Attached files
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EXCEL - IDEA: XBRL DOCUMENT - James River Holding Corp. | Financial_Report.xls |
EX-31.1 - CERTIFICATION - James River Holding Corp. | jrhc_ex311.htm |
EX-32.2 - CERTIFICATION - James River Holding Corp. | jrhc_ex322.htm |
EX-32.1 - CERTIFICATION - James River Holding Corp. | jrhc_ex321.htm |
EX-31.2 - CERTIFICATION - James River Holding Corp. | jrhc_ex312.htm |
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q/A
(Mark One)
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2012
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission File Number:
James River Holdings Corporation
(Exact name of registrant as specified in its charter)
Delaware
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45-2579623
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
For correspondence, please contact:
Jillian Ivey Sidoti, Esq.
38730 Sky Canyon Drive – Ste A
Murrieta, CA 92563
(323) 799-1342 (phone)
jillian@jilliansidoti.com
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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
|
Smaller reporting company þ
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
At November 14, 2012, there were 51,036,012 shares outstanding of the registrant’s common stock.
JAMES RIVER HOLDINGS CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED September 30, 2012
Page
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|||||
Number
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|||||
PART I. FINANCIAL INFORMATION | |||||
Item 1. |
Financial Statements
|
F-1 | |||
Balance Sheets as of September 30, 2012 and December 31, 2011 (Unaudited)
|
F-1 | ||||
Statements of Operations for the Three and Nine Months ended September 30, 2012 and September 30, 2011 (Unaudited)
|
F-2 | ||||
Statements of Cash Flows for the Nine Months ended September 30, 2012 and 2011 (Unaudited)
|
F-3 | ||||
Notes to Financial Statements (Unaudited)
|
F-4 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
4 | |||
Item 3. |
Controls and Procedures
|
7 | |||
PART II. OTHER INFORMATION | |||||
Item 1. |
Legal Proceedings
|
8 | |||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
8 | |||
Item 3. |
Defaults upon senior securities
|
8 | |||
Item 4. |
Submissions of matters to a vote of securities holders
|
8 | |||
Item 5. |
Other Information
|
8 | |||
Item 6. |
Exhibits
|
8 | |||
Exhibit 31.1
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|||||
Exhibit 32.1
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2
EXPLANATORY NOTE
The Company is amending the previously filed Form 10-Q for the period ended September 30, 2012 for the purpose of amending and restating our unaudited financial statements and related disclosures for the three and nine month period ended September 30, 2012, as discussed in Note 3 to the accompanying restated unaudited consolidated financial statements. The original filing was filed with the Securities and Exchange Commission (“SEC”) on November 19, 2012.
This Amendment No. 1 speaks as of the original filing date of the Form 10-Q, and does not reflect events that may have occurred subsequent to the original filing date.
3
PART I — FINANCIAL INFORMATION
JAMES RIVER HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2012
|
December 31, 2011
|
|||||||
(Restated)
|
||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 262,805 | $ | 4,000 | ||||
Subscription receivable
|
- | 10,000 | ||||||
Total current assets
|
262,805 | 14,000 | ||||||
Property and equipment, net of accumulated depreciation
|
16,651,550 | - | ||||||
Goodwill
|
2,408,619 | - | ||||||
Intangible assets, net of accumulated amortization
|
65,018 | - | ||||||
TOTAL ASSETS
|
$ | 19,387,992 | $ | 14,000 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accrued expenses
|
$ | 119,052 | $ | 2,000 | ||||
Short-term debt
|
1,567,195 | - | ||||||
Total current liabilities
|
1,686,247 | 2,000 | ||||||
Long-term debt
|
8,860,581 | - | ||||||
Long-term debt to related parties
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2,131,115 | - | ||||||
TOTAL LIABILITIES
|
12,677,943 | 2,000 | ||||||
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,
|
||||||||
52,954,812 and 30,033,334 issued and outstanding , respectively
|
52,955 | 30,033 | ||||||
Additional paid-in capital
|
6,910,446 | (10,033 | ) | |||||
Accumulated deficit
|
(253,352 | ) | (8,000 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY
|
6,710,049 | 12,000 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 19,387,992 | $ | 14,000 |
The accompanying notes are an integral part of these unaudited consolidated financial statements
F-1
JAMES RIVER HOLDING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||
Revenue
|
||||||||||||||||
Rental income
|
$ | 205,588 | $ | - | $ | 205,588 | $ | - | ||||||||
Managed properties income
|
2,057 | - | 2,057 | - | ||||||||||||
Total revenue
|
207,645 | - | 207,645 | - | ||||||||||||
Operating expenses
|
||||||||||||||||
General and administrative
|
151,996 | - | 276,198 | 8,000 | ||||||||||||
Depreciation expense
|
55,495 | - | 55,495 | - | ||||||||||||
Amortization expense
|
8,546 | - | 8,546 | - | ||||||||||||
Total operating expenses
|
216,037 | - | 340,239 | 8,000 | ||||||||||||
Income (loss) from operations
|
(8,392 | ) | - | (132,594 | ) | (8,000 | ) | |||||||||
Other expense
|
||||||||||||||||
Interest expense
|
(112,758 | ) | - | (112,758 | ) | - | ||||||||||
Net loss
|
$ | (121,150 | ) | $ | - | $ | (245,352 | ) | $ | (8,000 | ) | |||||
Net loss per share - basic and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | ||||
Weighted average shares outstanding - basic and diluted
|
41,355,424 | 30,333,334 | 34,264,381 | 22,874,318 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2
JAMES RIVER HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2012
|
2011
|
|||||||
(Restated)
|
||||||||
Cash Flows from Operating Activities
|
||||||||
Net loss
|
$ | (245,352 | ) | $ | (8,000 | ) | ||
Adjustments to reconcile net loss to net cash used in
|
||||||||
operating activities:
|
||||||||
Amortization expense
|
8,546 | - | ||||||
Depreciation expense
|
55,495 | - | ||||||
Common stock issued for services
|
16,000 | - | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accrued expenses
|
2,704 | 2,000 | ||||||
Net Cash Used in Operating Activities
|
(162,607 | ) | (6,000 | ) | ||||
Cash Flows from Investing Activities
|
||||||||
Cash paid for the purchase of fixed assets
|
(190 | ) | - | |||||
Net Cash Used in Investing Activities
|
(190 | ) | - | |||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from the issuance of debt
|
200,000 | - | ||||||
Collection of subscription receivable
|
10,000 | - | ||||||
Proceeds from sale of common stock
|
236,501 | 10,000 | ||||||
Payments on debt
|
(23,593 | ) | - | |||||
Payments on debt to related parties
|
(1,306 | ) | - | |||||
Net Cash Provided by Financing Activities
|
421,602 | 10,000 | ||||||
Net change in cash
|
258,805 | 4,000 | ||||||
Cash, beginning of period
|
4,000 | - | ||||||
Cash, end of period
|
$ | 262,805 | $ | 4,000 | ||||
Supplemental Disclosures of Cash Flows Information:
|
||||||||
Cash paid for interest
|
$ | 112,758 | $ | - | ||||
Cash paid for income taxes
|
- | - | ||||||
Noncash Investing and Financing Activities:
|
||||||||
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
F-3
James River Holding Corp.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
James River Holdings Corporation. (the "Company") was incorporated under the laws of the State of Delaware on May 31, 2011. The Company’s objective is the purchase, management, and disposal of real estate assets and to acquire operating companies outside of real estate.
The balance sheet of James River Holdings Corporation (the “Company”) as of September 30, 2012 and the statements of operations for the three and nine months and cash flows for the nine months ended September 30, 2012, have not been audited. However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of September 30, 2012 and the results of operations for the three-months then ended.
Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Company’s financial statements as filed on Form S-1 and S-1/A for the year ended December 31, 2011.
NOTE 2. GOING CONCERN
As of September 30, 2012, 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. RESTATEMENT OF PRIOR YEAR INFORMATION
During the preparation of the Company’s September 30, 2013 10-Q, the Company identified an error in the accounting and presentation of the acquisitions which took place during the period 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.
F-4
The following table represents the effect of the correction of prior year information and is 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
|
- | 1,567,195 | 1,567,195 | |||||||||
Total current liabilities
|
7,872 | 1,678,375 | 1,686,247 | |||||||||
Long-term debt
|
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 |
F-5
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 | ) |
F-6
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 |
F-7
NOTE 4. ACQUISITIONS
ASC 805, “Business Combinations”, requires entities to determine whether an acquisition transaction is a business combination. If the acquisition transaction constitutes a business, then the total purchase price is allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date. If the assets do not constitute a business then the acquisition is accounted for as an asset acquisition. Determining whether the transaction is a business acquisition and the allocation process requires an analysis of the fair value of all assets acquired and liabilities assumed.
As part of the Company’s strategy to expand into the real estate leasing market, the Company completed the acquisition of real estate from six related real estate funds on August 15, 2012. The real estate funds and James River did not have any common ownership. The CEO of James River, however, managed the property owned by the real estate funds. The real estate acquired included the existing tenant leases and the acquisition was deemed to be an acquisition of a business. The purchase price paid consisted of an aggregate of 20,161,000 common shares valued at $6,048,300. The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below:
Acquired Assets:
|
||||
Property and equipment
|
$ | 16,706,855 | ||
Intangible Assets
|
73,564 | |||
Total acquired assets
|
16,780,419 | |||
Assumed Liabilities:
|
||||
Debt
|
(10,251,369 | ) | ||
Debt to related party
|
(2,775,021 | ) | ||
Security deposits held
|
(114,348 | ) | ||
Total assumed liabilities
|
(13,140,738 | ) | ||
Net assets acquired
|
3,639,681 | |||
Purchase price
|
(6,048,300 | ) | ||
Goodwill
|
$ | 2,408,619 |
NOTE 5. DEBT OWED TO RELATED PARTIES
During the nine months ended September 30, 2012, the Company assumed $2,775,021 of related party debt pursuant to the acquisition discussed in Note 4. The real estate funds did not have any ownership in common with James River, however, their property was managed by the CEO of James River. The real estate funds had outstanding debt owed to a party that is owned by an Officer of James River at the time of the acquisition. This note carries an interest of 5% and is due on August 15, 2017. The debt is secured by the real estate property acquired. The Company converted $642,600 of debt into 1,918,800 shares of common stock and made repayments of $1,306 on this debt during the nine months ended September 30, 2012.
F-8
NOTE 6. DEBT
During the nine months ended September 30, 2012, the Company assumed $10,251,369 of debt pursuant to the acquisitions discussed in Note 4. The notes carry an interest rate ranging from 5.5% - 6% and have maturity dates ranging from March 3, 2013 to February 5, 2016. The debt is secured by the real estate property acquired.
The Company also received proceeds of $200,000 on debt during the nine months ended September 30, 2012. This note carries an interest rate ranging of 4.5%, and has a maturity date ranging of June 5, 2013.
The Company made repayments on debt totaling $23,593 during the nine months ended September 30, 2012.
NOTE 7. SHAREHOLDER'S EQUITY
Upon formation, the Company issued 30,033,334 shares of common stock for a $10,000 subscription receivable to the founding shareholder of the Company to fund organizational start-up costs. The $10,000 was collected during the nine months ended September 30, 2012.
During the nine months ended September 30, 2012, the Company had the following equity issuances:
·
|
788,344 shares sold for proceeds of $236,501
|
·
|
53,334 shares issued for services, valued at $16,000
|
·
|
20,161,000 shares issued for the acquisition of real estate, valued at $6,048,300 (see Note 4)
|
·
|
1,918,800 shares issued for conversion of $642,600 of related party debt
|
F-9
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in this report and those in our S-1 registration statement deemed effective on October 7, 2011 and our 8-k filed on October 4, 2012. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of certain factors, including but not limited to, those described under “Risk Factors” included in Part II, Item IA of this report.
OVERVIEW
James River Holdings (“James River,” the “Company,” “us,” or “we”) owns single family residential properties and hopes to own manufactured home communities, but may adjust their business plan to include other similar opportunities such as multifamily and commercial property if the economy dictates and the opportunity arises. The Company will purchase, manage, and dispose of revenue producing assets, specifically single family properties and manufactured home communities.
As part of the Company’s strategy to expand into the real estate leasing market, the Company completed the acquisition of real estate from six related real estate funds on August 15, 2012. The real estate funds and James River did not have any common ownership. The CEO of James River, however, managed the property owned by the real estate funds. The real estate acquired included the existing tenant leases and the acquisition was deemed to be an acquisition of a business. The purchase price paid consisted of an aggregate of 20,161,000 common shares valued at $6,048,300. The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below:
Acquired Assets:
|
||||
Property and equipment
|
$ | 16,706,855 | ||
Intangible Assets
|
73,564 | |||
Total acquired assets
|
16,780,419 | |||
Assumed Liabilities:
|
||||
Debt
|
(10,251,369 | ) | ||
Debt to related party
|
(2,775,021 | ) | ||
Security deposits held
|
(114,348 | ) | ||
Total assumed liabilities
|
(13,140,738 | ) | ||
Net assets acquired
|
3,639,681 | |||
Purchase price
|
(6,048,300 | ) | ||
Goodwill
|
$ | 2,408,619 |
4
Results of Operations for the Quarter ending September 30, 2012
Assets
As of September 30, 2012, we had $262,805 in cash and $16,651,550 in single family residences. These were acquired in September of 2012 and are valued at their estimated fair values on the date of acquisition. The Company also values its Goodwill at $2,408,619.
Revenue
Since the Company acquired assets including single family homes in the third quarter of 2012, they have commenced generating revenues. The revenues for the third quarter were $207,645.
Operating Expense
Total operating expenses for the three months ended September 30, 2012 were $216,037 compared to expenses for the nine months ended September 30, 2012 of $340,239. The increase was due mostly to consulting expenses resulting from seeking out a potential acquisition. We also recognized $55,495 in depreciation expense and $8,546 in amortization expense for the three months ended September 30, 2012.
Net Loss
Net loss for the three months ended September 30, 2012 was $121,150 compared to the nine months ended September 30, 2012 since inception of $245,352.
Liquidity and Capital Resources
At September 30, 2012, we had $262,805 in cash.
Long Term Liabilities
The properties acquired as a result of the September 2012 acquisitions, also resulted in the company incurring $8,860,581 in long term liabilities in the form of first mortgages on the single family residences acquired. We also have $2,131,115 in long term debt owed to related parties. Initially, $10,251,369 of debt and $2,775,021 of related party debt was assumed pursuant to our acquisitions of real property in this quarter. The real estate funds from which we acquired the properties did not have any ownership in common with James River, however, their property was managed by the CEO of James River. The real estate funds had outstanding debt owed to a party that is owned by an Officer of James River at the time of the acquisition. This note carries an interest of 5% and is due on August 15, 2017. The debt is secured by the real estate property acquired. The Company converted $642,600 of debt into 1,918,800 shares of common stock and made repayments of $1,306 on this debt during the nine months ended September 30, 2012.
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Critical Accounting Policies and Estimates
Our critical accounting policies are disclosed in our S-11 Registration Statement. During the three months ended September 30, 2012 there have been no significant changes in our critical accounting policies.
Recent Accounting Pronouncements
Recent accounting pronouncements are disclosed in our S-11 Registration Statement, deemed effective with the Securities and Exchange Commission on February 1, 2012. During the three months ended September 30, 2012 there have been no new accounting pronouncements which are expected to significantly impact our consolidated financial statements.
Liquidity and Capital Resources
The Company is currently searching for properties to purchase as well as trying to deploy its business plan. To this end, the Company was able to acquire approximately $18 million in single family residences The Company will likely have to look to its officer, Mr. J. Barry Watts, or to third parties for additional capital. There can be no assurance that the Company will be able to secure additional financing or that the amount of any additional financing will be sufficient to conclude its business objectives or to pay ongoing operating expenses.
We expect to leverage our business with bank financing in the way of mortgages and deeds of trust. Based on the CEO’s previous borrowing experience with local banks for properties purchased by one of Mr. Watts’ other entities, we expect to enter into lending relationships with the following terms on a property by property basis:
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Interest rates not to exceed 8%
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Loan to value of 80%
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Collateralized with a 1st deed of trust or mortgage on the property
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Points not to exceed 1.5%
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Loans amortized over 20-30 years.
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Item 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure 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, 2012, 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.
Changes in Internal Controls 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.
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Item 1. LEGAL PROCEEDINGS
None
None
None
None
None
Item 6. EXHIBITS
(a) Exhibits:
Number
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Description
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31.1
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Certification of Chief Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
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32.1
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Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
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101.INS **
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XBRL Instance Document
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101.SCH **
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XBRL Taxonomy Extension Schema Document
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101.CAL **
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF **
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB **
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE **
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XBRL Taxonomy Extension Presentation Linkbase Document
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** 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.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
James River Holdings Corporation
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Date: November 15, 2013
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By:
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/s/ J. Barry Watts | |
Name: J. Barry Watts | |||
Title: President and Director | |||
(Principal Executive Officer) |
Date: November 15, 2013
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By:
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/s/ J. Barry Watts | |
Name: J. Barry Watts | |||
Title: Treasurer and Chief Financial Officer | |||
(Principal Financial Officer, and Principal Accounting Officer)
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