Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - James River Holding Corp.Financial_Report.xls
EX-32.2 - CERTIFICATION - James River Holding Corp.jrhc_ex322.htm
EX-31.2 - CERTIFICATION - James River Holding Corp.jrhc_ex312.htm
EX-31.1 - CERTIFICATION - James River Holding Corp.jrhc_ex311.htm
EX-32.1 - CERTIFICATION - James River Holding Corp.jrhc_ex321.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2013
 
or

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

For the transition period from __________ to __________
 
Commission File Number: 000-50302

James River Holdings Corporation
(Exact name of registrant as specified in its charter)

Delaware
 
45-2579623
(State or other jurisdiction of incorporation)
 
(IRS Employer Identification No.)

2847 S. Ingram Mill, Suite B100
Springfield, MO 65804
(Address of principal executive offices)
 
417-881-7818
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, 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, or 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
o
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o
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 o No x

As of November 13, 2013, there were 53,204,812 shares outstanding of the registrant’s common stock. 
 


 
 

 
 
JAMES RIVER HOLDING CORP.
TABLE OF CONTENTS
 
 
 
 
Page No.
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
Item 1.
Consolidated Financial Statements (unaudited):
    3  
 
Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (unaudited):
    3  
 
Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2013 and 2012 (unaudited):
    4  
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (unaudited):
    5  
 
Notes to Consolidated Financial Statements (unaudited)
    6  
 
 
       
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    10  
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    12  
Item 4.
Controls and Procedures
    13  
 
 
       
PART II. OTHER INFORMATION
       
 
 
       
Item 1.
Legal Proceedings
    14  
Item 1A.
Risk Factors
    14  
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    14  
Item 3.
Defaults Upon Senior Securities
    14  
Item 4.
Mine Safety Disclosures
    14  
Item 5.
Other Information
    14  
Item 6.
Exhibits
    15  

 
2

 
 
PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements

JAMES RIVER HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
   
September 30,
2013
   
December 31,
2012
 
ASSETS
Current assets
           
Cash and cash equivalents
  $ 468,010     $ 239,796  
Accounts receivable
    35,043       82,711  
Inventory
    15,000       15,000  
Total current assets
    518,053       337,507  
                 
Property and equipment, net of accumulated depreciation
    17,198,796       17,430,063  
Goodwill
    2,437,250       2,437,250  
Intangible assets, net of accumulated amortization
    12,041       48,815  
TOTAL ASSETS
  $ 20,166,140     $ 20,253,635  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
               
Accrued expenses
  $ 125,661     $ 133,116  
Accounts payable
    57,381       -  
Short-term debt, net of unamortized discount
    5,645,529       2,324,749  
Total current liabilities
    5,828,571       2,457,865  
                 
Long-term debt
    8,231,881       10,647,527  
Long-term debt to related parties
    1,762,097       2,243,787  
TOTAL LIABILITIES
    15,822,549       15,349,179  
                 
Stockholders' Equity
               
Preferred stock, $.001 par value, 10,000,000 shares authorized,
               
none issued and outstanding
    -       -  
Common stock, $.001 par value, 100,000,000 shares authorized,
               
53,204,812 issued and outstanding
    53,204       53,204  
Additional paid-in capital
    6,985,197       6,985,197  
Accumulated deficit
    (2,694,810 )     (2,133,945 )
TOTAL STOCKHOLDERS' EQUITY
    4,343,591       4,904,456  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 20,166,140     $ 20,253,635  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
3

 
 
JAMES RIVER HOLDING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
         
(Restated)
         
(Restated)
 
Revenue
                       
Rental income
  $ 354,690     $ 205,588     $ 1,071,507     $ 205,588  
Property management income
    3,269       2,057       12,353       2,057  
Pavement maintenance income
    595,463       -       1,006,413       -  
Total revenue
    953,422       207,645       2,090,273       207,645  
                                 
Cost of revenue
    325,024       -       538,016       -  
                                 
Operating expenses
                               
General and administrative
    360,007       151,996       984,241       276,198  
Depreciation expense
    165,901       55,495       519,044       55,495  
Amortization expense
    8,650       8,546       36,774       8,546  
Total operating expenses
    534,558       216,037       1,540,059       340,239  
                                 
Income (loss) from operations
    93,840       (8,392 )     12,198       (132,594 )
                                 
Other expense
                               
Interest expense
    (195,328 )     (112,758 )     (573,063 )     (112,758 )
                                 
Net loss
  $ (101,488 )   $ (121,150 )   $ (560,865 )   $ (245,352 )
                                 
Net loss per share - basic and diluted
  $ (0.00 )   $ (0.00 )   $ (0.01 )   $ (0.01 )
                                 
Weighted average shares outstanding - basic and diluted
    53,204,812       41,355,424       53,204,812       34,264,381  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
4

 
 
JAMES RIVER HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Nine Months Ended
 
   
September 30,
 
   
2013
   
2012
 
         
(Restated)
 
Cash Flows from Operating Activities
           
Net loss
  $ (560,865 )   $ (245,352 )
Adjustments to reconcile net loss to net cash used in
               
operating activities:
               
Amortization of debt discounts
    8,127       -  
Amortization expense
    36,774       8,546  
Depreciation expense
    519,044       55,495  
Loss on sale of fixed assets
    6,558       -  
Common stock issued for services
    -       16,000  
Changes in operating assets and liabilities:
               
Accounts receivable
    47,668       -  
Accrued expenses
    (7,455 )     2,704  
Accounts payable
    57,381       -  
Net Cash Used in Operating Activities
    107,232       (162,607 )
                 
Cash Flows from Investing Activities
               
Cash paid for purchase of fixed assets
    (138,514 )     (190 )
Proceeds from the sale of fixed assets
    3,250       -  
Net Cash Used in Investing Activities
    (135,264 )     (190 )
                 
Cash Flows from Financing Activities
               
Proceeds from the issuance of debt
    950,000       200,000  
Commissions paid on the issuance of debt
    (10,836 )     -  
Proceeds from the issuance of debt to related parties
    460,527       -  
Collection of subscription receivable
    -       10,000  
Proceeds from sale of common stock
    -       236,501  
Payments on debt
    (198,864 )     (23,593 )
Payments on debt to related parties
    (944,581 )     (1,306 )
Net Cash Provided by Financing Activities
    256,246       421,602  
                 
Net change in cash
    228,214       258,805  
Cash, beginning of period
    239,796       4,000  
Cash, end of period
  $ 468,010     $ 262,805  
                 
Supplemental Disclosures of Cash Flows Information:
               
Cash paid for interest
  $ 564,936     $ 112,758  
Cash paid for income taxes
    -       -  
                 
Noncash Investing and Financing Activities:
               
Debt issued for the purchase of fixed assets
  $ 159,071     $ -  
Common stock issued for the acquisition of real estate
    -       6,048,300  
Common stock issued for related party debt
    -       642,600  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
5

 
 
James River Holding Corp.
Notes to Consolidated Financial Statements
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION
 
The accompanying unaudited financial statements of James River Holding Corp. (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 registration statement filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim 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 which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2012 as reported in Form 10-K, have been omitted.

NOTE 2 – GOING CONCERN

As of September 30, 2013, we had a working capital deficit and an accumulated deficit. These conditions raise substantial doubt about our ability to continue as a going concern.

Our management is continuing its efforts to secure funding through equity and/or debt instruments for our operations. We will require additional funds to pay down our liabilities, as well as finance our expansion plans. However, there can be no assurance that we will be able to secure additional funding. The consolidated financial statements contain no adjustment for the outcome of this uncertainty.
 
NOTE 3 – DEBT OWED TO RELATED PARTIES

During the nine months ended September 30, 2013 the Company received proceeds of $460,527 in related party debt and made repayments of $944,581 on related party debt. The notes bear interest ranging from 4% to 5% per annum and mature between December 31, 2015 and August 15, 2017. The debt is secured by the real estate property acquired. The aggregate outstanding balance of related party debt was $1,762,097 and $2,243,787 as of September 30, 2013 and December 31, 2012, respectively.

The debt outstanding is owed to related parties because the lender is owned by an Officer of the Company.

NOTE 4 – DEBT

During the nine months ended September 30, 2013 the Company received proceeds of $950,000 on debt. This note has a payment of $5,748 per month, carries an interest rate of 6%, a maturity date of January 18, 2014, and is secured by rental properties. Commissions of $10,836 were paid to the lender upon the closing of this loan resulting in a debt discount. The discount is being amortized over the life of the note using the effective interest rate method. During the nine months ended September 30, 2013, amortization of $8,127 was recognized as interest expense.

The company also received proceeds of $128,908, $15,082 and $15,081 on debt used to purchase fixed assets. These notes are secured by the underlying fixed assets, carry interest rates of 4.99%, 3.99% and 3.99% and have maturity dates of June 21, 2019, September 3, 2013 and September 3, 2013, respectively.
 
The Company made repayments on debt totaling $198,864 during the nine months ended September 30, 2013.
 
 
6

 
 
NOTE 5 – RESTATEMENT OF PRIOR YEAR INFORMATION

During the preparation of the Company’s September 30, 2013 10-Q, the Company identified errors in the accounting and presentation of the acquisitions which took place during the nine months ending September 30, 2012. This resulted in an adjustment to the previously reported amounts in the financial statements of the Company for the period ending September 30, 2012. The Company has filed an amended Form 10-Q for the nine months ended September 30, 2012 to reflect these restatements.

The following table represents the effect of the correction of prior year information and its impact on the consolidated balance sheet as of September 30, 2012

   
As of September 30, 2012
 
   
As Previously Reported
   
Adjustments
   
As Restated
 
ASSETS
                   
Property and equipment, net of accumulated depreciation
  $ 18,153,127     $ (1,501,577 )   $ 16,651,550  
Goodwill
    153,324       2,255,295       2,408,619  
Intangible assets, net of accumulated amortization
    -       65,018       65,018  
TOTAL ASSETS
  $ 18,569,256     $ 818,736     $ 19,387,992  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
                       
Accrued expenses
  $ 7,872     $ 111,180     $ 119,052  
Short-term debt, net of unamortized discounts
    -       1,567,195       1,567,195  
Total current liabilities
    7,872       1,678,375       1,686,247  
                         
Long-term debt, net of unamortized discounts
    12,433,342       (3,572,761 )     8,860,581  
Long-term debt to related parties
    -       2,131,115       2,131,115  
TOTAL LIABILITIES
    12,441,214       236,729       12,677,943  
                         
Stockholders' Equity
                       
Common stock – number of shares issued and outstanding
    51,036,012       1,918,800       52,954,812  
 
                       
Common stock
    51,036       1,919       52,955  
 
                       
Additional paid-in capital
    6,253,674       656,772       6,910,446  
Accumulated deficit
    (176,668 )     (76,684 )     (253,352 )
TOTAL STOCKHOLDERS' EQUITY
    6,128,042       582,007       6,710,049  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 18,569,256     $ 818,736     $ 19,387,992  
 
 
7

 

The following table represents the effect of the correction of prior year information and is impact on the consolidated statement of operations for the three months ended September 30, 2012

   
Three Months Ended September 30, 2012
 
   
As Previously Reported
   
Adjustments
   
As Restated
 
Revenue
                 
Rental income
  $ 222,966     $ (17,378 )   $ 205,588  
Managed properties income
    -       2,057       2,057  
Total revenue
    222,966       (15,321 )     207,645  
                         
Operating expenses
                       
General and administrative
    267,433       (115,437 )     151,996  
Depreciation expense
    -       55,495       55,495  
Amortization expense
    -       8,546       8,546  
Total operating expenses
    267,433       (51,396 )     216,037  
                         
Income (loss) from operations
    (44,467 )     36,075       (8,392 )
                         
Other expense
                       
Interest expense
    -       (112,758 )     (112,758 )
                         
Net loss
  $ (44,467 )   $ (76,683 )   $ (121,150 )
 
The following table represents the effect of the correction of prior year information and is impact on the consolidated statement of operations for the nine months ended September 30, 2012
 
   
Nine Months Ended September 30, 2012
 
   
As Previously Reported
   
Adjustments
   
As Restated
 
Revenue
                 
Rental income
  $ 222,966     $ (17,378 )   $ 205,588  
Managed properties income
    -       2,057       2,057  
Total revenue
    222,966       (15,321 )     207,645  
                         
Operating expenses
                       
General and administrative
    391,634       (115,436 )     276,198  
Depreciation expense
    -       55,495       55,495  
Amortization expense
    -       8,546       8,546  
Total operating expenses
    391,634       (51,395 )     340,239  
                         
Income (loss) from operations
    (168,668 )     36,074       (132,594 )
                         
Other expense
                       
Interest expense
    -       (112,758 )     (112,758 )
                         
Net loss
  $ (168,668 )   $ (76,684 )   $ (245,352 )
 
 
8

 
 
The following table represents the effect of the correction of prior year information and is impact on the consolidated statement of cash flows for the nine months ended September 30, 2012

   
Nine Months Ended September 30, 2012
 
   
As Previously Reported
   
Adjustments
   
As Restated
 
                   
Cash Flows from Operating Activities
                 
 Net loss
  $ (124,202 )   $ (121,150 )   $ (245,352 )
 Adjustments to reconcile net loss to net cash used in
                       
 operating activities:
                       
 Amortization expense
    -       8,546       8,546  
 Depreciation expense
    -       55,495       55,495  
 Common stock issued for services
    -       16,000       16,000  
 Changes in operating assets and liabilities:
                       
 Accrued expenses
    -       2,704       2,704  
Net Cash Used in Operating Activities
    (124,202 )     (38,405 )     (162,607 )
                         
Cash Flows from Investing Activities
                       
 Cash paid for the purchase of fixed assets
    -       (190 )     (190 )
Net Cash Used in Investing Activities
    -       (190 )     (190 )
                         
Cash Flows from Financing Activities
                       
 Proceeds from the issuance of debt
    -       200,000       200,000  
 Collection of subscription receivable
    -       10,000       10,000  
 Proceeds from sale of common stock
    246,501       (10,000 )     236,501  
 Payments on debt
    -       (23,646 )     (23,646 )
 Payments on debt to related parties
    -       (1,253 )     (1,253 )
Net Cash Provided by Financing Activities
    246,501       175,101       421,602  
                         
Net change in cash
    122,299       136,506       258,805  
Cash, beginning of period
    4,000       -       4,000  
Cash, end of period
  $ 126,299     $ 136,506     $ 262,805  
                         
Supplemental Disclosures of Cash Flows Information:
                       
 Cash paid for interest
  $ -     $ 112,758     $ 112,758  
 Cash paid for income taxes
    -       -       -  
                         
Noncash Investing and Financing Activities:
                       
 Common stock issued for the acquisition of real estate
  $ -     $ 6,048,300     $ 6,048,300  
 Common stock issued for related party debt
    -       642,600       642,600  
 
 
9

 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Registrant’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Registrant or any other person that the objectives and plans of the Registrant will be achieved.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.
 
Overview

Incorporated in May 2011 as a Delaware company, James River Holdings Corporation (“we,” “us” or “the Company”) is a diversified holding company engaged in acquiring controlling interests in and actively managing established companies operating profitable, high growth, entrepreneurial businesses in mature markets – companies that operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams which desire to remain in place and benefit from the growth made possible by leveraging our business-building platform.

More specifically, our criteria for qualifying sellers of businesses for acquisition consideration include the following:

·  
The prospect must be an established U.S.-based company with low/no debt, annual revenues of up to $100 million and $2-$10 million in annual EBITDA.
·  
The prospect has bright growth prospects, but is short on growth capital.
·  
The prospect produces in-demand products or provides in-demand services that are not subject to discretionary dollars.
·  
The prospect is geographically situated within the Midwestern region of the U.S.
·  
The prospect operates a simple, straight forward business that James River’s executive management team fully understands.
·  
The prospect shares James River Holdings’ core values and ethical business standards.

We believe that private company operators and corporate parents looking to sell their businesses may consider us as an attractive purchaser because of our ability to provide ongoing strategic and financial support for their businesses. In terms of the businesses we have acquired to date, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches and maintain strong customer relationships.

The Company’s current portfolio companies include Springfield Property Management, which owns and manages 217 single family and two duplex residential rental properties in the Springfield, Missouri market; and PaveCare, a company specializing in commercial pavement repair and parking lot maintenance services, mainly to big box retailers in the Midwestern region of the United States.

With acquisitions serving as a key component of James River Holdings’ long term growth strategy, the Company will continue to remain very busy qualifying and pursuing opportunities to continue its growth and enhance shareholder value.
 
 
10

 

Revenues

Total revenues for the three and nine months ended September 30, 2013 were $953,422 and $2,090,273, respectively, which compared to $207,645 in total revenues for both the three and nine month periods ended September 30, 2012. In our residential real estate business segment, revenue from rental income totaled $354,690 and $1,071,507 for the three and nine months ended September 30, 2013, respectively; and revenue from property management income totaled $3,269 and $12,353, respectively. Due to the timing of the Company’s acquisition of its rental properties in the third and fourth quarter of 2012, revenue from rental income totaled $205,588 for both the three and nine month periods in 2012 and revenue from property management income was $2,057 for both 2012 periods, as well. In our commercial paving business segment, PaveCare’s revenues were $595,463 for the three months ended September 30, 2013 and $1,006,413 for the nine month period. The reason that revenues for the paving business were nil in 2012 is due to the fact that the acquisition of the assets of 4 State Asphalt & Sealing and the subsequent formation of PaveCare did not occur until late in the fourth quarter of 2012.

Gross Profit

For the three months ended September 30, 2013, gross profit was $628,398 compared to $207,645 for the same three months in 2012. Gross profit for the first nine months of 2013 totaled $1,552,257, which compared to $207,645 for the nine months ended September 30, 2012. For the three and nine months ended June 30, 2013, gross profit margin was 66% and 74%, respectively.

Operating Expenses
 
Due to the previously noted timing of the acquisitions relating to our real estate rental and paving businesses, as well as increased costs associated with becoming a fully reporting public company, total operating expenses increased $318,521, or 147%, to $534,558 for the three months ended September 30, 2013, when compared to $216,037 the same three months in 2012. For the nine month period in 2013, total operating expenses climbed to $1,540,059, an increase of $1,199,820, or 353%, from $340,239 reported for the first nine months of 2012.

General and administrative expenses increased 137% to $360,007, for the three months ended September 30, 2013 compared to $151,996 for the same three month period in 2012. For the nine month reporting periods in 2013, general and administrative expenses totaled $984,241, representing a 256% increase over $276,198 spent on general and administrative expenses in the first nine months of 2012.

For the three months ended September 30, 2013 and 2012, depreciation expense totaled $165,901 and $55,495, respectively; and amortization expense was $8,650 and $8,546, respectively. For the comparable nine month periods ended September 30, 2013 and 2012, depreciation expense totaled $519,044 and $55,495, respectively; and amortization expense was $36,774 and $8,546, respectively.
 
Income (Loss) from Operations

After factoring total operating expenses, including non-cash depreciation and amortization expenses, income from operations for the three months ended September 30, 2013 totaled $93,840, which compared to a loss from operations of $8,392 for the three months ended September 30, 2012. For the nine month period ended September 30, 2013, the Company reported income from operations of $12,198 compared to a loss from operations of $132,594 for the nine months ended September 30, 2012.

Other Expense
 
Total other expense for the three and nine months ended September 30, 2013 was $195,328 and $573,063, respectively and stemmed solely from interest expense associated with servicing the Company’s real estate loans during the reporting periods. This compared to total other expense of $112,758 for both the three and nine months ended September 30, 2012.
 
Net Loss
 
Net loss totaled $101,488, or $0.00 loss per basic and diluted share, for the three months ended September 30, 2013, which compared to a net loss of $121,150, or $0.00 loss per basic and diluted share, for the same three month period in 2012. For the nine months ended September 30, 2013 and 2012, net loss was $560,865, or $0.01 loss per basic and diluted share, and $245,352, or $0.01 loss per basic and diluted share, respectively.
 
 
11

 
 
Liquidity and Capital Resources
 
We are currently seeking additional operating income opportunities through potential acquisitions or investments. Such acquisitions or investments may consume cash reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current Company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; and (iv) the activities of competitors. In addition to developing new products and services, obtaining new customers and increasing sales to existing customers, management plans to increase its business and profitability by entering into collaboration agreements, buying assets and acquiring companies that meet its defined acquisition criteria.
 
During the nine months ended September 30, 2013, the Company had a net increase in cash of $228,214. This compared to a net increase in cash of $258,805 for the first nine months of 2012. The Company's principal sources and uses of funds were as follows:
 
Cash provided by (used in) operating activities
 
Cash provided by operations for the nine months ended September 30, 2013 totaled $107,232, as compared to using $162,607 in cash for operating activities for the nine months ended September 30, 2012.

Cash used in investing activities
 
Investing activities for the first nine months of 2013 used cash of $135,264, as compared to using $190 in cash for the nine months ended September 30, 2012. This increase in cash used in 2013 is largely attributable to the purchase of fixed assets.
 
Cash provided by financing activities
 
Financing activities for the nine months ended September, 2013 provided cash of $256,246, as compared to cash of $421,602 provided from financing activities for the same nine month period in 2012. This decrease in cash provided in financing activities was largely attributable to the Company’s capital raising activities in the first nine months of 2012, wherein $236,501 in proceeds was raised from the sale of Common Stock and $200,000 was raised from the issuance of debt. During the first nine months of 2013, cash provided by the Company’s financing activities included $950,000 from the issuance of debt and $460,527 from the issuance of debt to related parties, which was offset by commissions paid on the issuance of debt of $10,836, payments on debt of $198,864 and payments on debt to related parties of $944,581 totaling $1,154,281.
 
The Company believes that as a result of the predictable cash flow in its residential real estate rental business, coupled with improving cash flow in its paving business, it has adequate liquidity to fund its operating plans for at least the next 12 months.
 
There was no significant impact on the Company’s operations as a result of inflation for the nine months ended September 30, 2013. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K to the SEC for the fiscal year ended December 31, 2012.
 
Off Balance Sheet Arrangements
 
During the nine months ended September 30, 2013, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
We do not hold any derivative instruments and do not engage in any hedging activities.
 
 
12

 
 
Item 4. Controls and Procedures
 
The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2013, and concluded that the disclosure controls and procedures were not effective as a whole. In particular, we have identified the following material weakness of our internal controls:

·  
Lack of segregation of duties
·  
Lack of formal control processes that provide for multiple levels of supervision and review.

(b) Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”).

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance of such reliability and may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our Chief Executive Officer and our Principal Accounting Officer, an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2013. Management’s assessment of internal control over financial reporting used the criteria set forth in SEC Release 33-8810 based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control over Financial Reporting – Guidance for Smaller Public Companies. Based on this evaluation, Management concluded that our system of internal control over financial reporting was not effective as of December 31, 2012, based on these criteria.

(c) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
13

 
 
PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings
 
We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
 
In August, 2013 we filed a lawsuit against Robert Sorensen, Thomas R. Sorensen, Patricia Sorensen, and Sorensen Enterprises in the Circuit Court of Greene County, Missouri alleging breach of contract and fraud with damages in the amount of $16,000,000 for failure to perform on the terms of a contract signed in October, 2012. If successful this suit would have a material, favorable impact on the company. If unsuccessful it would have no material adverse effect on the company.
 
In September, 2013 we filed a lawsuit against Anton & Chia, CPA’s alleging breach of contract and fraud with damages in an amount exceeding $70,000 resulting from their failure to complete the audit for which they were paid-in-full in April of 2013. If successful this suit would have a material, favorable impact on the company. If unsuccessful it would have no material adverse effect on the company.
 
There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
 
Item 1A. Risk Factors
 
We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on August 7, 2013.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
Other than disclosed above, there were no unregistered sales of equity securities during the period ended September 30, 2013 that were not otherwise required to be disclosed in a current report on Form 8-K.
 
Item 3. Defaults Upon Senior Securities
 
There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.
 
Item 4. Mine Safety Disclosures
 
Not Applicable.
 
Item 5. Other Information
 
There is no other information required to be disclosed under this item which has not been previously reported.
 
 
14

 
 
Item 6. Exhibits
 
31.1
 
Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
31.2
 
Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
32.1
 
Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2
 
Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS
 
XBRL Instance Document**
101.SCH
 
XBRL Taxonomy Extension Schema**
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase**
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase**
101.LAB
 
XBRL Taxonomy Extension Label Linkbase**
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase**
__________
* Filed herewith
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
15

 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
JAMES RIVER HOLDING CORP.
 
 
 
 
Dated: November 13, 2013
By:
/s/ J. Barry Watts
 
 
 
J. Barry Watts
 
 
 
Chief Executive Officer (Principal Executive Officer)
 
 
Chief Financial Officer (Principal Accounting Officer)
 
 
 
 
 
 
 
 
 
16