in such expenses of $57,917 or 89.7% 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 $-0- for the three month period ended March 31, 2012 or 0.0% of net revenue compared to the comparable period in 2011 when such expenses were $24,716 or 5.9% of net revenue. The decrease in such expenses is attributable to increased officers’ salaries in 2012 and a decrease in interest expense. The following table shows the changes in the components of these expenses during the comparable periods.

 

		Three Month				Three Month
		Period Ended				Period Ended
		March 31, 2012				March 31, 2011				Change				Percent Change
Officers Salaries		$	-			$	20,338			$	20,338				(100.0	)%
Interest Expense		$	-			$	4,378			$	4,378				(100.0	)%

 

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, 2012 was ($6,659) or (0.0%) of net revenue as compared to an operating loss of ($37,362) or (9.0%) of net revenue for comparable period in 2011, an increase of $30,703. This increase in operating income was primarily as a result of a decrease in gross revenues which was less than the decrease of operating expense.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As of March 31, 2012, we had cash and cash equivalents of $1,883 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, 2012, 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, 2012 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 21, 2012	By:	/s/ William Solko
		William Solko, Chief Executive Officer