Attached files
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EX-31.1 - EX-31.1 - CORGREEN TECHNOLOGIES HOLDING Corp | ex-31_1.htm |
EX-32.1 - EX-32.1 - CORGREEN TECHNOLOGIES HOLDING Corp | ex-32_1.htm |
EX-31.2 - EX-31.2 - CORGREEN TECHNOLOGIES HOLDING Corp | ex-31_2.htm |
EX-32.2 - EX-32.2 - CORGREEN TECHNOLOGIES HOLDING Corp | ex-32_2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
S
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
||||
For the quarterly period ended
|
September 30, 2014
|
||||
*
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
||||
For the transition period from ____________ to ____________
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|||||
Commission file number 001-55162
|
|||||
________________________
|
Gold Ridge Resources, Inc.
(Exact name of registrant as specified in its charter) |
|
Nevada
(State or other jurisdiction of incorporation or organization) |
45-2898817
(I.R.S. Employer Identification No.)
|
|
|
9891 Irvine Center Drive Suite 200, Irvine, California 92618
(Address of principal executive offices, including zip code) |
|
(855) 587-4249
(Registrant's telephone number, including area code) |
|
(Former name, former address and former fiscal year, if changed since last report) |
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒
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 definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ☐
|
Accelerated Filer ☐
|
Non-Accelerated Filer ☐
|
Smaller reporting company ☒
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
27,012,500 shares of the registrant's common stock, $.001 par value per share, were outstanding as of December 19, 2014.
Gold Ridge Resources, Inc.
FORM 10-Q
For The Quarter Ended September 30, 2014
INDEX
|
||
GOLD RIDGE RESOURCES, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
September 30,
|
June 30,
|
|||||||
2014
|
2014
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash & cash equivalents
|
$
|
248,226
|
$
|
3,110
|
||||
Accounts receivable, net
|
280
|
280
|
||||||
Inventory
|
57,258
|
57,258
|
||||||
Residential property for sale
|
1,657,326
|
1,657,326
|
||||||
Advances and prepaids
|
26,558
|
-
|
||||||
Note receivables
|
50,000
|
-
|
||||||
Receivables from property sales
|
545,000
|
545,000
|
||||||
Total Current Assets
|
2,584,648
|
2,262,974
|
||||||
Property & Equipment, net
|
436,318
|
378,637
|
||||||
Total Assets
|
$
|
3,020,966
|
$
|
2,641,612
|
||||
Liabilities & Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
10,476
|
9,341
|
||||||
Due to shareholders
|
294,685
|
298,247
|
||||||
Loan payable
|
42,000
|
-
|
||||||
Convertible notes payable
|
700,000
|
-
|
||||||
Deferred revenue
|
50,000
|
-
|
||||||
Mortgages on properties
|
1,792,715
|
1,792,715
|
||||||
Total Liabilities
|
2,889,876
|
2,100,303
|
||||||
Stockholders' Equity
|
||||||||
Common Stock, $.001 par value, ?? shares authorized,
|
||||||||
27,012,500 and 16,450,000 issued and outstanding, respectivley
|
27,013
|
16,450
|
||||||
Additional paid-in capital
|
(22,013
|
)
|
(11,450
|
)
|
||||
Retained earnings
|
126,090
|
536,309
|
||||||
Total Stockholders' Equity
|
131,090
|
541,309
|
||||||
Total Liabilities & Stockholders' Equity
|
$
|
3,020,966
|
$
|
2,641,612
|
The accompanying notes are an integral part of these consolidated financial statements.
|
GOLD RIDGE RESOURCES, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(Unaudited)
|
||||||||
For the Three Months Ended
|
||||||||
September 30,
|
||||||||
2014
|
2013
|
|||||||
Revenues
|
$
|
17,688
|
$
|
236,508
|
||||
Cost of Sales
|
-
|
230,862
|
||||||
Gross Profit
|
17,688
|
5,646
|
||||||
Operating Expenses
|
||||||||
Advertising, promotional and selling
|
2,248
|
27,882
|
||||||
Depreciation
|
14,319
|
10,757
|
||||||
Contract labor
|
31,500
|
17,239
|
||||||
General and administrative
|
375,840
|
123,428
|
||||||
Total Operating Expenses
|
423,907
|
179,306
|
||||||
Loss from Operations
|
(406,219
|
)
|
(173,660
|
)
|
||||
Other Expenses
|
||||||||
Interest expense
|
(3,980
|
)
|
(8,347
|
)
|
||||
Total Other Expenses
|
(3,980
|
)
|
(8,347
|
)
|
||||
Net loss
|
$
|
(410,199
|
)
|
$
|
(182,007
|
)
|
||
Basic and diluted net loss per share
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
||
Basic and diluted weighted-average number of shares
|
27,012,500
|
16,450,000
|
The accompanying notes are an integral part of these consolidated financial statements.
GOLD RIDGE RESOURCES, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
For the Three Months Ended
|
||||||||
September 30,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(410,199
|
)
|
$
|
(182,007
|
)
|
||
Adjustments to reconcile net income (net loss) to net cash
|
||||||||
(used in) provided by operating activities:
|
||||||||
Depreciation
|
14,319
|
10,757
|
||||||
Changes in operating assets and liabilities:
|
-
|
|||||||
Accounts receivable
|
-
|
11,700
|
||||||
Inventory
|
-
|
(19,273
|
)
|
|||||
Residential properties held for sale
|
-
|
(1,786,327
|
)
|
|||||
Short Term Advance
|
(26,558
|
)
|
(121,649
|
)
|
||||
Due to/from shareholder
|
(3,562
|
)
|
-
|
|||||
Deferred Revenue
|
50,000
|
6,000
|
||||||
Accounts Payable
|
1,116
|
-
|
||||||
Net cash used in operating activities
|
(374,884
|
)
|
(2,080,799
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of property & equipment
|
-
|
(929
|
)
|
|||||
Note Receivable
|
(50,000
|
)
|
-
|
|||||
Net cash used in investing activities
|
(50,000
|
)
|
(929
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from convertible notes payable
|
700,000
|
-
|
||||||
Payments on notes payable
|
(30,000
|
)
|
-
|
|||||
Proceeds from notes payable
|
-
|
2,154,315
|
||||||
Net cash provided by financing activities
|
670,000
|
2,154,315
|
||||||
Change in cash and cash equivalents
|
245,116
|
72,587
|
||||||
Cash and cash equivalents at beginning of period
|
3,110
|
2,592
|
||||||
Cash and cash equivalents at end of period
|
$
|
248,226
|
$
|
75,179
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
3,980
|
$
|
8,347
|
||||
Non-cash investing and financing activities:
|
||||||||
Purchase of property and equipment with financing
|
$
|
72,000
|
$
|
-
|
The accompanying notes are an integral part of these consolidated financial statements.
GOLD RIDGE RESOURCES, INC.
September 30, 2014 (Unaudited)
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying consolidated 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 at June 30, 2014, and for all periods presented herein have been made.
Certain information and footnote disclosures normally included in consolidated 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 consolidated financial statements and notes thereto included in the Company's December 31, 2013 audited consolidated financial statements. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the operating results for the full years.
Basis of Presentation
The financial statements are presented on the accrual basis of accounting and the Company reports its income on a calendar year basis and are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Consistent with historical reporting, the Company's financial statements are presented in accordance with accounting and financial reporting standards and Accounting Standard Codifications (ASC) promulgated by the Financial Accounting Standards Board (FASB).
Principles of Consolidation
The accompanying consolidated financial statements include the results of the Company and its four operating Subsidiaries: SFS, S4H, GMTFY and 3 Lids. All significant intercompany balances and transactions have been eliminated in consolidation.
Risk and Uncertainties
Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, lower than anticipated growth from existing and yet to be determined competition, an inability to control expenses, technology changes, the impact of the application of and/or changes in accounting principles, undue pressure upon the financial services industry to provide adequate business resources, changes in regulatory requirements and national, state and local laws and their enforcement, and uncertain economic conditions. Negative developments in these or other risk factors could have a material adverse effect on the Company's financial position, results of operations and cash flows.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to inventory, property and equipment, fair values of real property, contingencies and related party receivables or payables. Management's estimates are based on historical experience and on other assumptions that are believed to be reasonable, the results of which form the basis of making judgments about the carrying values of assets and liabilities.
Cash and Cash Equivalents
Cash and cash equivalents at September 30, 2014 and June 30, 2014, included cash on-hand. Cash equivalents are considered all accounts with a maturity date within 90 days.
GOLD RIDGE RESOURCES, INC.
Notes to Consolidated Financial Statements
September 30, 2014 (Unaudited)
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable and Allowance for Doubtful Accounts
Accounts Receivable are stated at the amount Management expects to collect from the balances outstanding at year-end. When estimating the allowance for doubtful accounts, the Company takes into consideration such factors as its day-to-day knowledge of the financial position of specific clients, the industry and size of its clients, the overall composition of its accounts receivable aging, prior history with specific customers of accounts receivable write-offs and prior experience of allowances in proportion to the overall receivable balance. The Company has recorded $-0- in allowance for doubtful accounts and receivables as of September 30, 2014 and June 30, 2014, respectively.
Residential Property Held for Sale
Real estate held for sale is stated at the lower of cost or fair value less costs to sell. The cost of real estate held for sale includes acquisition, development, construction and carrying costs, and other related costs through the development stage. Real estate under development and land available for development are stated at cost. Real estate held for investment, is stated at cost, less accumulated depreciation. The Company capitalizes interest on funds used in developing properties from the date of initiation of development activities through the date the property is substantially complete and ready for sale or lease. Common costs are allocated based on the relative fair value of individual land parcels. Certain carrying costs are capitalized on properties currently under active development. The Company capitalizes improvements that increase the value of properties and have useful lives greater than one year. Costs related to repairs and maintenance are charged to expense as incurred.
The Company performs an impairment test when events or circumstances indicate that an asset's carrying amount may not be recoverable. Events or circumstances that the Company considers indicators of impairment include significant decreases in market values, adverse changes in regulatory requirements (including environmental laws), significant budget overruns for properties under development, and current period or projected operating cash flow losses from rental properties. Measurement of the impairment loss is based on the fair value of the asset. Generally, the Company determines fair value using valuation techniques such as discounted expected future cash flows. Impairment tests for properties held for sale involve management estimates of fair value based on estimated market values for similar properties in similar locations and management estimates of costs to sell. If estimated fair value less costs to sell is less than the related carrying amount, then a reduction of the carrying amount of the asset to fair value less costs to sell is required.
The Company recorded no impairment charges for the twelve months ended June 30, 2014 or the three months ended September 30, 2014. Should market conditions deteriorate in the future or other events occur that indicate the carrying amount of Stratus' real estate assets may not be recoverable, Stratus will reevaluate the expected cash flows from each property to determine whether any impairment exists.
Cost of Property Sales. Cost of sales includes the cost of real estate sold as well as costs directly attributable to the properties sold such as marketing, maintenance and property taxes. Cost of sales also includes operating costs and depreciation for properties held for investment and municipal utility district reimbursements.
Revenue Recognition
Property Sales. Revenues from property sales are recognized when the risks and rewards of ownership are transferred to the buyer, when the consideration received can be reasonably determined and when the Company has completed its obligations to perform certain supplementary development activities, if any exist, at the time of the sale. Consideration is reasonably determined and considered likely of collection when the Company has signed sales agreements and has determined that the buyer has demonstrated a commitment to pay. The buyer's commitment to pay is supported by the level of their initial investment, the Company's assessment of the buyer's credit standing and the Company's assessment of whether the buyer's stake in the property is sufficient to motivate the buyer to honor their obligation to pay.
Rental Income. The Company recognizes its rental income based on the terms of its signed leases with tenants on a straight-line basis. Recoveries from tenants for taxes, insurance and other commercial property operating expenses are recognized as revenues in the period the related costs are incurred. The Company recognizes sales commissions and management and development fees when earned, as properties are sold or when the services are performed.
Product Sales. The Company records revenue from the sale of its vitamin spray product when the goods are delivered to customers, the rights of ownership have transferred from the Company to the customer and when assurance of collection within a reasonable period of time is determined.
GOLD RIDGE RESOURCES, INC.
Notes to Consolidated Financial Statements
September 30, 2014 (Unaudited)
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements
The Company's management has considered all recent accounting pronouncements. Management believes that these recent pronouncements will not have a material effect on the Company's financial statements.
NOTE B – INVENTORY
Inventory consists of raw materials, work in process and finished goods for S4H's "Pure Spray" product line. The Company purchases raw materials and assembles the finished product. The cost elements of work in process and finished goods inventory consist of raw materials and direct labor.
Inventories consisted of the following as of as of September 30, 2014 and June 30, 2014:
September 30,
2014
|
June 30, 2014
|
|||||||
Raw materials
|
$
|
21,120
|
$
|
21,120
|
||||
Work-in-process
|
-
|
-
|
||||||
Finished goods
|
36,138
|
36,138
|
||||||
Total inventory
|
$
|
57,258
|
$
|
57,258
|
NOTE C – SHORT-TERM NOTE RECEIVABLE
The Company has advanced a short-term receivable of $50,000 to a trade associate with a stated interest rate of 8% per annum, all due and payable by April 1, 2015.
NOTE D – ADVANCES AND PREPAIDS
The Company has placed deposits and advanced funds to shareholders in the normal course of business. All advances are short-term and reconciled to normal expense or asset accounts on a regular basis. At September 30, 2014 advances and deposits totaled $26,558.
NOTE E – RECEIVABLES FROM PROPERTY SALES
On December 22, 2013 the Company sold a property located at 6248 E. Hillcrest Blvd. in Scottsdale, Arizona for $1,195,000 and took back an installment note for $595,000, with all interest (8 percent) and principal due on or before December 20, 2014, and a deferred payment of $191,327 until February 2014. The balance due in notes receivable was $545,000 as of both September 30 and June 30, 2014.
GOLD RIDGE RESOURCES, INC.
Notes to Consolidated Financial Statements
September 30, 2014 (Unaudited)
NOTE F – RESIDENTIAL PROPERTY HELD FOR SALE
The Company acquires real property to improve and sell for profit. Interim, short-term financing, with interest only payments, finance the holding period. The following schedule summarizes the costs of the Company's property purchases, improvements, and carrying costs during the three month period ended September 30, 2014 and the twelve month period ended June 30, 2014:
September 30,
2014
|
June 30, 2014
|
|||||||
Beginning balance of properties held for sale
|
$
|
1,657,326
|
$
|
13,949
|
||||
Property purchases
|
-
|
1,939,577
|
||||||
Improvements and carrying costs
|
-
|
286,399
|
||||||
Materials and supplies
|
-
|
9,577
|
||||||
Cost of properties held for sale
|
1,657,326
|
2,249,502
|
||||||
Less: cost of properties sold
|
-
|
(592,176
|
)
|
|||||
Ending balance of properties held for sale
|
$
|
1,657,326
|
$
|
1,657,326
|
Interest paid included in carrying costs was $-0- and $151,503 for the three months ended September 30, 2014 and the twelve months ended June 30, 2014 respectively.
NOTE G – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of September 30 and June 30, 2014:
September 30,
2014
|
June 30, 2014
|
|||||||
Office building
|
$
|
300,000
|
$
|
300,000
|
||||
Extraction equipment
|
130,911
|
130,911
|
||||||
Packaging and filling equipment
|
8,281
|
8,281
|
||||||
Office equipment and furniture
|
6,874
|
6,874
|
||||||
Vehicles
|
72,000
|
-
|
||||||
Total property and equipment
|
518,066
|
446,066
|
||||||
Less: accumulated depreciation
|
(81,748
|
)
|
(67,430
|
)
|
||||
Property and equipment, net
|
$
|
436,318
|
$
|
378,636
|
Depreciation expense was $14,318 and $57,923 for the three months ended September 30, 2014 and the twelve months ended June 30, 2014, respectively.
NOTE H – DUE TO/FROM SHAREHOLDER
The Company received advances or had expenditures made on the Company's behalf from shareholders for operating expenses and property and equipment purchases. These amounts do not bear interest or have a maturity date. During the twelve months ended June 30, 2014, the Company had a beginning balance due to shareholders of $450,722, received $689,333 in cash and expenses, and repaid $841,807 in cash, leaving an ending balance due to shareholders of $298,248. During the three months ended September 30, 2014, the Company received $4,555 in cash and expenses, and repaid $8,118 leaving an ending balance due to shareholders of $298,685.
GOLD RIDGE RESOURCES, INC.
Notes to Consolidated Financial Statements
September 30, 2014 (Unaudited)
NOTE I – LEASE COMMITMENTS
The Company had an equipment lease commitment on an office copier through December 31, 2013, when it was cancelled. Equipment lease expense was $-0- and $2,827 for the three months ended September 30, 2014 and the twelve months ended June 30, 2014, respectively.
NOTE J – LOANS PAYABLE
During the period ended September 30, 2014, the Company purchased a vehicle and financed the purchase with a $72,000, 36 month installment loan payable bearing interest at 5.74 percent. As of September 30, 2014, the Company made a $30,000 lump-sum payment against the loan, leaving an ending balance of $42,000.
NOTE K – CONVERTIBLE NOTES PAYABLE
During the period ended September 30, 2014, the Company executed convertible notes payable with various individuals and entities. The combined principal balance of the notes is $700,000, the notes are unsecured, bear interest at ten percent per annum, and have maturity dates ranging from December 2014 to March 2015. The notes are automatically converted into common stock of the Company in the event a private investment in public equity ("PIPE") is consummated at an amount of $800,000 or more. The conversion price in the event of the consummation of a qualifying PIPE is the lesser of $1.00 or 66.7% of the per share purchase price of the securities offered in the PIPE.
NOTE L – MORTGAGES ON PROPERTIES
The Company acquires real property to improve and sell for profit using interim, short-term, renewable financing, with interest only payments, to bridge holding periods until sale. The Company had four mortgage loans outstanding with a total balance due of $1,792,715 at both September 30 and June 30, 2014. All property loans are considered to be current liabilities.
As of September 30, 2014 and June 30, 2014 the Company's mortgages on properties consisted of the following:
Property Address
|
Interest
Rate
|
Monthly
Payment
|
September 30,
2014
|
June 30, 2014
|
||||||||||||
1335 N. Greenfield, Mesa AZ
|
15.9
|
%
|
$
|
3,975
|
$
|
300,000
|
$
|
300,000
|
||||||||
5815 N. 25th Street, Phoenix AZ
|
14.0
|
%
|
10,500
|
900,000
|
900,000
|
|||||||||||
2219 E. Mallard Court, Gilbert AZ
|
17.0
|
%
|
3,471
|
245,000
|
245,000
|
|||||||||||
618 Windsor Street, Santa Cruz, CA
|
6.0
|
%
|
1,739
|
347,715
|
347,715
|
|||||||||||
Totals (weighted-average)
|
13.2
|
%
|
$
|
19,684
|
$
|
1,792,715
|
$
|
1,792,715
|
Interest paid on the above loans was $3,975 and $8,347 for the three months ended September 30, 2014 and the twelve months ended June 30, 2014, respectively.
NOTE M – SEGMENT INFORMATION
The Company is organized into four operating subsidiaries which each provide unique services. Revenues recorded by GMTFY are for equipment rentals, by S4H are for product sales and by SFS are for property sales, transaction fees and property leasing. There was no activity recorded by 3 Lids.
Results of the operating segments are as follows:
September 30,
2014
|
||||||||||||||||||||
GMTFY
|
S4H
|
|
SFS
|
CorGreen
|
Total
|
|||||||||||||||
Revenues
|
$
|
-
|
$
|
8,615
|
$
|
1,553
|
$
|
7,500
|
$
|
17,688
|
||||||||||
Cost of sales
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Gross profit
|
-
|
8,615
|
1,553
|
7,500
|
17,688
|
|||||||||||||||
Operating expenses
|
9,546
|
492
|
6,891
|
261,291
|
423,907
|
|||||||||||||||
Interest expense
|
-
|
-
|
-
|
3,980
|
3,980
|
|||||||||||||||
Net income (loss)
|
$
|
(9,546
|
)
|
$
|
8,123
|
$
|
(5,338
|
)
|
$
|
(257,771
|
)
|
$
|
(410,199)
|
|||||||
Cash
|
140
|
2,467
|
1,239
|
244,380
|
248,226
|
|||||||||||||||
Accounts receivable
|
-
|
280
|
-
|
-
|
280
|
|||||||||||||||
Inventory
|
-
|
57,258
|
-
|
-
|
57,258
|
|||||||||||||||
Short-term note receivable
|
-
|
-
|
-
|
50,000
|
50,000
|
|||||||||||||||
Advances & prepaid expenses
|
-
|
-
|
-
|
26,558
|
26,558
|
|||||||||||||||
Residential properties held for sale
|
-
|
-
|
1,657,326
|
-
|
1,657,326
|
|||||||||||||||
Receivables from property sales
|
-
|
-
|
545,000
|
-
|
545,000
|
|||||||||||||||
Property and equipment, net
|
75,583
|
6,036
|
285,859
|
68,840
|
436,318
|
|||||||||||||||
Total assets
|
$
|
75,723
|
$
|
66,041
|
$
|
2,489,424
|
389,778
|
$
|
3,020,966
|
GOLD RIDGE RESOURCES, INC.
Notes to Consolidated Financial Statements
September 30, 2014 (Unaudited)
NOTE N– COMMON STOCK AND SHARE EXCHANGE AGREEMENT
On July 15, 2014, Gold Ridge Resouces, Inc. ("GDGR") closed a share exchange agreement with CorGreen Technologies Corporation ("CGTC") and the shareholders of CGTC. As a result of the exchange transaction, the CGTC shareholders acquired 18,562,500 (68.7 percent) of the 27,012,500 issued and outstanding common stock of GDGR.
The share exchange constitutes a reverse recapitalization and is considered to be a capital transaction in substance, rather than a business combination, therefore no goodwill or other intangible assets have been recorded.
The Company is authorized to issue up to 100,000,000 shares of common stock (par value $0.001). As of September 30, 2014 and June 30, 2014, 27,012,500 and 16,450,500 shares of common stock are issued and outstanding, respectively.
NOTE O – SUBSEQUENT EVENTS
Subsequent to the period end, the Company executed additional short-term convertible loan agreements for total proceeds of approximately $150,000. The loans have maturity dates ranging from March 2015 to April 2015.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion regarding the Company along with our financial statements and related notes included in this quarterly report. This quarterly report, including the following discussion, contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance and achievements in 2013 and beyond may differ materially from those expressed in, or implied by, these forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements.
Overview
We were incorporated in Nevada on July 15, 2010 and originally operated as a mining exploration stage company engaged in the acquisition and exploration of mineral properties. On July 15, 2014, we entered into a Share Exchange Agreement with CorGreen Technologies Corporation, a privately held Nevada corporation ("CorGreen") and the shareholders of CorGreen. In accordance with the terms of the Share Exchange Agreement, at the closing an aggregate of 18,562,500 shares of our common stock were issued to the holders of CorGreen's common stock in exchange for their shares of CorGreen (the "Exchange"). As a result of the Exchange, we are no longer pursuing our former business plan of acquiring and exploring mineral properties. Under the direction of our newly appointed officers and directors, we are in the business of serving cannabis manufacturing, grow operational management, distributing of CBD based products and financing processes.
Our mission is to be among the first companies with the ability to serve the cannabis market from "seed to retail." We formed our subsidiary, CorGreen, to be among the first vertical-integrated company to serve the emerging market for medicinal and recreational cannabis use. Through our four operating subsidiaries – 3Lids Consulting, Spray for Health, GMTFY and Strong Financial Solutions – we serve the cannabis manufacturing, distributing and financing process. We believe that combining these strategic business units provide us with a competitive advantage, by allowing us access to multiple points of revenue in the harvesting and distribution process of cannabis and by giving us the ability to share clients, as well as SG&A costs among the strategic business units.
Results of Operations
Revenue
Revenues decreased $218,820 (93%) from $236,508 to $17,688 due to the fact that sales of residential properties held for sale did not occur during the current three month period. The sales recorded in the current period of $17,688 relate to sales of the Company's vitamin spray product.
Expenses
For the quarter ended September 30, 2014, we incurred operating expenses in the amount of $423,907 as compared to $179,306 for the quarter ended September 30, 2013 an increase of $232,559 (134%). This resulted from an increase of $3,562 in depreciation expense due to property and equipment additions and increases of $14,261 and $252,412 in contract labor and general and administrative expenses, respectively as the Company seeks to implements new business plan strategies related to consulting opportunities in the cannabis and medical marijuana industries.
Net Loss
Our net loss increased by $228,192 (125%) from $182,007 for the quarter ended September 30, 2013 to $17,096 for the quarter ended September 30, 2014 due to the decreases in revenue and increases in expenses noted above.
Liquidity and Capital Resources
As of September, 2014, we had a working capital deficit of $305,228 which represents a decrease in working capital of $467,899 (228%) from the Company's working capital surplus at June 30, 2014 of $162,671. The decrease is related to an increase in current liabilities of $789,573 due to the execution of new notes payable which was offset by an increase in current assets of $321,674.
A component of our operating plan impacting our expansion is the ability to obtain additional capital through additional equity and/or debt financing for purposes of future product development and the expansion of our manufacturing facilities. Additionally, we anticipate obtaining additional financing to fund acquisitions through common stock offerings and bank borrowings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to pursue other avenues.
Going Concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of our company as a going concern. We currently have limited liquidity and have not completed our efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These factors raise substantial doubt about our ability to continue as a going concern.
Not applicable.
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, 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 Exchange Act of 1934, as amended, or the Exchange Act, as of September 30, 2014, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2014, our disclosure controls and procedures were not effective at the reasonable assurance level due to the following three material weaknesses:
1. | We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of the year ending June 30, 2014. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
2. | We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
3. | Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. |
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions..
Changes in Internal Controls.
There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2014 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
We currently have no legal proceedings pending nor have any legal proceeding been threatened against us or any of our officers, directors or control persons of which we are aware.
None except as previously on our Current Report on Form 8-K dated July 15, 2014.
2.1 | Share Exchange Agreement, incorporated by reference to Exhibit 2.1 of our Form 8-K dated July 15, 2014 |
2.2 | Conveyance Agreement, incorporated by reference to Exhibit 2.1 of our Form 8-K dated July 15, 2014 |
31.1 | Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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.
GOLD RIDGE RESOURCES, INC.:
Dated: December 24, 2014 By: /s/ R. Clinton Pyatt
R. Clinton Pyatt
Chief Executive Officer
(principal executive officer)
Dated: December 24, 2014 By: /s/ Brian Loiselle
Brian Loiselle
Chief Financial Officer (principal
financial and accounting officer)