Car Monkeys Group - FORM 10-Q - February 12, 2014

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - Car Monkeys Group	Financial_Report.xls
EX-31.2 - CERTIFICATION - Car Monkeys Group	dlne_ex312.htm
EX-31.1 - CERTIFICATION - Car Monkeys Group	dlne_ex311.htm
EX-32.1 - CERTIFICATION - Car Monkeys Group	dlne_ex321.htm
EX-32.2 - CERTIFICATION - Car Monkeys Group	dlne_ex322.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 December 31, 2013

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

Commission file number 000-54583

Delaine Corporation

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

393 Crescent Ave, Wyckoff, NJ 07481

(Address of principal executive offices, including zip code.)

(862) 251-5912

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO 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-Y (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small 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 Act). YES o NO x

As of February 10, 2014, there are 65,012,813 shares of common stock outstanding.

All references in this Report on Form 10-Q to the terms “we”, “our”, “us”, the “Company”, “Delaine” and the “Registrant” refer to Delaine Corporation unless the context indicates another meaning.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited interim financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the June 30, 2013 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. These unaudited financial statements reflect all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

Delaine Corporation

Index to the Financial Statements (Unaudited)

December 31, 2013 (Unaudited)

June 30, 2013

Balance Sheets as of December 31, 2013 (Unaudited) and June 30, 2013			4

Statements of Operations (Unaudited) for the six month periods ended
December 31, 2013 and 2012, and for the three month periods ended
December 31, 2013 and 2012			5

Statements of Cash Flows (Unaudited) for the six month periods ended
December 31, 2013 and 2012			6

Notes to the Financial Statements (Unaudited)			7-10

Delaine Corporation

Balance Sheets (Unaudited)

	December 31, 2013			June 30, 2013

ASSETS
Current assets:
Cash	$	3,771		$	41,334
Restricted cash (see Note 3)		112,735			-
Accounts receivable		18,600			1,880
Prepaid expenses		-			5,833
Total current assets		135,106			49,047

Property, plant and equipment, net		1,279			1,361

Intangible assets		353,194			353,194
Total assets	$	489,579		$	403,602

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	21,395		$	13,133
Accounts payable - related party		16,797			-
Total current liabilities		38,192			13,133

Stockholders' Equity
Preferred stock, par value $0.001, 10,000,000 shares authorized, 400,000 shares issued and outstanding as of December 31, 2013 and June 30, 2013, respectively		400			400
Common stock, par value $0.001, 100,000,000 shares authorized, 65,012,813 issued and outstanding as of December 31, 2013 and June 30, 2013, respectively		65,013			65,013
Additional paid-in capital		734,651			734,626
Retained deficit		(348,677	)		(409,570	)
Total stockholder's equity		451,387			390,469
Total liabilities and stockholder's equity	$	489,579		$	403,602

See accompanying notes to the financial statements (unaudited).

Delaine Corporation

Statements of Operations (Unaudited)

	For the Six Month Period Ended December 31, 2013			For the Six Month Period Ended December 31, 2012			For the Three Month Period Ended December 31, 2013			For the Three Month Period Ended December 31, 2012

Net sales	$	766,684		$	-		$	429,684		$	-
Cost of sales, including delivery expenses		468,926			-			257,496			-
Gross profit	$	297,758		$	-		$	172,188		$	-

Operating expenses:
Selling, general and administrative		116,838			18,462			58,130			47,205
Executive compensation		85,333			49,522			63,900			24,800
Professional fees		34,615			66,668			10,681			-
Depreciation expense		81			163			-			81
Total operating expenses		236,867			134,815			132,711			72,086

Operating income (loss) before income taxes		60,891			(134,815	)		39,477			(72,086	)

Other income		2			33			-			5

Income tax (expense) benefit		-			-			-			-

Net income (loss)	$	60,893		$	(134,782	)	$	39,477		$	(72,081	)

Basic and diluted income (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding		65,012,813			45,980,000			65,012,813			45,980,000

See accompanying notes to the financial statements (unaudited).

Delaine Corporation

Statements of Cash Flows (Unaudited)

	For the Six Month Period Ended December 31, 2013			For the Six Month Period Ended December 31, 2012

Cash flows from operating activities:
Net loss	$	60,893		$	(134,782	)
Depreciation expense		81			163
Adjustments to reconcile net loss to net cash used in operating activities:
Restricted cash		(112,735	)		-
Accounts receivable		(16,720	)		-
Prepaid expenses		5,833			(55,833	)
Accounts payable		8,262			6,002
Accounts payable - related party		16,797			-
Net cash used in operating activities		(37,589	)		(184,450	)

Cash flows from investing activities:		-			(1,686	)
Net cash used in investing activities		-			(1,686	)

Cash flows from financing activities:
Contributed capital		26			5,000
Issuance of common stock for cash		-			-
Net cash provided by financing activities		26			5,000

Net increase in cash		(37,563	)		(181,136	)
Cash at beginning of period		41,334			186,602
Cash at end of period	$	3,771		$	5,466

Supplemental Information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

See accompanying notes to the financial statements (unaudited).

Delaine Corporation

Notes to the Financial Statements (Unaudited)

1)	BASIS FOR FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2013 audited financial statements as reported in Form 10-K. The results of operations for the period ended December 31, 2013 are not necessarily indicative of the operating results for the full year ended June 30, 2014.

2)	DEVELOPMENT STAGE COMPANY

Historically, the Company has been considered a ‘Development Stage Company’ as defined in ASC 915 “Development Stage Entities.” As a result of operating activities during the six month period ended December 31, 2013, the Company has implemented its planned, principal activities, generated significant revenues and, as such, is no longer considered a ‘Development Stage Company.’

3)	RESTRICTED CASH

The Company uses merchant accounts to facilitate sales realized through the Company’s proprietary online sales platform. In accordance with certain merchant account agreements 15% of cash receipts up to a certain maximum amount are withheld for a period of 6 to 12 months to ensure the Company’s creditworthiness. After such period these withholdings are to be deposited in the Company’s bank accounts and become usable. Accordingly, as of December 31, 2013, the Company has classified these merchant account reserve balances as restricted cash, totaling $112,735.

Delaine Corporation

Notes to the Financial Statements (Unaudited)

4)	RELATED PARTY TRANSACTIONS

In August, 2013, the Company entered into an agreement with its President, wherein the Company agreed to pay a monthly salary of $15,800 in exchange for services to be rendered. Furthermore, the Company entered into an agreement with its Chief Technology Officer pursuant to which terms the Company agreed to pay a monthly salary of $6,500. These compensation amounts, in addition to $5,833 in remaining amortization of the President’s prepaid salary through August, 2013, have been recorded in executive compensation for the six month period ended December 31, 2013 totaling $85,333. Of this amount, $16,797 has yet to be paid and is recorded in accounts payable – related party as of December 31, 2013.

5)	PROVISION FOR INCOME TAXES

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position. If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Delaine Corporation

Notes to the Financial Statements (Unaudited)

5)	PROVISION FOR INCOME TAXES (CONTINUED)

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 43% to pretax income from continuing operations for the six month periods ended December 31, 2013 and 2012 due to the following:

	For the Six Month Period Ended December 31, 2013			For the Six Month Period Ended December 31, 2012
Deferred tax asset:
Net operating loss carryforward	$	116,155		$	91,733
Valuation allowance		(116,155	)		(91,733	)
Total	$	-		$	-

The components of income tax expense are as follows:

	For the Six Month Period Ended December 31, 2013			For the Six Month Period Ended December 31, 2012

Current Federal Tax (Benefit)	$	20,704		$	(45,826	)
Current State Tax		5,480			(12,130	)
Use of NOL and Rate Difference		(26,184	)		-
Change in NOL benefit		47,673			57,956
Change in valuation allowance		(47,673	)		-
Total	$	-		$	-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As of December 31, 2013, the Company has an unused net operating loss carry-forward balance of $270,127 that is available to offset future taxable income. This unused net operating loss carry-forward balance begins to expire in 2033. The Company also has operating losses of approximately $78,550 which expire beginning in 2030. However, due to a change in control and line of business, the losses are suspended. These losses have not been considered in the deferred tax asset calculation as of December 31, 2013.

Delaine Corporation

Notes to the Financial Statements (Unaudited)

5)	PROVISION FOR INCOME TAXES (CONTINUED)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	For the Six Month Period Ended December 31, 2013		For the Six Month Period Ended December 31, 2012

Beginning balance	$	-	$	-
Additions based on tax positions related to current year		-		-
Additions for tax positions of prior years		-		-
Reductions for tax positions of prior years		-		-
Reductions in benefit due to income tax expense		-		-
Ending balance	$	-	$	-

At December 31, 2013, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

As of December 31, 2013 and 2012, the Company had no accrued interest or penalties related to uncertain tax positions.

The tax years that remain subject to examination by major taxing jurisdictions are those since June 23, 2010 (Inception) through the year ended June 30, 2013.

6)	GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2013 and June 30, 2013, the Company has a retained deficit of $348,677 and $409,570, respectively. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.

7)	SUBSEQUENT EVENTS

The Company has evaluated its subsequent events from the balance sheet date through the date of this report and determined that there are no additional events to disclose.

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

The following discussion is an overview of the important factors that management focuses on in evaluating our business; financial condition and operating performance should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of any number of factors, including those set forth in the Company’s reports filed with the SEC on Form 10-K, 10-Q and 8-K as well as in this Quarterly Report on Form 10-Q. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Overview

Delaine Corporation (the “Company”) was incorporated on June 23, 2010 in the State of Nevada. The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is June 30. Pursuant to the Reorganization Agreement entered into in June 2012, the Company’s development and operations are to provide online sales of recycled automotive parts using the Company sole’s and exclusive license to certain proprietary technology relating to online procurement of goods (the “Technology”).

Delaine Corporation is an online retailer of used auto parts under the brand name Car Monkeys. The Company utilizes proprietary algorithms developed in 2008 by Mariusz Girt, the Company’s president. The Company’s proprietary search and consolidation algorithm allows us to show our customers all parts that meet their specific needs. Far more sophisticated than normal search engines, this technology understands and accounts for the fact that many identical parts and assemblies are shared across multiple models, model years, and even across brands. Most owners are completely unaware that parts from a completely different vehicle may be an exact fit for their application. Ordinary search engines do not account for this interchangeability, and as a result, severely limit the customer’s range of choices. Working from this expanded field of prospects, a second proprietary component of our technology applies advanced AI techniques to perform a complex analysis to identify parts that are simultaneously competitively priced as well as of verifiable quality. This component allows us to assess all resultant prospects, and display those that simultaneously represent the best value to our customers, a reasonable profit margin, and, most importantly, a predictive quality metric that allows us to offer a 5-year unlimited-mileage warranty on used parts purchased from us. The technology also includes a fulfillment module, and a fulfillment follow-up module, allowing real time searching of over 157 million auto parts from a trusted network of suppliers, as well as an automated process to identify in-transit shipments, and shipment problems.

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2013 and June 30, 2013, the Company had cash of $3,771 and $41,334, respectively. The Company also had restricted cash of $112,735 as of December 31, 2013 which pursuant to the Company’s credit card merchant accounts required that 15% of cash receipts are withheld for a period of up to 12 months to ensure the Company’s creditworthiness. After such period these withholdings are to be deposited in the Company’s bank accounts and become usable.Our principal asset is the intangible asset of the proprietary technology acquired in June 2012.

Our current liabilities at December 31, 2013 are $38,192 consisting of accounts payable to unrelated parties of $21,395 and accounts payable to related parties of $16,797 representing accrued compensation to our chief executive officer. As of December 31, 2013 and June 30, 2013, we had a retained deficit of $348,677 and $409,570 respectively.

In order to carry on our business, we must obtain additional capital. The Company intends to fund continuing operations through equity financing. Therefore, available capital may be insufficient to fund capital expenditures, required working capital, and other cash requirements for the next twelve months. The successful execution of our business plan requires significant cash resources. Because of our limited operating history, equity or debt financing arrangements may not be available in amounts and on terms acceptable to us, if at all. Additionally, because we intend to rely upon the sale of additional equity securities, there is a risk that your shares will suffer additional dilution. Furthermore, if we incur additional indebtedness there is a risk that increased debt service obligations will restrict our operations. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders. Since we initiated our business operations in June 2012, we have been funded by the private sale of equity.

During the fiscal quarter ended March 31, 2013, the Company issued 18,500,000 shares for services. The value of the services received for the shares is based on the stated value of services stated in a consulting contract entered into during the fiscal quarter. The shares issued 5,000,000 shares valued at $25,000 issued as a signing bonus to Pavel Girt, the Company’s newly appointed chief financial officer appointed in March 2013 and 500,000 shares valued at $2,500 were issued as a signing bonus to the Company’s newly engaged chief technology officer. 10,000,000 shares were issued to a business development, personnel and finance consultant whose contract states a $50,000 value for the services, equaling $0.005 per share value. 3,000,000 shares were issued to another business consultant similarly valued at $15,000.

The services received for shares during the fiscal quarter are valued at $92,500. The value of the shares issued is $3,061,750 or $0.1655 per share being the weighted average price per share in the below described contemporary cash sales of common shares. The excess of the value of the shares issued over the value of the services received is $2,969,250 and has been recorded as a reduction of additional paid in capital.

In January 2013, the Company issued 25,000 shares for $10,000 or $0.40 per share. In April 2013, the Company issued 156,250 common shares to two individuals in exchange for $20,000 or $0.128 per share.

As of December 31, 2013 and June 30, 2013, we had no material commitments for capital expenditures.

Results of Operation

During the fourth quarter of fiscal year ended June 30, 2013 we launched our www.carmonkeys.com web site to introduce our product line to the marketplace. During the first quarter of the current fiscal year we commenced operating our second website, www.lowmilegeparts.com. As of the first quarter of fiscal 2014 we are no longer in the Development Stage. During the six months ended December 31, 2013 we had net sales of $766,684 resulting in gross profit of $297,758. Inflation and changing prices have had no impact on our revenues or income from continuing operations.

During the three and six month periods ended and December 31, 2013, selling, general and administrative expenses consist of $58,130 and $116,838 respectively primarily for website development and commencing operations. For the same periods there were professional fees of $10,681 and $34,615 for the legal, accounting, transfer agent fees and EDGAR filing fees inherent in public company regulatory compliance. This is compared to $0 and $66,668 for the three and six month periods ended December 31, 2012. We paid executive compensation of $63,900 and $24,800 during the three month periods ending December 31, 2013 and December 31, 2012 respectively.

We had net income of $39,477 and $60,893 during the three and six month periods ending December 31, 2013 compared to net losses of $72,081 and $134,782 during the three and six month periods ended December 31, 2012.

Off Balance Sheet Arrangements

None.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Currently we are not involved in any pending litigation or legal proceeding.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.		Description

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer

32.2		Section 906 Certification of Chief Financial Officer

101.INS **		XBRL Instance Document

101.SCH **		XBRL Taxonomy Extension Schema Document

101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

** 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DELAINE CORPORATION

Date: February 11, 2014	By:	/s/ Mariusz Girt
		Mariusz Girt, President

Attached files

Car Monkeys Group Reports

Also read