Attached files
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| EXCEL - IDEA: XBRL DOCUMENT - Golden Gate Homes, Inc. | Financial_Report.xls |
| EX-32 - Golden Gate Homes, Inc. | ex32.htm |
| EX-31.2 - Golden Gate Homes, Inc. | ex31-2.htm |
| EX-31.1 - Golden Gate Homes, Inc. | ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-32574
GOLDEN GATE HOMES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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87-0745202
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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14 Wall Street, 20th Floor, New York, New York 10005
(Address of principal executive offices)
(212) 385-0955
(Issuer’s telephone number)
Check whether the issuer (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 o
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 (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 3,837,688 common shares as of May 7, 2013.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
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Page
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Item 1.
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3
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Item 2.
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7
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Item 3.
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8
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Item 4T.
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8
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PART II – OTHER INFORMATION
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||
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Item 1.
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9
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Item 1A.
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9
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Item 5.
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Other Information
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Item 6.
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9
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10
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLDEN GATE HOMES, INC.
BALANCE SHEETS
(UNAUDITED)
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March 31, 2013
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December 31, 2012
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash
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$
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4,932
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$
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34,854
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||||
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Rental guarantee advances
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10,212
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6,052
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||||||
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Investment in house mortgage
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34,900
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-
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||||||
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Prepaid Expenses and other current assets
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6,060
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6,060
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Total Assets
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$
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56,104
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$
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46,966
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$
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16,276
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$
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15,899
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||||
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Guarantee accrued expenses & Other Liabilities
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30,728
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-
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||||||
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Total liabilities
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47,004
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15,899
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||||||
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Stockholders' equity
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Preferred stock, $0.0001 par value, 1,000,000 shares authorized, 0 issued and outstanding
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-
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-
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||||||
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Common stock, $0.0001 par value, 600,000,000 shares authorized, 3,837,688 shares issued and outstanding as of March 31, 2013 and December 31, 2012
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384
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384
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Paid-in capital
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2,641,697
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2,641,697
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||||||
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Accumulated deficit
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(2,632,981
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)
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(2,611,014
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)
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Total Stockholders' equity
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9,100
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31,067
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||||||
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Total Liabilities and Stockholders' equity
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$
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56,104
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$
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46,966
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See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended
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||||||||
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March 31, 2013
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March 31, 2012
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Brokerage and Fee Income
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$
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20,697
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754
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|||||
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Operating Expenses:
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||||||||
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General & Administrative
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42,664
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9,152
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Impairment of deferred transaction costs
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-
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-
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Operating income (loss)
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(21,967
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) |
(8,398
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) | ||||
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Other income (expense):
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||||||||
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Interest income
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-
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-
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Gain/(loss) on settlement of accounts payable
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-
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-
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||||||
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Total Other income
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-
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-
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||||||
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Net loss
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$
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(21,967
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) |
$
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(8,398
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) | ||
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Net loss per common share Basic & Diluted
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$
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(0.01
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) |
$
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0.00
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Weighted average number of common shares outstanding Basic & Diluted
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3,837,688
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3,837,791
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See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended
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||||||||
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March 31, 2013
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March 31, 2012
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$
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(21,967
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$
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(8,398
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) | ||
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
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||||||||
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Gain/(loss) on settlement of accounts payable
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-
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-
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||||||
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Shares issued for services
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-
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-
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Change in operating assets and liabilities :
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||||||||
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Other current assets and prepaid expenses
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(4,160
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) | ||||||
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Accounts payable and accrued expenses
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31,105
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2,793
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Net cash provided by (used in) operating activities
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4,978
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(5,605
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) | |||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Loans made to buyers
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(34,900
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) |
-
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Repayment on rental guarantee advances
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-
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2,794
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Net cash provided by (used in) investing activities
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(34,900
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) |
2,794
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Net change in cash
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(29,922
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(2,811
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Cash at beginning of period
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34,854
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45,120
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Cash at end of period
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$
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4,932
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$
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42,309
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See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Golden Gate Homes, Inc. (hereinafter referred to as 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 ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”) filed with the SEC. 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 periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2012 as reported in the Form 10-K have been omitted.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis of accounting which contemplates continuity of operations, realization of assets, liabilities, and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Golden Gate Homes, Inc. is unable to continue as a going concern. Golden Gate has an accumulated deficit as of March 31, 2013 with no significant revenues to cover its expenses for the near term.
Management believes Golden Gate will need to raise capital in order to operate over the next 12 months. Golden Gate’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. Golden Gate has limited capital with which to pursue its business plan. There can be no assurance that Golden Gate’s future operations will be significant and profitable, or that Golden Gate will have sufficient resources to meet its objectives. These conditions raise substantial doubt as to Golden Gate’s ability to continue as a going concern. Management may pursue either debt or equity financing or a combination of both, in order to raise sufficient capital to meet Golden Gate’s financial requirements over the next twelve months and to fund its business plan. There is no assurance that management will be successful in raising additional funds.
NOTE 3 – RELATED PARTY TRANSACTIONS
There was $0 due to the related party as of March 31, 2013.
During the quarter, the Company purchased from Virtus Capital, a Florida based hedge fund affiliated with Mr. Gidumal, a second mortgage on one of the homes sold by the Company to one of our clients. As property values have increased in the state of the mortgage, the Company viewed the high interest rate and secured second loan position as an attractive investment. The loan was purchased at the original face amount of $34,900, has a 12.50% interest rate, and the mortgage holder has never missed a monthly payment. The loan matures in April 2014.
NOTE 4 – GUARANTEED ACCRUED EXPENSES
During the quarter, the Company sold two properties to overseas buyers and was required to issue one-year rent guarantees to buyers to facilitate the sales. The guarantees entitled the buyer to monthly payments of $1,925 per house if no rent was paid on the property during their first twelve months of ownership. If the monthly rent paid by a tenant was less than $1,925 each month, then Golden Gate would pay the owner the difference at the end of the one year guarantee period. One of the tenants at the sold properties has already been late in paying rent and to remove the tenant or to incur a month or months of no rent is a concern. To be conservative, the Company booked a guarantee liability reserve of $27,130 in the first quarter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events, and we assume no obligation to update any such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could, ""would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause our future results to differ from those statements include, but are not limited to, those described in the section entitled "Risk Factors" of the Form 10-K. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report and with the section entitled "Risk Factors" of the Form 10-K.
OVERVIEW
The focus of the Company is on marketing high-quality, distressed residential properties in certain US markets (currently in California and Florida) to international buyers (primarily from Asia) through exclusive selling agreements or consignment arrangements. In the event that the Company is successful in completing a major capital raising transaction, it will also consider purchasing similar assets for resale to the same target market.
In October 2009, the Company entered into an exclusive marketing agreement with Premier Capital, Ltd. (“Premier Capital”). Management believes that Premier Capital is one of the most reputable international real estate consulting firms in Asia, and is highly regarded for selling international properties throughout China and other parts of Asia. Premier Capital was founded in Hong Kong in 1988 and expanded into China in 1997. It has offices in Hong Kong, Beijing, Shanghai, Guangzhou and Shenzhen, the five Asian cities in which the Company markets properties. Premier Capital also has offices in Australia, Singapore and New Zealand.
Premier Capital acts as the Company’s agent in Hong Kong and mainland China to market properties that are approved by Premier Capital and for which the Company has obtained sales options or agreements (“Approved Properties”). The Company pays the bulk of the expenses arising in connection with the marketing of Approved Properties in Hong Kong and China, although Premier Capital bears some of these expenses as well. For its services, Premier Capital is paid a customary brokerage fee for Approved Properties sold in Hong Kong and China.
Premier Capital terminated the exclusive marketing agreement with the Company in April 2011, although it has stated that it will continue to work with the Company to sell the Company’s current inventory as well as future projects. The Company is in discussions with Premier Capital about entering into an exclusive marketing agreement for another geographical market in the United States, and expects to complete such an agreement on a non-exclusive agreement upon the completion of the current sales program. The Company will also seek additional selling agents to market its properties, although there can be no assurance that the Company will be successful in finding additional selling agents. Inasmuch as Premier Capital has agreed to continue to work with the Company, the Company does not believe that the termination of the exclusive marketing agreement with Premier Capital will have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 2013 and 2012
For the three months ended March 31, 2013, we had a net loss of $21,967, compared to net income of $8,398 for the three months ended March 31, 2012. For the three months ended March 31, 2013, we incurred $42,664 of general and administrative expenses, compared to $9,152 of general and administrative expenses for the three months ended March 31, 2012. During the quarter the Company closed two sales of properties and as a result took on two new property management contracts.
CHANGES IN FINANCIAL CONDITION
Liquidity and Capital Resources
The Company's cash position as of March 31, 2013 is $4,932. As of March 31, 2013, the Company has outstanding payables of $47,004. Capital constraints currently limit the Company’s ability to purchase residential properties for resale to international clients, and consequently the Company is restricted to selling agreements and consignment arrangements. There can be no assurances that the Company will enter into any new sales agreements. Absent new agreements, the Company will be unable to generate future revenues beyond the income derived from asset management fees.
The Company has taken numerous steps to conserve cash. However, to properly grow the Company will need additional financing but can make no assurances that any additional financing will be available to it when needed or, if available, that it can be obtained on commercially reasonable terms.
To conserve on the Company's capital requirements, the Company may issue shares of its common stock to pay certain expenses.
Off-Balance Sheet Arrangements
Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries.
SUBSEQUENT EVENT
In late April, Basil Argerson, SVP of the Company tendered his resignation to pursue other opportunities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. We are exposed to market risk from changes in interest rates and foreign currency exchange rates. Our exposure to interest rate risk is limited to interest income sensitivity for working capital funds placed in a money market account. The effect of interest rate changes does not pose significant market risk to us. Also, we are exposed to foreign currency exchange rates whereby the strengthening of the US currency could make it more expensive for our foreign purchasers to buy our US properties, while a weakening US currency would make our properties less expensive to our international clients. We do not currently hedge against interest rate or currency risks. The effect of other changes, such as commodity prices and/or equity prices, does not pose significant market risk to us.
ITEM 4T. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on that evaluation, management has concluded that, as of March 30, 2013, our internal control over financial reporting was ineffective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2012.
ITEM 6. EXHIBITS
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NUMBER
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DESCRIPTION
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31.1
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31.2
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32
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.INS
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XBRL Instance Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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101.SCH
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XBRL Taxonomy Extension Schema Linkbase
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Pursuant to the requirements of Section 13 or 15(d) 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.
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GOLDEN GATE HOMES, INC.
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Date: May 7, 2013
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By:
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/s/ Steven Gidumal
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Steven Gidumal
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Chairman of the Board, CEO and Chief Financial Officer
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(Principal Executive, Financial and Accounting Officer)
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