UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended: March 31, 2018

 

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the transition period from _____________ to _____________.

 

Commission file number: 333-212527

 

HIGH DESERT HOLDING CORP.

(Exact name of registrant as specified in its charter)

 

Nevada	46-3493034
(State of incorporation)	(I.R.S. Employer Identification No.)

 

865 Tahoe Boulevard, Suite 302

Incline Village, Nevada 89451

(Address of principal executive offices)

 

(775) 298-2856

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

 

Securities registered pursuant to Section 12(g) of the Exchange Act:

None

 

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 ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  x
Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨ No x

 

The number of shares of the issuer's common stock issued and outstanding as of April 30, 2018 was 37,990,000 shares.

 

 

 

 

TABLE OF CONTENTS

 

			Page
PART I.  FINANCIAL INFORMATION			3
	Item 1	Financial Statements	3
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	10
	Item 4	Controls and Procedures	10
PART II.  OTHER INFORMATION			11
	Item 1	Legal Proceedings	11
	Item 1A	Risk Factors	11
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	11
	Item 3	Defaults Upon Senior Securities	11
	Item 4	Mine Safety Disclosures	11
	Item 5	Other Information	11
	Item 6	Exhibits	11
SIGNATURES			12

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

HIGH DESERT HOLDING CORP.

BALANCE SHEETS

(UNAUDITED)

 

		March 31, 2018				December 31, 2017
ASSETS
Current Assets
Cash		$	1,999			$	241
Total current assets			1,999				241
Mining equipment, net			–				–
Mineral properties			–				–
Total assets		$	1,999			$	241
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accrued director fees		$	120,000			$	105,000
Related party accounts payable			30,335				22,768
Shareholder advances			9,000				9,000
Total current liabilities			159,335				136,768
Commitments and Contingencies			–				–
Stockholders' Equity (Deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized and no shares issued and outstanding		$	–			$	–
Common stock, $.001 par value, 70,000,000 shares authorized and 37,990,000 and shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively			37,990				37,990
Additional paid in capital			1,049,652				1,049,652
Accumulated deficit			(1,244,978	)			(1,224,169	)
Total stockholders' equity (deficit)			(157,336	)			(136,527	)
Total liabilities and stockholders' equity (deficit)		$	1,999			$	241

 

 

The accompanying notes are an integral part of these financial statements

 

 

HIGH DESERT HOLDING CORP.

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the Three Months Ended
		March 31				March 31,
		2018				2017
Revenue
Net revenue		$	–			$	–
Expenses
Exploration			(1,550	)			1,954
Loss on sale of equipment			–				32,503
General and administrative			22,359				27,750
Total operating expenses			20,809				62,207
Loss from operations			(20,809	)			(62,207	)
Net loss		$	(20,809	)		$	(62,207	)
Net loss per share - basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding			37,990,000				37,982,500

 

 

The accompanying notes are an integral part of these financial statements

 

 

 

HIGH DESERT HOLDING CORP

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the Three Months Ended
		March 31,				March 31,
		2018				2017
Cash Flows from Operating Activities
Net loss		$	(20,809	)		$	(62,207	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on sale of equipment			–				32,503
Change in prepaid expenses			–				(650	)
Change in related party accounts payable			22,567				(16,817	)
Net cash provided by (used in) operating activities			1,758				(47,171	)
Cash Flows from Investing Activities
Proceeds from sale of mining equipment			–				47,175
Net cash provided by investing activities			–				47,175
Cash Flows from Financing Activities
Proceeds from issuance of common stock			–				5,000
Net cash provided by financing activities			–				5,000
Net increase in cash and cash equivalents			1,758				5,004
Cash and cash equivalents at beginning of the period			241				536
Cash and cash equivalents at end of the period		$	1,999			$	5,540
Supplementary Disclosures of Cash Flow Information
Cash paid for income taxes		$	–			$	–
Cash paid for interest		$	–			$	–

 

 

The accompanying notes are an integral part of these financial statements

 

 

HIGH DESERT HOLDING CORP.

Notes to the Financial Statements

March 31, 2018

(Unaudited)

 

NOTE 1.

GENERAL ORGANIZATION AND BUSINESS

 

High Desert Holding Corp. (“Company”) was organized in the state of Nevada in September 2013. The Company is a precious and non-precious mineral exploration company. The Company is initially focused on identifying both public and privately held land that have historically demonstrated commercially viable resources primarily located in the Western United States, particularly Nevada.

 

The Company has a mineral property located in Nevada has not yet determined whether these properties contain a viable resource. Future exploration and development of this and any other properties will be dependent upon the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreements to complete the development of the properties and upon the ability to raise additional capital.

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern.

 

NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes which are normally included in the Company’s Form 10-K. These financial statements reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes are necessary to fairly state results for the interim periods presented. Results of operations for interim periods are not necessarily indicative of annual results of operations.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in banks and financial instruments which mature within three months of the date of purchase. As of March 31, 2018 and December 31, 2017 the Company did not have any cash equivalents.

 

Use of Estimates

 

The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Loss per Share

 

The Company computes net loss per share in accordance with GAAP. This requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period under the treasury stock method using the if-converted method. The Company does not currently have any instruments issued and outstanding that are potentially dilutive.

 

Fair Value of Financial Instruments

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Financial assets are marked to bid prices and financial liabilities are marked to offer prices.  The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.  In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

 

 

 

 

 

Fair value measurements do not include transaction costs.  A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values.  Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The fair value hierarchy is defined into the following three categories:

 

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

 

Income Taxes

 

The Company recognizes deferred tax liabilities and assets using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statements carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment and interpretation of statutes is required. Judgments and interpretation of statutes are inherent in this process. Future income tax assets are recorded in the financial statements if realization is considered more likely than not.

 

For previously taken tax positions considered to be uncertain, the Company prescribes a recognition threshold and measurement attribute. In the event certain tax positions do not meet the appropriate recognition threshold, de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions is required.

 

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to federal tax audits for all periods since inception in 2013.

 

Stock Based Compensation

 

The Company has on occasion issued equity and equity linked instruments to employees and non-employees in lieu of cash to various vendors for the receipt of goods and services and, in certain circumstances the settlement of short-term loan arrangements. The applicable GAAP establishes that share-based payment transactions with employees and non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

In these transactions, we issue unregistered and restricted shares of common stock.

 

When unregistered common shares and equity-linked instruments convertible into unregistered common shares are issued for the settlement of short-term financing arrangements (that are not initially convertible), the reacquisition price of the extinguished financing arrangement is determined by the value of the debt which is more clearly evident, and no additional inducement expense is recognized.

 

In situations in which we issue unregistered restricted common shares in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy). We have determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments using a commercially reasonable valuation technique.   

 

NOTE 3.

GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  Since inception, the Company has not identified any proven or probable reserve and correspondingly has not generated any revenue during its exploration stage. This raises substantial doubt about the Company’s ability to continue as a going concern. These financials do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. The Company needs to raise additional funds to continue as a going concern.

 

 

 

 

 

NOTE 4.

RELATED PARTY TRANSACTIONS

 

In August 2013 our founder, former officer and director, and significant shareholder, Marty Weigel, loaned us $9,000 to fund the start-up of our initial operations. Mr. Weigel has agreed to not accrue interest on the loan and has informally agreed to defer re-payment of the loan until such time as we have acquired a more stable source of funding.

 

As of March 31, 2018, and December 31, 2017 we owed Ingenium Accounting Associates, an accounting Firm controlled by Marty Weigel, $4,600 and $4,600, respectively, related to payments made on our behalf to maintain our regulatory filings with the State of Nevada, and pay for operating expenses.

 

As of March 31, 2018, and December 31, 2017, we owed Mr. Kersey $25,735 and $18,168, respectively, for administrative and travel expenses paid on our behalf. Mr. Kersey has agreed to defer repayment of these expenses until the Company’s cash resources significantly increase. In addition to these obligations, the Company incurred directors fees due to Mr. Kersey totaling $5,000 and $5,000 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, and December 31, 2017, director fees totaling $40,000 and $35,000, respectively, remained outstanding and are included in accrued director fees in the accompanying consolidated balance sheets.

 

The Company incurs Director fees on a quarterly basis at $5,000 per quarter. As of March 31, 2018, and December 31, 2017 the Company recognized accrued director fees due to its two non-officer Directors totaling $80,000 and $70,000, respectively.

 

NOTE 5.

SUBSEQUENT EVENTS

 

The Company did not identify any material subsequent events. The Company performed its evaluation through April 30, 2018, the date the financial statements were available for issuance.

 

 

 

 

 

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q, Unaudited Financial Statements, and Notes to Unaudited Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations, and financial conditions. All forward-looking statements are based on management's existing beliefs about present and future events outside of management's control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected, or intended.  We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date this Quarterly Report on Form 10-Q is filed.

 

When this report uses the words "we," "us," "our," or "HDHC" and the "Company," they refer to High Desert Holding Corp.

 

Overview

 

Since our inception in 2013, we have been engaged in the identification, potential acquisition, and on-going exploration of precious and non-precious mineral properties located in the Western United States with an initial emphasis in Nevada. Until May 2015, we did not have patented or unpatented mineral claims and our activities only consisted of initial discussions and due diligence sample testing.

 

We currently hold ten (10) unpatented mining claims located in Esmeralda County, Nevada, commonly known as "Kibby Flats Property". We also hold fifty (50) unpatented mining claims commonly referred to as the "QR Property" located in Humboldt County, Nevada.

 

Funding permitted, we expect to devote the majority of our efforts permitting and exploring the QR Property. Since the end of the fiscal year ended December 31, 2016 and through the date of this report, we were unable to commence material field activities due to heavy snowfall and our lack of financial resources.

 

Results of Operations

 

Revenues

 

We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future.

 

Operating Expenses

 

For the three months ended March 31, 2018 we did not incur any exploration costs as a result of our focus on obtaining appropriate funding to begin our planned exploration program. Additionally, we received a refund associated with our QR Claim fees totaling approximately $1,500. For the three months ended March 31, 2017, we incurred exploration costs of approximately $2,000, primarily consisting of our required claim maintenance fees. As our funding permits, we expect to incur increasing exploration costs for at least the next twelve months.

 

During the period ended March 31, 2018, our general and administrative costs decreased approximately $5,400 to approximately $22,400 from the prior comparable period of 2017. General and administrative expense primarily consists of director fees totaling $15,000 and professional fees associated with regulatory compliance.

 

Liquidity and Capital Resources

 

As of March 31, 2018, the Company had a working capital deficit of approximately $157,000. Nearly all current obligations due, inclusive of $120,000 of director fees, are held by related parties that informally agreed to defer payment until the Company’s financial resources improve (however, they are under no formal obligation to continue to do so).

 

During the quarter ended March 31, 2018 our cash used in operations was due to the Company continuing to incur operating expenses included in our net loss of approximately $21,000.

 

Our current available capital reserves are not sufficient for the Company to remain operational. We require additional equity and / or debt financing to implement our exploration and other business plans.

 

 

 

 

Our auditors have issued a "going concern" opinion on our financial statements for the year ended December 31, 2017, meaning that there is substantial doubt we can continue as an on-going business for the next twelve months unless we obtain additional capital. No substantial revenues are anticipated until we have completed one or more financings and implemented our plan of operations. Our sole Officer, and other affiliates, have provided the financial resources to continue as a going concern, however, they have no obligations to do so.

 

We have achieved success in using shares of our restricted and unregistered shares of common stock in making capital asset acquisitions including mining equipment and mineral properties. We expect to continue to issue shares for certain future capital acquisitions and to compensate certain officers, directors, and other consultants; however, there is no guarantee we will be able to do so at terms favorable to our operating plans or at all.

 

On April 3, 2018 the Company was approved by the Financial Industry Regulatory Authority (FINRA) to be listed for quotation on the Over-The-Counter securities market. The Company was listed by FINRA with the trading symbol of HGHH. The sponsoring broker to FINRA on the Company’s behalf was Alpine Securities, which is located in Salt Lake City, UT. The Company is working with Alpine Securities as its market maker to establish a market for the Company’s securities. During the last ten (10) months, the Company has been engaged with FINRA in order to be approved for trading in the public markets.

 

Critical Accounting Policies

 

Our Unaudited Financial Statements and Notes to Unaudited Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

As a "smaller reporting company" (as defined by Item 10 of Regulation S-K), the Company is not required to provide the information required by this item.

 

Item 4.

Controls and Procedures.

 

Disclosure Controls and Procedures (Item 307)

 

The Company's management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of March 31, 2018, the date of the Company's most recently completed fiscal quarter end. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective, as of March 31, 2018, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms due to limited segregation of duties, lack of independent directors, and no written internal control procedure manual. The Company plans to address the weaknesses in controls as soon as the Company determines that the financial situation allows the Company to expend its currently limited resources to mitigate the weaknesses in controls.

 

Changes in Internal Control over Financial Reporting. (Item 308)

 

There were no material changes in our internal control over financial reporting during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

None.

 

Item 1A.

Risk Factors.

 

As a "smaller reporting company" (as defined by Item 10 of Regulation S-K), the Company is not required to provide the information required by 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.

 

There were no mining operations during the three-month period ended March 31, 2018.

 

Item 5.

Other Information.

 

None.

 

Item 6.

Exhibits.

 

The following exhibits are filed with this Quarterly Report on Form 10-Q.

 

Number	Description
31.1	Certification of Mark A. Kersey, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Mark A. Kersey, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Mark A. Kersey, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Mark A. Kersey, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema 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**

 

__________________

 

* This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.

 

** XBRL (Extensible Business Reporting Language) information (i) 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, (ii) is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and (iii) 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. 

 

	HIGH DESERT HOLDING CORP.
Dated: April 30, 2018	By:	/s/ Mark A. Kersey
	Name:	Mark A. Kersey
	Title:	President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and Director (Principal Executive, Financial and Accounting Officer)