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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - HARRISON VICKERS & WATERMAN INCf10q093013_ex31z1.htm
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - HARRISON VICKERS & WATERMAN INCf10q093013_ex32z1.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)


  X . QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the nine month period ended September 30, 2013


      . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


HARRISON VICKERS AND WATERMAN INC.

(Exact name of registrant as specified in its charter)


Nevada

26-2883037

(State or jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)


129 Glenwood Road, Glenwood Landing, NY 11547

(203) 340-4123

Address of registrant’s principal executive offices

Registrant’s telephone number including


Securities registered under Section 12(b) of the Exchange Act:   None


Securities registered under Section 12(g) of the Exchange Act: Common stock, par value $0.0001 per share

(Title of Class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes      . No  X .


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes      . No  X .


Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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 (§ 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      .


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K       .


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.


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 .


Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of November 14, 2013: not applicable


As of November 14, 2013 the registrant had 124,986,367 outstanding shares of Common Stock (on a post forward-split basis).
















Table of Contents


PART I

3

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

3

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

18

ITEM 3.

QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

20

ITEM 4.

CONTROLS AND PROCEDURES

20

 

 

 

PART II

 

21

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

21

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

21

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

21

ITEM 4.

EXHIBIT LIST

21

 

 

 

SIGNATURES

21




2




Harrison Vickers and Waterman Inc.


(Formerly Sharp Performance, Inc.)


September 30, 2013 and 2012


Index to the consolidated financial statements



Contents

Page(s)

 

 

Consolidated Balance Sheets at September 30, 2013 (unaudited) and June 30, 2013

4

 

 

Consolidated Statements of Operations for the Three Months Ended September 30, 2013 and 2012 (unaudited)

5

 

 

Consolidated Statement of Stockholders’ Equity (Deficit) for the Period from June 30, 2012 through September 30, 2013 (unaudited)

6

 

 

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 30, 2013 and 2012 (unaudited)

7

 

 

Notes to the Consolidated Financial Statements (unaudited)

8




3




Harrison Vickers and Waterman Inc.

 Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2013

 

June 30,

2013

 

 

 

 

(Unaudited)

 

 

 ASSETS

 

 

 

 

 CURRENT ASSETS:

 

 

 

 

 

 Cash

$

215

$

2,706

 

 Real estate loans receivable

 

1,620,000

 

-

 

 

 

 

 

 

 

 

 

 Total Current Assets

 

1,620,215

 

2,706

 

 

 

 

 

 

 

 

 

 Total Assets

$

1,620,215

$

2,706

 

 

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 CURRENT LIABILITIES:

 

 

 

 

 

 Accrued expenses

$

3,364

$

4,629

 

 Due to investor

 

36,628

 

-

 

 Advances from related party

 

-

 

34,627

 

 

 

 

 

 

 

 

 

 Total Current Liabilities

 

39,992

 

39,256

 

 

 

 

 

 

 

 NON-CURRENT LIABILITIES:

 

 

 

 

 

 Promissory note payable

 

1,620,000

 

-

 

 

 

 

 

 

 

 

 

 Total Non-Current Liabilities

 

1,620,000

 

-

 

 

 

 

 

 

 

 

 

 Total Liabilities

 

1,659,992

 

39,256

 

 

 

 

 

 

 

 COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 STOCKHOLDERS' DEFICIT:

 

 

 

 

 

 Preferred stock par value $0.0001: 1,000,000 shares authorized;

 100,000 shares designated as Series A 8% Convertible Preferred Stock

 Series A 8% Convertible preferred par value $.0001 per share: stated value

 $1,000 per share;  95,000 and 0 shares issued and outstanding, respectively  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

-

 

 Common stock par value $0.0001: 2,000,000,000 shares authorized;

 124,986,367 and 1,634,993,250 shares issued and outstanding, respectively  

 

 

 

 

 

 

12,499

 

163,499

 

 Additional paid-in capital

 

417,720

 

(159,649)

 

 Accumulated deficit

 

(470,005)

 

(40,400)

 

 

 

 

 

 

 

 

 

 Total Stockholders' Deficit

 

(39,777)

 

(36,550)

 

 

 

 

 

 

 

 

 

 Total Liabilities and Stockholders' Deficit

$

1,620,215

$

2,706

 

 

 

 

 

 

 

 See accompanying notes to the consolidated financial statements.




4




Harrison Vickers and Waterman Inc.

 Consolidatated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months

 

For the Three Months

 

 

 

 

Ended

 

Ended

 

 

 

 

September 30, 2013

 

September 30, 2012

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 REVENUES

$

-

$

-

 

 

 

 

 

 

 

 

 Interest Income

 

13,320

 

-

 

 Interest Expense

 

(13,320)

 

-

 

 

 

 

 

 

 

 GROSS MARGIN

 

-

 

-

 

 

 

 

 

 

 

 OPERATING EXPENSES:

 

 

 

 

 

 Professional fees

 

2,000

 

230

 

 Compensation

 

208,788

 

-

 

 Management fees

 

145,879

 

-

 

 Consulting fees

 

72,474

 

-

 

 General and administrative expenses

 

464

 

30

 

 

 

 

 

 

 

 

 

 Total operating expenses

 

429,605

 

260

 

 

 

 

 

 

 

 LOSS BEFORE INCOME TAX PROVISION

 

(429,605)

 

(260)

 

 

 

 

 

 

 

 INCOME TAX PROVISION

 

-

 

-

 

 

 

 

 

 

 

 NET LOSS

$

(429,605)

$

(260)

 

 

 

 

 

 

 

 NET LOSS PER COMMON SHARE

 

 

 

 

 

 - basic and diluted

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 Weighted average common shares outstanding

 - basic and diluted

 

 

 

 

 

 

1,241,032,454

 

1,634,993,250

 

 

 

 

 

 

 

 See accompanying notes to consolidated financial statements




5




Harrison Vickers and Waterman Inc.

Consolidated Statement of Stockholders' Deficit

For the Year Ended June 30, 2012 and for the Interim Period Ended September 30, 2013

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A Preferred Stock

Par Value $0.0001

 

Common Stock

Par Value $0.0001

 

Additional

 

 

 

Total

 

 

 

Number of

Shares

 

Amount

 

Number of

Shares

 

Amount

 

paid-in

Capital

 

Accumulated

Deficit

 

Stockholders'

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, June 30, 2012

-

$

-

 

1,634,993,250

$

163,499

$

(159,649)

$

(35,085)

$

(31,235)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

-

 

-

 

-

 

-

 

-

 

(5,315)

 

(5,315)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, June 30, 2013

-

 

-

 

1,634,993,250

 

163,499

 

(159,649)

 

(40,400)

 

(36,550)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Retirement of common shares

-

 

-

 

(1,610,006,750)

 

(161,000)

 

161,000

 

-

 

-

 

 Issuance of common shares for compensation

-

 

-

 

99,999,867

 

10,000

 

(8,621)

 

-

 

1,379

 

 Issuance of Series A Preferred Stock for compensation

95,000

 

10

 

-

 

-

 

424,990

 

-

 

425,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

-

 

-

 

-

 

-

 

-

 

(429,605)

 

(429,605)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, September 30, 2013

95,000

$

10

 

124,986,367

$

12,499

$

417,720

$

(470,005)

$

(39,777)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to consolidated financial statements




6




Harrison Vickers and Waterman Inc.

Consolidated Statements of Cash Flow

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

For the Three

 

 

 

 

Months Ended

 

Months Ended

 

 

 

 

September 30, 2013

 

September 30, 2012

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 Net loss

$

(429,605)

$

(260)

 

 

 

 

 

 

 

 Adjustments to reconcile net loss to net cash provided by (used in) operating activities

 

 

 

 

 Common stock issued for compensation

 

1,379

 

-

 

 Series A Preferred Stock issued for compensation

 

425,000

 

-

 

 Changes in operating assets and liabilities:

 

 

 

 

 

 

   Real estate loans

 

180,000

 

-

 

 

 Accrued expenses  

 

(1,265)

 

(2,630)

 

 

 

 

 

 

 

 Net cash provided by (used in) operating activities

 

175,509

 

(2,890)

 

 

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 Payment on promissory note payable

 

(180,000)

 

-

 

 Amounts received from related party

 

2,000

 

2,860

 

 

 

 

 

 

 

 Net cash provided by (used in) financing activities

 

(178,000)

 

2,860

 

 

 

 

 

 

 

 NET CHANGE IN CASH

 

(2,491)

 

(30)

 

 

 

 

 

 

 

 Cash at beginning of period

 

2,706

 

3,000

 

 

 

 

 

 

 

 Cash at end of period

$

215

$

2,970

 

 

 

 

 

 

 

 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 Interest paid

$

-

$

-

 

 Income tax paid

$

-

$

-

 

 

 

 

 

 

 

 NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 Purchase of real estate loans for debt, net

$

1,620,000

$

-

 

 

 

 

 

 

 

 See accompanying notes to consolidated financial statements




7



Harrison Vickers and Waterman Inc.

(Formerly Sharp Performance, Inc.)

September 30, 2013 and 2012

Notes to the Consolidated Financial Statements

(Unaudited)


Note 1 - Organization and Operations


Sharp Performance Associates LLC


Sharp Performance Associates LLC (“LLC” or “Predecessor”) was organized as a Limited Liability Company on September 5, 2008 under the laws of the State of Nevada.


The LLC provides consulting services to the sales and marketing sectors of the automotive industry. These services include but are not limited to the training of staff, development and implementation of general and marketing strategies, dealership presentation as well as customer satisfaction improvement. The LLC services dealerships throughout the New England area. By providing these services, the LLC intends to differentiate dealer inventory and service enhancing their sales volume and profitability.


The heart of the LLC’s business model is the introduction of the limited production GT-33 based on the Nissan 350Z. The base model is upgraded for a front spoiler, rear wing and racing graphics. These specialty models attract attention and positively affect dealership profits and increase public exposure. While the current product offerings revolve around the GT-33, the customization processes and methodologies can be applied to any care to elevate a dealership to the next tier.


Sharp Performance, Inc.


Sharp Performance, Inc. (the “Company”) was incorporated on September 5, 2008 under the laws of the State of Nevada for the sole purpose of acquiring all of the outstanding membership units of Sharp Performance Associates LLC. Upon formation, the Company issued an aggregate of 5,000,000 shares of the newly formed corporation’s common stock to the member of the LLC for all of the outstanding membership units of Sharp Performance Associates LLC. No value was given to the stock issued by the newly formed corporation. Therefore, the shares were recorded to reflect the $0.0001 par value and paid in capital was recorded as a negative amount of ($500). The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Sharp Performance Associates LLC, which are recorded at historical cost.


The Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification, by reclassifying the LLC member’s capital account inclusive of capital contributions and the LLC’s undistributed earnings and losses as of September 5, 2008 to additional paid-in capital. There was no reclassification of the LLC member’s capital account as the LLC was newly formed with no capital contribution.


The accompanying consolidated financial statements have been prepared as if the Company had its corporate capital structure as of the first date of the first period presented.


Material Definitive Agreement


Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “Agreement”) with Harrison Vickers and Waterman, LLC (“Harrison Vickers”).  Pursuant to the Agreement the Company agreed to purchase from Harrison Vickers certain assets held by Harrison Vickers in the form of real estate loans (the “Loans”).  The purchase price was paid by the Company via the issuance of a secured promissory note in the principal amount of $1,800,000 (the “Note”) due December 31, 2014.


The Note is secured by a Pledge Agreement (the “Pledge Agreement”) entered into between the Company and Harrison Vickers, whereby the proceeds of the Loans are pledged as security for the repayment of the Note.




8




Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “HVW Agreement”) with HVW Holdings LLC (“HVW”).  Pursuant to the Agreement the Company agreed to sell to HVW an aggregate of 308,166 shares of the Company’s Common Stock and 32,300 shares of preferred stock of the Company which pursuant to the terms thereof will be convertible into 32,300,000 shares of the Company’s common stock.  The consideration under the HVW Agreement was certain services to be rendered by HVW to the Company pursuant to a management agreement (the “Management Agreement”) entered into between the Company and HVW on September 6, 2013. Some of the material terms of the HVW Agreement include: (i) that Robert J. Sharp, the Chief Executive Officer and Board Member of the Company retire 4,961,500 shares of common stock of the Company owned by Mr. Sharp, (ii) the Company will submit to a vote of its shareholders a forward split of the Company’s common stock equal to 324.5 for 1, (iii) the Company will appoint up to three persons nominated by HVW to the board of directors of the Company to serve until the next annual meeting of shareholders of the Company, (iv) the Company will issue shares of a to be created series of preferred stock (8% annual dividend, anti-dilution rights for 24 months, each share convertible into 1,000 shares of common stock) to each of HVW (32,300), Mr. Sharp (46,500) and an Institutional Investor (16,200).


The material terms of the Management Agreement include: (i) HVW will provide certain business, financial and advisory services to the Company; (ii) HVW will receive a management fee of two percent (2%) per annum of average gross assets, (iii) HVW will also receive twenty percent (20%) of the revenues received by the Company derived from the services under the Management Agreement.


On October 24, 2013 the Company filed a Certificate of Amendment to amend its Articles of Incorporation (the “Actions”) to: (i) change the name of the Company to Harrison Vickers & Waterman Inc.; (ii) increase the number of shares of authorized common stock of the Corporation from 74,000,000 to 2,000,000,000 shares; and (iii) effect a forward stock split of our common stock at a ratio determined by our Board of Directors of 324.5 for 1.


All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.


Note 2 - Summary of Significant Accounting Policies


The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application.  Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.


Basis of Presentation – Unaudited Interim Financial Information


The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended June 30, 2013 and notes thereto contained in the information filed as part of the Company’s Annual Report on Form 10-K filed with the SEC on October 11, 2013.


Fiscal Year End


The Company elected June 30th as its fiscal year end date upon its formation.


Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).



9




Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimate(s) and assumption(s) affecting the financial statements were:


(i)

Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, (d) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors;

(ii)

Assumption as a Going Concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.


Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole 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.


Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.


Principles of Consolidation


The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification ("ASC") to determine whether and how to consolidate another entity.  Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee.  Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation.  The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.


The Company's consolidated subsidiaries and/or entities are as follows:


Name of consolidated

subsidiary or entity

State or other jurisdiction of

incorporation or organization

Date of incorporation or

formation (date of

acquisition, if applicable)

Attributable

interest

 

 

 

 

Sharp Performance Associates LLC

The State of Nevada

September 5, 2008

100%


The consolidated financial statements of the Company include all accounts of the Company and its wholly owned subsidiary, LLC.

All intercompany balances and transactions have been eliminated.




10




Fair Value of Financial Instruments


The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:


Level 1

 

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

 

Level 3

 

Pricing inputs that are generally observable inputs and not corroborated by market data.


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.


The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses approximate their fair values because of the short maturity of these instruments.


Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.


Cash Equivalents


The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.


Related Parties


The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.


Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.


The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. adescription of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d.  mounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.



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Commitment and Contingencies


The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.


If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.


Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.


Revenue Recognition


The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.


Income Tax Provision


The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.


The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.


The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.


Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.



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Uncertain Tax Positions


The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended September 30, 2013 or 2012.


Net Income (Loss) per Common Share


Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.


There were no potentially outstanding dilutive common shares for the reporting period ended September 30, 2013 or 2012.


Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.


Subsequent Events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the consolidated financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its consolidated financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.


Recently Issued Accounting Pronouncements


In January 2013, the FASB issued ASU No. 2013-01, "Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". This ASU clarifies that the scope of ASU No. 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities." applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in FASB Accounting Standards Codification or subject to a master netting arrangement or similar agreement. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.


In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The ASU adds new disclosure requirements for items reclassified out of accumulated other comprehensive income by component and their corresponding effect on net income. The ASU is effective for public entities for fiscal years beginning after December 15, 2013.


In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU No. 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date."  This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013.



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In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity." This ASU addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.


In March 2013, the FASB issued ASU 2013-07, “Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting.” The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity’s governing documents from the entity’s inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity’s inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity’s expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted.


Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


Note 3 – Going Concern


The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


As reflected in the consolidated financial statements, the Company had an accumulated deficit at September 30, 2013, a net loss and net cash used in operating activities for the fiscal year then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.


In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.  The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.


The consolidated financial statements do not include any adjustments related to the recoverability and classification of reported asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


Note 4 – Real Estate Loans Receivable and Related Promissory Note Payable


Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “Agreement”) with Harrison Vickers and Waterman, LLC (“Harrison Vickers”).  Pursuant to the Agreement the Company agreed to purchase from Harrison Vickers certain assets held by Harrison Vickers in the form of real estate loans (the “Loans”).  The purchase price was paid by the Company via the issuance of a secured promissory note in the principal amount of $1,800,000 (the “Note”) due December 31, 2014.


Four loans, $1,800,000 in aggregate, were purchased with one loan of $180,000 being collected during the interim period ending September 30, 2013.  The remaining three loans of $520,000, $550,000 and $550,000 were issued on April 2, 2013, May 15, 2013 and July 15, 2013, respectively. They all bear interest at 12% per annum and are due one year from the date of issuance. The loans are secured by a first lien.


The Note is secured by a Pledge Agreement (the “Pledge Agreement”) entered into between the Company and Harrison Vickers, whereby the proceeds of the Loans are pledged as security for the repayment of the Note.



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During the interim period ended September 30, 2013, the Company paid down $180,000 of the Note.


Note 5 – Related Party Transactions


Advances from Related Party


From time to time, a related party of the Company advance funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand.


Free Office Space


The Company has been provided office space by an officer of the Company at no cost.  The management determined that such cost is nominal and did not recognize the rent expense in its consolidated financial statements.


Note 6 – Due to Investor


Since inception, the Company had received advances from its former Chairman and Chief Executive Officer, Robert J Sharp, for working capital purposes. During the interim period ended September 30, 2013, Mr. Sharp advanced the Company an additional $2,001.


On September 1, 2013, Mr. Sharp assigned his rights to the advances to an investor. These amounts remain non-interest bearing and due on demand.


Note 7 – Commitments and Contingencies


Management Agreement


Effective September 6, 2013 the Company entered into a management agreement (the “Management Agreement”) between the Company and HVW.


The material terms of the Management Agreement include: (i) HVW will provide certain business, financial and advisory services to the Company; (ii) HVW will receive a management fee of two percent (2%) per annum of average gross assets, and (iii) HVW will also receive twenty percent (20%) of the revenues received by the Company derived from the services under the Management Agreement.


Note 8 – Stockholders’ Equity (Deficit)


Shares Authorized


Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy Five Million (75,000,000) shares of which One Million (1,000,000) shares shall be Preferred Stock, par value $0.0001 per share, and Seventy Four Million (74,000,000) shares shall be Common Stock, par value $0.0001 per share.


On October 24, 2013 the Company filed a Certificate of Amendment to amend its Articles of Incorporation (the “Actions”) to: (i) change the name of the Company to Harrison Vickers & Waterman Inc.; (ii) increase the number of shares of authorized common stock of the Corporation from 74,000,000 to 2,000,000,000 shares; and (iii) effectuate a forward stock split of our common stock at a ratio determined by our Board of Directors of 324.5 for 1.


All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.


Series A, 8% Convertible Preferred Stock


On September 17, 2013 the Company filed the Series A 8% Convertible Preferred Stock Certificate of Designation with the Secretary of State of Nevada (the “Certificate of Designation”) authorizing 100,000 shares of Series A Convertible Preferred Stock, and establishing the rights, preferences, privileges and obligations thereof.



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As set forth in the Certificate of Designation, the holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefore, and the Company shall accrue, quarterly in arrears on March 31, September 30, September 30, and December 31 of each year, cumulative dividends on the Series A Preferred Stock at the rate per share equal to eight percent (8%) per annum on the Stated Value, payable in common stock valued at the closing trade price per share on the last trading day of the calendar quarter. The Series A Preferred Stock shall not have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, either by written consent or by proxy.   So long as any shares of Series A Preferred Stock are outstanding, the Company shall not and shall cause its subsidiaries not to, without the affirmative vote of the Requisite Holders, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series A Preferred Stock, (d) increase the authorized or designated number of shares of Series A Preferred Stock, (e) issue any additional shares of Series A Preferred Stock (including the reissuance of any shares of Series A Preferred Stock converted for Common Stock) or (f) enter into any agreement with respect to the foregoing. Each share of Series A Preferred Stock shall be convertible into 1,000 shares of Common Stock.  For a period of 24 months from the Issuance Date, if the Company issues shares of common stock (or securities, including any derivative securities, containing the right to purchase, exercise or convert into shares of common stock) (the “Dilution Shares”) such that the outstanding number of shares of common stock on a fully diluted basis shall be greater than 214,000,000 shares (inclusive of conversions of Series A Preferred Stock at the Conversion Ratio immediately above), then the Conversion Ratio for the Series A Preferred Stock then outstanding and unconverted as of the date the Dilution Shares are issued shall be adjusted to equal the Conversion Ratio multiplied by a fraction, the numerator of which shall be the number of shares outstanding on a fully diluted basis after the issuance of the Dilution Shares, and the denominator shall be 214,000,000.   The Company shall not effect any conversion of the Series A Preferred Stock, to the extent that, after giving effect to the conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of 9.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Series A Preferred Stock.


Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “HVW Agreement”) with HVW Holdings LLC (“HVW”).  Pursuant to the Agreement the Company agreed to sell to HVW an aggregate 32,300 shares of its Series A, 8% Convertible Preferred Stock which pursuant to the terms thereof will be convertible into 32,300,000 shares of the Company’s common stock.  The consideration under the HVW Agreement was certain services to be rendered by HVW to the Company pursuant to a management agreement (the “Management Agreement”) entered into between the Company and HVW on September 6, 2013.


In addition, the Company issued 46,500 shares of its Series A, 8% Convertible Preferred Stock to its former president, Robert Sharp and 16,200 shares to an investor.


The 95,000 shares issued of the A, 8% Convertible Preferred Stock were valued at $425,000 in aggregate.


Common Stock


Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “HVW Agreement”) with HVW Holdings LLC (“HVW”).  Pursuant to the Agreement the Company agreed to sell to HVW an aggregate of 308,166 shares of the Company’s Common Stock.  The consideration under the HVW Agreement was certain services to be rendered by HVW to the Company pursuant to a management agreement (the “Management Agreement”) entered into between the Company and HVW on September 6, 2013. Some of the material terms of the HVW Agreement include: (i) that Robert J. Sharp, the Chief Executive Officer and Board Member of the Company retire 4,961,500 shares of common stock of the Company owned by Mr. Sharp, and  the Company will appoint up to three persons nominated by HVW to the board of directors of the Company to serve until the next annual meeting of shareholders of the Company.


The common stock issued was valued at its fair market value of $1,379.


The material terms of the Management Agreement include: (i) HVW will provide certain business, financial and advisory services to the Company; (ii) HVW will receive a management fee of two percent (2%) per annum of average gross assets, (iii) HVW will also receive twenty percent (20%) of the revenues received by the Company derived from the services under the Management Agreement.




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Note 9 – Subsequent Events


The Company has evaluated all events that occurred after the balance sheet date through the date when the consolidated financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were certain reportable subsequent events to be disclosed as follows:


On November 4, 2013, the owners of the Series A Preferred Stock agreed that the Conversion ratio, as defined in the Certificate of Designation, shall not change in the event of forward-split or reverse-split for a period of nine months from issuance.


On October 24, 2013, the Company created the 2013 Equity Incentive Plan (the “Plan.”)  The aggregate number of shares of Common stock that may be issued under the Plan shall not exceed five million (5,000,000) shares.  


On October 23, 2013, the Company issued a promissory note (the “Note”) in consideration for $5,000 received from an investor.  The Note matures on June 30, 2014 and bears interest at a rate of ten percent, 10%, per annum.  




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As used in this Form 10-Q, references to “the Company,” “we,” “our,” “ours” and “us” refers to Harrison Vickers and Waterman Inc., unless otherwise indicated. In addition, references to “financial statements” are to our financial statements except as the context otherwise requires.


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

 

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected for any future periods.

 

This discussion contains forward-looking statements, based on current expectations. All statements regarding future events, our future financial performance and operating results, our business strategy and our financing plans are forward-looking statements and involve risks and uncertainties. In many cases, you can identify forward-looking statements by terminology, such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms and other comparable terminology. These statements are only predictions. Known and unknown risks, uncertainties and other factors could cause our actual results and the timing of events to differ materially from those projected in any forward-looking statements. In evaluating these statements, you should specifically consider various factors, including, but not limited to, those set forth in the Registration Statement and in this report.

 

General

 

Our principal executive office is located at 129 Glenwood Road, Glenwood Landing, NY 11547; our telephone number is (203) 340-4123. Our fiscal year end is June 30th.


We were incorporated on June 5, 2008, under the laws of the State of Nevada. On that date, we acquired 100% of the ownership interest in Sharp Performance Associates, LLC and the rights to the GT-33 customization package from the sole owner Robert J Sharp.  We issued Mr. Sharp 5,000,000 shares in consideration for this acquisition.


While the American automotive industry has made substantial improvement since the period of our incorporation, the demand for our services was not that substantial, and as such, the Company decided to change its business model..


Specifically, the Company decided that a rebounding United States real estate market presented a promising opportunity, and on September 6, 2013, the Company purchased from Harrison Vickers and Waterman LLC (“Harrison Vickers”) certain real estate loans in the amount of $1,800,000.  The Company issued a secured promissory note as consideration for the loans. The Note is due on December 31, 2014.  During the first quarter, $180,000 of the real estate loans were repaid with interest. With the proceeds, the Company repaid Harrison Vickers for that portion of the secured promissory note. The remaining balance of the loans and the secured promissory note at the balance sheet date was $1,620,000.


Also, on that date, the Company entered into a Securities Purchase Agreement (the “HVW Agreement”) with HVW Holdings LLC (“HVW”).  Pursuant to the Agreement the Company agreed to sell to HVW an aggregate of 308,166 shares of the Company’s Common Stock and 32,300 shares of preferred stock of the Company which pursuant to the terms thereof will be convertible into 32,300,000 shares of the Company’s common stock.  The consideration under the HVW Agreement was certain services to be rendered by HVW to the Company pursuant to a management agreement (the “Management Agreement”) entered into between the Company and HVW on September 6, 2013.   Please see our Form 8-K filed on September 10, 2013 for more detail on this transaction.


On September 13, 2013, Mr. Sharp resigned as Officer and Director, and James Giordano was named Chief Executive Officer and Director, and Dennis Mihalatos was named Chief Operating Officer. Please see our Form 8-K filed on September 18, 2013 for further detail.


The Company’s revised business model is making commercial secured real estate loans under advantageous and risk averse terms. We provide alternative funding solutions to borrowers who may not qualify with conventional lenders or may require faster turnaround.  Typical terms for loans are as follows: a) terms are generally for one year but may be extended to three years; b) interest rates are above market and adjustable upward; c) loans are interest only; d) loan to value (“LTV”) below 60%; e) loan secured by a first lien; f) all expenses, costs and fees incurred are paid for by the borrower. The Company anticipates additional opportunities through loan default, foreclosure, selected development, ownership and property management.

 

We believe the returns we shall get are more than commensurate with the risks offered by the short-term nature of the loans, above market interest rates and low loan to value (“LTV”) of our loans.  We may charge above average interest rates due to our efficiency in providing loans and our knowledge in conducting due diligence accurately and timely.



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We have not yet earned substantial revenues from our business operations. Accordingly, we may be required to raise cash from sources other than our operations in order to continue our business plan. We may raise this additional capital either through debt or equity. No assurance can be given that such efforts will be successful. We have no specific plans at present for raising additional capital.


Results of Operations for the Three Months Ended September 30, 2013 As Compared to September 30, 2012

 

Commensurate with the change in business model described, under “General” above, the Company generated $13,320 in revenues for the three months ended September 30, 2013.  These were the initial revenues associated with the purchase of real estate loans.  These revenues were offset by interest expense in the same amount.  There were no revenues earned during the period ended September 30, 2012.


Professional fees increased $1,770 in 2013 versus 2012, primarily due to increased auditing and accounting fees of $2,000 due to payments of previously unaccrued fees. These fees were partially offset by decreased state income taxes of $250. 


Compensation expense increased $208,788 due to accruals to our former Chairman and Chief Executive Officer for services renderered.


Management fees increased $145,879 due to the commencement of operations under the new business model. See General above


Consulting fees increased $72,474 due to the establishment of a consulting agreement with an advisory firm.  Consulting matters to be addressed are fund raising, financial reporting and general corporate matters.


General and administrative expenses increased $434 due to a greater level of miscellaneous payments.


Liquidity and Capital Resources


Our cash balance at September 30, 2013 was $215, a decrease of $2,491 from $2,706 at June 30, 2013.


We have limited capital resources, as, among other things, we are a development stage company with a limited operating history. We have generated limited revenues to date and may not be able to generate sufficient revenues to become profitable in the future.


The report of our independent registered public accounting firm on our financial statements for the fiscal year ended June 30, 2013 contains an explanatory paragraph regarding our ability to continue as a going concern based on our history of net losses since our inception.


While we have sufficient funds on hand to commence business operations, our cash reserves may not be sufficient to meet our obligations for the next 12-month period. As a result, we may need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to meet our obligations over the next 12 months. We do not have any arrangements in place for any future equity financing.


We do not currently own any significant plant or equipment that we will seek to sell in the near future.


We do not anticipate the need to hire employees over the next 12 months with the possible exception of secretarial support should our business grow and necessitate such expenditure. We believe the services provided by our sole officer and director are sufficient at this time. We believe that our operations are currently on a small scale and are manageable by one individual.


Off-Balance Sheet Arrangements


We have no off-balance sheet arrangements.




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)). Based upon that evaluation, our principal executive officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.


Inherent Limitations of Internal Controls


Our Principal Executive Officer does not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.


Changes in Internal Control over Financial Reporting


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




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PART II.


ITEM 1. LEGAL PROCEEDINGS


There are no pending, nor to our knowledge, threatened legal proceedings against us.


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


During the period, the Company issued 95,000 shares of Series A Preferred stock and 32,500 warrants exercisable at $.05 for a period of three years.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.


There were no defaults upon securities


ITEM  4. EXHIBIT INDEX


Exhibit

 

Number

Description

 

 

31.1

Certification pursuant to Section 302 of  the Sarbanes-Oxley Act-1 and 2

32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act





SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date: November 14, 2013


/s/ James Giordano

James Giordano

Chairman of the Board,

Chief Executive Officer, Principal Financial Officer and

Principal Accounting Officer




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