Attached files
| file | filename |
|---|---|
| EX-32.2 - GARMAN CABINET & MILLWORK, INC. | ex32_2.htm |
| EX-32.1 - GARMAN CABINET & MILLWORK, INC. | ex32_1.htm |
| EX-31.1 - GARMAN CABINET & MILLWORK, INC. | ex31_1.htm |
| EX-31.2 - GARMAN CABINET & MILLWORK, INC. | ex31_2.htm |
U.S.
Securities and Exchange Commission
Washington,
D.C. 20549
FORM
10-Q
|
[X]
|
Quarterly
Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934
for the Quarterly Period Ended June 30,
2010.
|
|
[
]
|
Transition
Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934
for the Transition Period from _______ to
_______
|
Commission File
Number: 333-157399
(Exact
Name of Registrant as Specified in Its Charter)
|
North Carolina
|
2431
|
56-2115043
|
||
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
Valerie
A. Garman
President
137
Cross Center Road
Suite
318
Denver,
NC 28037
Telephone
No.: 704-489-2798
(Name,
Address and Telephone Number
of
Principal Executive Offices and Agent for Service)
Indicate
by check mark if the registrant is a well-know seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
[ ] No
[x]
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act
Yes
[ ] No
[x]
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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.
[ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, 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 such shorter period that the
registrant was required to submit and post such files).
[ ]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 if
Regulation S-K (229.405 of this Chapter) is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K.
[ ]
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
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer
|
¨
|
|
Non-accelerated
filer
|
¨ (Do not
check if a smaller reporting company)
|
|
Accelerated
filer
|
¨
|
|
Smaller
reporting company
|
X
|
Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the exchange act).
Yes
[ ] No
[X]
Number of
shares of common stock outstanding as of August 13, 2010: 12,569,300
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties. The issuer's actual results could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-Q. We base our forward-looking statements on
information currently available to us, and we assume no obligation to update
them. Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995.
1
TABLE OF
CONTENTS
PART I. FINANCIAL
INFORMATION
| ITEM | PAGE |
| ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS | 3 |
| ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND CONSOLIDATED RESULTS OF OPERATION | 11 |
| ITEM 3. QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 12 |
| ITEM 4. CONTROLS AND PROCEDURES | 12 |
| PART II. OTHER INFORMATION | |
| ITEM 1. LEGAL PROCEEDINGS | 13 |
| ITEM 1A. RISK FACTORS | 13 |
|
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
|
13 |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 13 |
| ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 13 |
| ITEM 5. OTHER INFORMATION | 13 |
| ITEM 6. EXHIBITS | 13 |
| SIGNATURES | 14 |
| INDEX TO EXHIBITS | 15 |
2
INDEX TO
GARMAN CABINET AND MILLWORK, INC. FINANCIAL STATEMENTS
Garman Cabinet and Millwork,
Inc. Page
Balance
Sheet 4
Statement
of
Operations
5
Statement
of Cash
Flows 6
Notes to
Financial Statements 7
3
|
GARMAN
CABINET & MILLWORK, INC.
|
||||||||
|
AS
OF JUNE 30 AND DECEMBER 31, 2009
|
||||||||
|
ASSETS
|
(Unaudited)
|
(Audited)
|
||||||
|
6/30/2010
|
12/31/2009
|
|||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
|
$ | 2,096 | $ | 393 | ||||
|
Employee
advances
|
5,100 | 5,100 | ||||||
|
TOTAL
CURRENT ASSETS
|
7,196 | 5,493 | ||||||
|
FIXED ASSETS:
|
||||||||
|
Machinery
and equipment
|
29,708 | 29,708 | ||||||
|
Vehicles
|
47,351 | 47,351 | ||||||
|
Total
Gross Fixed Assets
|
77,059 | 77,059 | ||||||
|
Accumulated
depreciation
|
(43,990 | ) | (41,436 | ) | ||||
|
TOTAL
NET FIXED ASSETS
|
33,069 | 35,623 | ||||||
|
Security
deposits
|
1,545 | 1,545 | ||||||
|
TOTAL
ASSETS
|
$ | 41,810 | $ | 42,661 | ||||
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 88,344 | $ | 82,574 | ||||
|
Outstanding
checks in excess of bank balances
|
150 | 775 | ||||||
|
Loans
from shareholders
|
15,000 | 15,000 | ||||||
|
Current
portion of bank note payable
|
118,924 | 121,949 | ||||||
|
TOTAL
CURRENT LIABILITIES
|
222,418 | 220,298 | ||||||
|
LONG-TERM LIABILITIES
|
||||||||
|
Bank
note payable
|
- | - | ||||||
|
TOTAL
LONG-TERM LIABILITIES
|
- | - | ||||||
|
STOCKHOLDERS' DEFICIT
|
||||||||
|
Common
stock ($.0001 par value, 100,000,000 shares authorized; 12,569,300 and
11,859,300 shares issued and outstanding at June 30, 2010 and December 31,
2009, respectively)
|
12,569 | 11,859 | ||||||
|
Additional
paid in capital
|
203,361 | 176,571 | ||||||
|
Retained
deficit
|
(396,538 | ) | (366,067 | ) | ||||
|
TOTAL
STOCKHOLDERS' DEFICIT
|
(180,608 | ) | (177,637 | ) | ||||
|
|
||||||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 41,810 | $ | 42,661 | ||||
The
accompanying notes are an integral part of these financial
statements.
4
|
GARMAN
CABINET & MILLWORK, INC.
|
||||||||||||||||
|
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
|
||||||||||||||||
|
|
||||||||||||||||
|
Three
Months
|
Six
Months
|
|||||||||||||||
|
Ended
June 30,
|
Ended
June 30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Sales
|
$ | 49,110 | $ | 173,761 | $ | 56,503 | $ | 244,524 | ||||||||
|
Cost
of sales
|
(26,874 | ) | (95,874 | ) | (30,976 | ) | (135,501 | ) | ||||||||
|
Gross
profit
|
22,236 | 77,887 | 25,527 | 109,023 | ||||||||||||
|
EXPENSES:
|
||||||||||||||||
|
Selling,
general and administrative expenses
|
19,920 | 156,681 | 53,784 | 253,453 | ||||||||||||
|
Total
expenses
|
19,920 | 156,681 | 53,784 | 253,453 | ||||||||||||
|
Income
(loss) from operations
|
$ | 2,316 | $ | (78,794 | ) | $ | (28,257 | ) | $ | (144,430 | ) | |||||
|
Interest
expense
|
(2,003 | ) | (2,012 | ) | (2,214 | ) | (3,210 | ) | ||||||||
|
Income
(loss) before income taxes
|
313 | (80,806 | ) | (30,471 | ) | (147,640 | ) | |||||||||
|
Provision
for income taxes
|
- | - | - | - | ||||||||||||
|
NET
INCOME (LOSS)
|
$ | 313 | $ | (80,806 | ) | $ | (30,471 | ) | $ | (147,640 | ) | |||||
|
Basic
and fully diluted net income (loss) per common share
|
$ | 0.000 | $ | (0.01 | ) | $ | (0.002 | ) | $ | (0.01 | ) | |||||
|
Weighted
average common shares outstanding
|
12,214,300 | 11,709,300 | 12,214,300 | 11,709,300 | ||||||||||||
|
|
||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
5
|
GARMAN
CABINET & MILLWORK, INC.
|
||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
FOR
THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
|
||||||||
|
|
||||||||
|
|
||||||||
|
2010
|
2009
|
|||||||
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||
|
Net
(loss)
|
$ | (30,471 | ) | $ | (147,640 | ) | ||
|
Adjustments
to reconcile net loss to net cash (used in) operations:
|
||||||||
|
Depreciation
|
2,554 | 2,556 | ||||||
|
(Increase)
decrease in operating assets
|
||||||||
|
Prepaid
expenses
|
- | 66,667 | ||||||
|
Employee
advances
|
- | 5,100 | ||||||
|
Increase
(decrease) in operating liabilities
|
||||||||
|
Outstanding
checks in excess of bank balances
|
(625 | ) | - | |||||
|
Accounts
payable
|
5,770 | 39,283 | ||||||
|
NET
CASH (USED IN) OPERATING ACTIVITIES
|
(22,772 | ) | (34,034 | ) | ||||
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
||||||||
|
Purchases
of fixed assets
|
- | - | ||||||
|
NET
CASH (USED IN) INVESTING ACTIVITIES
|
- | - | ||||||
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
||||||||
|
Issuance
of common stock to accredited investors
|
27,500 | - | ||||||
|
Repayments
of bank note payable
|
(3,025 | ) | - | |||||
|
Borrowings
from bank note payable
|
- | 13,510 | ||||||
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
24,475 | 13,510 | ||||||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
1,703 | (20,524 | ) | |||||
|
CASH
AND CASH EQUIVALENTS,
|
||||||||
|
BEGINNING
OF THE PERIOD
|
393 | 29,432 | ||||||
|
END
OF THE PERIOD
|
$ | 2,096 | $ | 8,908 | ||||
The
accompanying notes are an integral part of these financial
statements.
6
GARMAN
CABINET & MILLWORK, INC.
NOTES TO
FINANCIAL STATEMENTS
For the
Six Months Ended June 30, 2010
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Business
Activity
Garman
Cabinet & Millwork, Inc., (the “Company”) is a North Carolina corporation
that installs architectural woodwork mainly in and around the Charlotte, North
Carolina area. The Company was incorporated in the State of North Carolina on
December 10, 1998.
Basis of
Presentation
The
financial statements include the accounts of Garman Cabinet & Millwork, Inc.
and its wholly owned subsidiaries under the accrual basis of accounting. All
intercompany accounts and transactions have been eliminated.
Management’s Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Deferred
Taxes
Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), “Accounting for Income
Taxes.” A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry
forwards.
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 asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of
enactment.
Fair Value of Financial
Instruments
The
Company’s financial instruments are cash, employee advances, security deposits
and accounts payable. The recorded values of cash and payables approximate their
fair values based on their short-term nature.
Cash and Cash
Equivalents - For purposes of the Statements of Cash Flows, the Company
considers highly liquid investments with an original maturity of three months or
less to be cash equivalents.
Revenue Recognition –
Revenue is recognized when architectural woodwork services are completed
provided collection from the customer of the resulting receivable is
probable.
Comprehensive Income
(Loss) - The Company adopted Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
Income”, which establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. There were
no items of comprehensive income (loss) applicable to the Company during the
period covered in the financial statements.
Loss Per Share - The
Company reports loss per share in accordance with Statement of Financial
Accounting Standard (SFAS) No.128. This statement requires dual presentation of
basic and diluted earnings (loss) with a reconciliation of the numerator and
denominator of the loss per share computations. Basic earnings per share amounts
are based on the weighted average shares of common outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. There were no adjustments required to net loss for the period presented
in the computation of diluted earnings per share. There were no common stock
equivalents necessary for the computation of diluted loss per
share.
Long-Lived Assets -
In accordance with SFAS No. 144, the Company reviews and evaluates its
long-lived assets for impairment whenever events or changes in circumstances
indicate that their net book value may not be recoverable. When such factors and
circumstances exist, including those noted above, the Company compares the
assets’ carrying amounts against the estimated undiscounted cash flows to be
generated by those assets over their estimated useful lives. If the carrying
amounts are greater than the undiscounted cash flows, the fair values of those
assets are estimated by discounting the projected cash flows. Any excess of the
carrying amounts over the fair values are recorded as impairments in that fiscal
period.
Property and Equipment -
Property and equipment is stated at cost. Depreciation is provided by the
straight-line method over the estimated economic life of the property and
equipment remaining from three to seven years.
When
assets are sold or retired, their costs and accumulated deprecation are
eliminated from the accounts and any gain or loss resulting from their disposal
is included in the statement of operations.
The
Company recognizes an impairment loss on property and equipment when evidence,
such as the sum of expected future cash flows (undiscounted and without interest
charges), indicates that future operations will not produce sufficient revenue
to cover the related future costs, including depreciation, and when the carrying
amount of the asset cannot be realized through sale. Measurement of the
impairment loss is based on the fair value of the assets.
7
GARMAN
CABINET & MILLWORK, INC.
NOTES TO
FINANCIAL STATEMENTS
For the
Six Months Ended June 30, 2010
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Risk and Uncertainties
- The Company is subject to risks common to companies in the service
industry, including, but not limited to, litigation, development of new
technological innovations and dependence on key personnel.
Share-Based Payments -
The Company accounts for share-based compensation using the fair value
method of Financial Accounting Standard No. 123R. Common shares issued for
services rendered by a third party (both employees and non-employees) are
recorded at the fair value of the shares issued or services rendered, whichever
is more readily determinable. The Company accounts for options and warrants
under the same authoritative guidance using the Black-Scholes Option Pricing
Model.
Advertising Costs -
Advertising costs are expensed as incurred. The Company does not incur any
direct-response advertising costs.
Recent Accounting
Pronouncements - The Company has reviewed all recently issued, but not
yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.
FASB Accounting
Standards Codification
(Accounting Standards Update (“ASU”)
2009-01)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s consolidated financial statements as all future references to
authoritative accounting literature will be referenced in accordance with the
Codification. There have been no changes to the content of the Company’s
financial statements or disclosures as a result of implementing the Codification
during the fiscal year ended December 31, 2009.
Recent Accounting
Pronouncements (cont.) - As a result of the Company’s implementation of
the Codification during the fiscal year ended December 31, 2009, previous
references to new accounting standards and literature are no longer applicable.
In the current annual consolidated financial statements, the Company will
provide reference to both new and old guidance to assist in understanding the
impacts of recently adopted accounting literature, particularly for guidance
adopted since the beginning of the current fiscal year but prior to the
Codification.
Subsequent
Events
(Included in Accounting Standards
Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events”)
SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the consolidated
financial statements are issued or available to be issued (“subsequent events”).
An entity is required to disclose the date through which subsequent events have
been evaluated and the basis for that date. For public entities, this is the
date the consolidated financial statements are issued. SFAS No. 165 does
not apply to subsequent events or transactions that are within the scope of
other GAAP and did not result in significant changes in the subsequent events
reported by the Company. SFAS No. 165 became effective for interim or
annual periods ending after June 15, 2009 and did not impact the Company’s
consolidated financial statements. The Company evaluated for subsequent events
through the issuance date of the Company’s consolidated financial statements. No
recognized or non-recognized subsequent events were noted.
Determination of
the Useful Life of Intangible Assets
(Included in ASC 350 “Intangibles —
Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the
Useful Lives of Intangible Assets”)
FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for consolidated financial statements
issued for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The adoption of FSP SFAS No. 142-3 did not
impact the Company’s consolidated financial statements.
Recent Accounting
Pronouncements (cont.) - Noncontrolling
Interests
(Included in ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 51”)
SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. The adoption of SFAS No. 160
did not have any other material impact on the Company’s financial
statements.
Consolidation of
Variable Interest Entities — Amended
(To be included in ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”)
SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.
8
GARMAN
CABINET & MILLWORK, INC.
NOTES TO
FINANCIAL STATEMENTS
For the
Six Months Ended June 30, 2010
NOTE
2 INCOME
TAXES
At June
30, 2010, the Company had federal and state net operating loss carry forwards of
approximately $396,000 that expire in various years through the year 2023.
Due to
operating losses, there is no provision for current federal or state income
taxes for the three and six months ended June 30, 2010 and 2009.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for federal and state income tax purposes.
The
Company’s deferred tax asset at June 30, 2010 consists of net operating loss
carry forwards calculated using federal and state effective tax rates equating
to approximately $158,000 less a valuation allowance in the amount of
approximately $158,000. Because of the Company’s lack of earnings history, the
deferred tax asset has been fully offset by a valuation allowance. The valuation
allowance increased by approximately $12,000 for the six months ended June 30,
2010.
The
Company’s total deferred tax asset as of June 30, 2010 is as
follows:
Net operating loss carry
forwards $
158,000
Valuation
allowance (158,000)
Net
deferred tax
asset $
--
========
The
reconciliation of income taxes computed at the federal and state statutory
income tax rate to total income taxes for the three and six months ended June
30, 2010 and 2009 is as follows:
Income tax computed at the federal
statutory
rate
34%
Income
tax computed at the state statutory
rate
5%
Valuation
allowance (39%)
Total
deferred tax
asset
0%
NOTE
3 CAPITAL
STOCK
The
Company is authorized to issue 100,000,000 common shares at $.0001 par value per
share.
During
the three months ended March 31, 2010, the Company issued 710,000 common shares
in exchange for $27,500 in cash collections from the sale thereof pursuant to
private placements to accredited investors made under Regulation
504.
NOTE
4 INCOME (LOSS) PER
SHARE
Income
(loss) per share is computed by dividing the net income (loss) by the weighted
average number of common shares outstanding during the period. Basic and diluted
income (loss) per share was the same for the six months ended June 30, 2009 and
2008.
NOTE
5 SUPPLEMENTAL CASH FLOW
INFORMATION
Supplemental
disclosures of cash flow information for the three months ended June 30, 2010
and 2009 are summarized as follows:
Cash paid
during the period for interest and income taxes:
2010 2009
Income
Taxes $ --
$ --
Interest
$2,214 $3,210
9
GARMAN
CABINET & MILLWORK, INC.
NOTES TO
FINANCIAL STATEMENTS
For the
Six Months Ended June 30, 2010
NOTE
6 GOING CONCERN AND
UNCERTAINTY
The
Company has suffered recent losses from operations since inception. In addition,
the Company has recently generated a negative internal cash flow from its
business operations. These factors raise substantial doubt as to the ability of
the Company to continue as a going concern.
Management’s
plans with regard to these matters encompass the following actions: 1) obtain
funding from new investors to alleviate the Company’s working deficiency, and 2)
implement a plan to generate sales. The Company’s continued existence is
dependent upon its ability to resolve it liquidity problems and increase
profitability in its current business operations. However, the outcome of
management’s plans cannot be ascertained with any degree of certainty. The
accompanying financial statements do not include any adjustments that might
result from the outcome of these risks and uncertainties. Due to business
souring and cash at low levels, management has elected to search for
acquisition candidates to enhance value to its shareholders.
NOTE
7 LEASE COMMITMENTS AND
RELATED PARTY TRANSACTIONS
The
Company has four operating lease agreements at various rates with unrelated
parties. The leases all expire in 2010 and, therefore, no future minimum lease
commitment exists beyond one year.
The
Company leases approximately 2,000 square feet of space for its corporate
headquarter offices. The Company also leases three residences which are used for
employee housing.
NOTE
8 BANK LINE OF CREDIT
PAYABLE
The
Company has a bank line of credit payable to an unrelated banking institution
bearing annual interest of 1% above the Wall Street Journal prime rate or 7% as
of June, 2010, secured by machinery and equipment with a net book value of
approximately $33,069 at June 30, 2010. The bank line of credit was originally
for $125,000 in maximum borrowings available and consists of no specific monthly
payments of principal and interest due to the nature of the line. The principal
maturity was originally November, 2008 but the line of credit was extended for
an additional period. The line of credit is dated November 2, 2007 and is
guaranteed by two of the Company’s officers and directors.
Principal
maturities of the bank note payable as of June 30, 2010 for the next five years
and thereafter are as follows:
2010 $ 118,924
Total $ 118,924
10
ITEM 2. Management’s
Discussion and Analysis
Management’s
Discussion and Analysis contains various “forward looking statements” regarding
future events or the future financial performance of the Company that involve
risks and uncertainties. Certain statements included in this 10Q, including,
without limitation, statements related to anticipated cash flow sources and
uses, and words including but not limited to “anticipates”, “believes”, “plans”,
“expects”, “future” and similar statements or expressions, identify forward
looking statements. Any forward-looking statements herein are subject to certain
risks and uncertainties in the Company’s business, including but not limited to,
reliance on key customers and competition in its markets, market demand, product
performance, technological developments, maintenance of relationships with key
suppliers, difficulties of hiring or retaining key personnel and any changes in
current accounting rules, all of which may be beyond the control of the Company.
Management will elect additional changes to revenue recognition to comply with
the most conservative SEC recognition on a forward going accrual basis as the
model is replicated with other similar markets (i.e. SBDC). The Company’s actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth
therein.
Management’s
Discussion and Analysis of Results of Financial Condition and Results of
Operations (“MD&A”) should be read in conjunction with the financial
statements included herein.
Business
Model
Garman
Cabinet & Millwork, Inc.’s mission is to provide the best quality of
architectural woodwork installation to meet its clients’ needs and
deadlines. The Company focuses on providing superior, reasonably
priced architectural woodwork installation as well as unparalleled customer
service and commitment.
We
generate our business by providing superior, reasonably priced architectural
woodwork installation as well as unparalleled customer service and
commitment. The Company targets clients throughout the construction
industry whether it is the general contractor, architect, woodwork manufacturer
or directly to the owner. No job is too large or too
small. Garman Cabinet & Millwork, Inc. is set apart from other
companies in that it is able to control all of the steps involved with
estimation, pricing, and the quality of the installation. The Company
offers superior knowledge of the customers’ needs and
desires. Customer service and satisfaction is the Company’s number
one priority and is monitored from start to finish.
Our
services include a broad range of products from varied materials in the
execution of architectural woodwork. This includes installation
services such as high end architectural wood, specialty items, custom furniture,
panels, trim, casework, doors, jambs, solid surfaces, elevator cab interiors,
stairways, and columns. We have the expertise and capability to
install all of these items to the highest AWI standards. Garman
Cabinet & Millwork has managed and installed a vast variety of woodwork for
small and large companies such as Southern Architectural Woodwork, RT Dooley,
Craftsmanship Unlimited, Fetzers Woodwork, Wachovia, Bank of America, Four
Season’s Resort, Atlantis Hotel & Casino and many other high profile
clients. The Company also provides services and products to smaller
companies and individuals.
We are
headquartered in Denver, North Carolina and seek to enhance stockholder value by
building brand awareness and recognition of our high quality products and
services.
Plan
of Operation
We plan
to raise additional funds through joint venture partnerships, project debt
financings or through future sales of our common stock, until such time as our
revenues are sufficient to meet our cost structure, and ultimately achieve
profitable operations. There is no assurance that we will be successful in
raising additional capital or achieving profitable operations. Our financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. We will need financing within 12 months to execute our
business plan.
For the
next 12 months, our Plan of Operations is as follows:
|
·
|
Establish
Garman Cabinet & Millwork, Inc. as the first and only destination of
choice for retailers, manufacturers, builders and
individuals.
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|
·
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Establish
a more prominent identity in the local market through aggressive
marketing.
|
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·
|
Establish
an excellent reputation in the community through superior customer service
and installation.
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|
·
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Establish
professional relationships with local and regional
clients.
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·
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Develop
and maintain extraordinary relationships with retail merchandisers,
manufacturers and contractors through superior service and quality
installation resulting in word-of-mouth
advertising.
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·
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Continuously
service existing customer base.
|
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·
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Continuously
update our internet website: www.garmanmillwork.net.
|
|
·
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Advertise
aggressively on the internet using search engine
marketing.
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|
·
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Continuously
update equipment to meet demands of
customers.
|
|
·
|
Hire
additional project managers and one additional
estimator.
|
|
·
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Continue
to build our installation team and office
staff.
|
|
·
|
Open
a facility to house our office, equipment and
material.
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·
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Update
the training of our existing installation team and hire additional
installers to help meet the needs of our
clients.
|
We are
currently improving our installation skills and strengthening our industry
relationships.
Major
ongoing Tasks:
—
building and strengthening professional relationships,
—
building and strengthening customer relationships,
— seeking
investors,
—
continue with improving our installation skills.
RESULTS OF OPERATIONS – FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
Revenues
We had
revenues of $49,110 for the three months ended June 30, 2010 compared with
$173,761 for the three months ended June 30, 2009. The decrease in revenues is
attributable to a decrease in project work in the three months ended June 30,
2010 compared to the prior three months ended June 30, 2009.
We had
revenues of $56,503 for the six months ended June 30, 2010 compared with
$244,524 for the six months ended June 30, 2009. The decrease in revenues is
attributable to a decrease in project work in the six months ended June 30, 2010
compared to the prior six months ended June 30, 2009.
Cost of Good
Sold
We had
cost of goods sold of $26,874 or 55% of sales for the three months ended June
30, 2010 compared with $95,874 or 56% for the three months ended June 30, 2009.
The amount decrease in cost of good sold is attributable to a decrease in
project work in the three months ended June 30, 2010 compared to the prior three
months ended June 30, 2009. The percentage of sales for cost of goods sold
remained constant.
We had
cost of goods sold of $30,976 or 55% of sales for the six months ended June 30,
2010 compared with $135,501 or 56% for the six months ended June 30, 2009. The
amount decrease in cost of good sold is attributable to a decrease in project
work in the six months ended June 30, 2010 compared to the prior six months
ended June 30, 2009. The percentage of sales for cost of goods sold remained
constant.
Operating
Expenses
We had
operating expenses of $19,920 for the three months ended June 30, 2010 compared
with $156,681 for the three months ended June 30, 2009. The decrease in
operating expenses is attributable to a decrease in project work which required
less selling, general and administrative support staff in the three months ended
June 30, 2010 compared to the prior three months ended June 30,
2009.
We had
operating expenses of $53,784 for the six months ended June 30, 2010 compared
with $253,453 for the six months ended June 30, 2009. The decrease in operating
expenses is attributable to a decrease in project work which required less
selling, general and administrative support staff in the six months ended June
30, 2010 compared to the prior six months ended June 30, 2009.
Other
Expenses
We had an
interest expense of $2,003 for the three months ended June 30, 2010 compared
with $2,012 for the three months ended June 30, 2009. This was attributable to
an incurrence of a bank loan toward the end of the prior year.
We had an
interest expense of $2,214 for the six months ended June 30, 2010 compared with
$3,210 for the six months ended June 30, 2009. This was attributable to an
incurrence of a bank loan toward the end of the prior year.
Liquidity and Capital
Resources
We had
$2,096 cash as of June 30, 2010 compared to $10,797 cash for the three months
ended June 30, 2009. We will be required to raise capital on an ongoing basis.
Most recently we raised funds from unrelated accredited investors through
private placements of common stock. In the future we will potentially need to
raise capital to sustain operations through this channel.
Net cash
provided by (used in) operations for the six months ended June 30, 2010 and 2009
were $(22,772) and $(34,034), respectively. A net loss of $30,471 and $147,640
less decreases in accounts payable of $5,770 and $39,283 for the six months
ended June 30, 2010 and 2009, respectively, are the main reasons for the net
cash usages in both periods. Also, for the six months ended June 30, 2009, we
recorded a prepaid expense in the amount of $66,667.
During
the six months ended June 30, 2010 and 2009, we used cash in investing
activities of $-0- and $-0-, respectively.
Net cash
provided by financing activities for the six months ended June 30, 2010 and 2009
were $24,475 and $13,510, respectively. The net cash provided by financing for
the six months ended June 30, 2010 is attributable to the issuance of common
stock to accredited investors in the amount of $27,500. There were repayments of
bank notes payable in each period.
Critical Accounting Policies
and Estimates
The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amount 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 reported
period. A critical accounting policy is one that is both very important to the
portrayal of our financial condition and results, and requires management’s most
difficult, subjective or complex judgments. Typically, the circumstances that
make these judgments difficult, subjective and/or complex have to do with the
need to make estimates about the effect of matters that are inherently
uncertain.
Off-Balance Sheet
Arrangements
We have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material to
investors. Certain officers and directors of the Company have provided personal
guarantees to our various lenders as required for the extension of credit to the
Company.
Accounting Policies Subject
to Estimation and Judgment
Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. When preparing
our financial statements, we make estimates and judgments that affect the
reported amounts on our balance sheets and income statements, and our related
disclosure about contingent assets and liabilities. We continually evaluate our
estimates, including those related to revenue, allowance for doubtful accounts,
reserves for income taxes, and litigation. We base our estimates on historical
experience and on various other assumptions, which we believe to be reasonable
in order to form the basis for making judgments about the carrying values of
assets and liabilities that are not readily ascertained from other sources.
Actual results may deviate from these estimates if alternative assumptions or
condition are used.
11
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The
information to be reported under this item is not required of smaller reporting
companies.
ITEM 4. CONTROLS AND
PROCEDURES
We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and its Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required
disclosure.
The
Certifying Officers have also concluded, based on their evaluation of our
controls and procedures that as of June 30, 2010, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.
The
Certifying Officers have also concluded that there was no change in our internal
controls over financial reporting identified in connection with the evaluation
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 4T. CONTROLS AND
PROCEDURES
(a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting.
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Exchange Act as of June 30, 2010,
and, based on their evaluation, as of the end of such period, the our disclosure
controls and procedures were effective as of the end of the period covered by
the Quarterly Report,
(b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:
• Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and
• Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the issuer are being
made only in accordance with authorizations of management of the issuer;
and
• Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the financial statements.
As of the
end of the period covered by the Quarterly Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.
Management
assessed the effectiveness of our internal control over financial reporting as
of June 30, 2010. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated Framework.
Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
This
Quarterly Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Quarterly
Report.
(c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
12
PART II. OTHER
INFORMATION
We are
not aware of any pending or threatened legal proceedings, in which we are
involved. In addition, we are not aware of any pending or threatened legal
proceedings in which entities affiliated with our officers, directors or
beneficial owners are involved.
ITEM
1A. RISK FACTORS
The information to be reported under
this item has not changed since the previously filed 10K, for the year ended
December 31, 2009.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
None.
None.
ITEM 6.
EXHIBITS
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(1)
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Exhibits: Exhibits required to be attached
by Item 601 of Regulation S-B are listed in the Index to Exhibits
beginning on page 28 of this Form 10-Q, which is incorporated herein by
reference.
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Reports on Form 8-K
filed
|
(2)
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None.
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13
SIG
NATURES
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, there
unto duly authorized.
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GARMAN
CABINET & MILLWORK, INC.
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||
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Date:
August 16, 2010
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By:
|
/s/ Valerie
Garman
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Valerie
Garman
President
, Chief Executive Officer
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14
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Exhibit
No.
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Description
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31.1
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31.2
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32.1
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32.2
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