Attached files
| file | filename |
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| EX-32 - EXHIBIT 32 - Monarch Investment Properties, Inc. | ex_32.htm |
| EX-31.1 - EXHIBIT 31.1 - Monarch Investment Properties, Inc. | ex31_1.htm |
| EX-31.2 - EXHIBIT 31.2 - Monarch Investment Properties, Inc. | ex31_2.htm |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 December 31, 2010
o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number: 000-52754
MONARCH INVESTMENT PROPERTIES, INC.
(Exact name of small business issuer as specified in its charter)
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Nevada
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84-1251553
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(State or Other Jurisdiction
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(I.R.S. Employer Identification
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of Incorporation or Organization)
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Number)
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1801 North Military Trail, Suite 203
Boca Raton, FL 33431
(Address of Principal Executive Offices)
(561) 391-6117
(Issuer’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 o No o
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer o
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Accelerated Filer o
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Non-Accelerated Filer o
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Smaller Reporting Company x
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Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act).
Yes x No o
The number of shares outstanding of the registrant’s Class A common stock as of February 1, 2011 was 16,168,733.
This Space Intentionally Left Blank
TABLE OF CONTENTS
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Page
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| PART I. FINANCIAL INFORMATION |
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| Balance Sheets as of December 31, 2010 (Unaudited) and June 30, 2010 |
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4
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| Statements of Operations for the Three and Six months Ended December 31, 2010 and 2009 (Unaudited) |
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5
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| Statement of Changes in Stockholders’ Deficiency for the Six Months Ended December 31, 2010 (Unaudited) |
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6
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| Statements of Cash Flows for the Six Months Ended December 31, 2010 and 2009 (Unaudited) |
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7
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| Notes to the Unaudited Financial Statements as of December 31, 2010 and 2009 (Unaudited) |
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12
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15
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16
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| PART II. OTHER INFORMATION |
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| SIGNATURES |
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EX-31.1
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Section 302 Certification of Principal Executive Officer
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EX-31.2
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Section 302 Certification of Principal Financial Officer
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EX-32
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Section 906 Certification of Officers
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2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include our status as a shell company as well as other risks including, but are not limited to:
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our lack of an operating business and dependence on a related party to pay our operating expenses,
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our inability to close a reverse merger or other business combination with an operating entity,
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our need for additional capital,
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our auditors have expressed doubt about our ability to continue as a going concern,
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conflicts of interest which may impact our officers and directors,
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potential dilution to our stockholders,
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control by our management,
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risks associated with dependence on a single business unit, and
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the lack of liquidity of an investment in our common stock.
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Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, as well as the risks described in Item 1A. – Risk Factors appearing in our Annual Report on Form 10-K for the year ended June 30, 2010. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms the “Monarch,” “Company,” “we,” “us,” and similar terms refers to Monarch Investment Properties, Inc., a Nevada corporation.
3
MONARCH INVESTMENT PROPERTIES, INC.
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December 31, 2010
(Unaudited)
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June 30, 2010
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ASSETS
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CURRENT ASSETS
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Cash
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$ | 1,306 | $ | 4,311 | ||||
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Total Current Assets
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1,306 | 4,311 | ||||||
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TOTAL ASSETS
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$ | 1,306 | $ | 4,311 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
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CURRENT LIABILITIES
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Accrued expenses and other current liabilities
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$ | 62,866 | $ | 67,439 | ||||
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Convertible judgment debt payable
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232,326 | 225,002 | ||||||
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Affiliated party debt
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342,854 | 305,318 | ||||||
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Total Current Liabilities
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638,046 | 597,759 | ||||||
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COMMITMENTS AND CONTINGENCES
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STOCKHOLDERS’ DEFICIENCY
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Preferred stock, $0.01 par value, 25,000,00 shares authorized, no shares issued and outstanding
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__
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__
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Common stock, $.001 par value, 100,000,000 shares authorized, 16,168,733 shares issued and outstanding, respectively
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16,169 | 16,169 | ||||||
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Additional paid-in capital
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2,833,241 | 2,833,241 | ||||||
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Accumulated deficit
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(3,486,150 | ) | (3,442,858 | ) | ||||
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Total Stockholders’ Deficiency
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(636,740 | ) | (593,448 | ) | ||||
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TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIENCY
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$ | 1,306 | $ | 4,311 | ||||
See accompanying notes to the unaudited financial statements
4
MONARCH INVESTMENT PROPERTIES, INC
(Unaudited)
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Three Months Ended
December 31,
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Six Months Ended
December 31,
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2010
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2009
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2010
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2009
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Revenue
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$ | — | $ | — | $ | — | $ | — | ||||||||
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General and administrative expenses
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7,340 | 4,966 | 16,432 | 10,068 | ||||||||||||
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Loss from operations
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(7,340 | ) | (4,966 | ) | (16,432 | ) | (10,068 | ) | ||||||||
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Other (expense) income:
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Interest expense
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(13,817 | ) | (11,234 | ) | (26,860 | ) | (21,954 | ) | ||||||||
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Total Other (expense)
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(13,817 | ) | (11,234 | ) | (26,860 | ) | (21,954 | ) | ||||||||
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Net Loss
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$ | (21,157 | ) | $ | (16,200 | ) | $ | (43,292 | ) | $ | (32,022 | ) | ||||
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Net Loss per common share:
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Basic and fully diluted
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$ | (0.001 | ) | $ | (0.001 | ) | $ | (0.003 | ) | $ | (0.002 | ) | ||||
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Weighted average number of common shares outstanding:
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Basic
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16,168,733 | 16,168,733 | 16,168,733 | 16,168,733 | ||||||||||||
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Fully diluted
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16,168,733 | 16,168,733 | 16,168,733 | 16,168,733 | ||||||||||||
See accompanying notes to the unaudited financial statements
5
MONARCH INVESTMENT PROPERTIES, INC.
FOR THE SIX MONTHS ENDED DECEMBER 31, 2010
(Unaudited)
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Common Stock
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Value
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Paid-In | Accumulated | Deficiency | ||||||||||||||||||||
| Shares | Shares | Amount |
Capital
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Deficit
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Total
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Balance at June 30, 2010
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16,168,733 | $ | 16,169 | $ | 2,833,241 | $ | (3,442,858 | ) | $ | (593,448 | ) | |||||||||||||
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Net Loss
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(43,292 | ) | (43,292 | ) | ||||||||||||||||||||
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Balance at December 31, 2010
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— | 16,168,733 | $ | 16,169 | $ | 2,833,241 | $ | (3,486,150 | ) | $ | (636,740 | ) | ||||||||||||
See accompanying notes to the unaudited financial statements
6
MONARCH INVESTMENT PROPERTIES, INC.
(Unaudited)
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Six Months Ended December 31,
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2010
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2009
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (43,292 | ) | $ | (32,022 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Changes in operating assets and liabilities:
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Decrease in accrued expenses and other current liabilities
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(4,573 | ) | (6,247 | ) | ||||
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Increase in convertible judgment debt payable
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7,324 | 7,324 | ||||||
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Total adjustments
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2,751 | 1,077 | ||||||
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Net cash used in operating activities
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(40,541 | ) | (30,945 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Increase in affiliated party debt
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37,536 | 27,631 | ||||||
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Net cash provided by financing activities
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37,536 | 27,631 | ||||||
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NET DECREASE IN CASH
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(3,005 | ) | (3,314 | ) | ||||
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CASH - BEGINNING OF YEAR
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4,311 | 5,179 | ||||||
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CASH - END OF PERIOD
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$ | 1,306 | $ | 1,865 | ||||
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SUPPLEMENTAL CASH FLOW DATA:
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Cash paid for interest
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$ | — | $ | — | ||||
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Cash paid for income taxes
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$ | — | $ | — | ||||
See accompanying notes to the unaudited financial statements
7
Monarch Investment Properties, Inc.
as
of December 31, 2010 and 2009
(Unaudited)
Note 1 – Financial Statements
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flow at December 31, 2010 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. These financial statements should be read in conjunction with the audited financial statement for the years ended June 30, 2010 and 2009 included in the Annual Report filed with the Securities and Exchange Commission on Form 10-K.
The results of operations for the period ended December 31, 2010 are not necessarily indicative of the operating results for the full year.
Note 2 – Significant Accounting Policies
The significant accounting policies are summarized as follows:
Use of Estimates
Management of Monarch has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses, convertible judgment debt payable and shareholder payable approximate their fair market value based on the short-term maturity of these instruments.
FASB ASC 820 – Fair Value Measurements and Disclosures requires disclosures about the fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of December 31, 2010 and June 30, 2010. Accordingly, the estimates presented in these statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. Management has estimated the fair values of cash, accounts payable, and accrued expenses to be approximately their respective carrying values reported on these statements because of their short maturities.
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Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 3 - Going Concern
As reflected in the accompanying financial statements, the Company incurred a net loss of $43,292, negative cash flow from operations of $40,541 for the six months ended December 31, 2010, has an accumulated deficit of $3,486,150 and a stockholders’ deficiency of $636,740 at December 31, 2010. The ability of the Company to continue as a going concern is dependent upon its ability to obtain financing and achieve profitable operations. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. These matters raise substantial doubt about the company’s ability to continue as a going concern.
Note 4 – Accrued Expenses and Other Current Liabilities
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December 31, 2010
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June 30, 2010
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Legal fees
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$ | 42,269 | $ | 43,658 | ||||
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Accounting and Auditing
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7,000 | 10,000 | ||||||
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Miscellaneous, other
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13,597 | 13,781 | ||||||
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Total accrued expenses and other current liabilities
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$ | 62,866 | $ | 67,439 | ||||
This Space Intentionally Left Blank
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Note 5 – Convertible Judgment Debt Payable
Listed below is a summary of the transactions related to the JJFN Judgment obtained by JJFN Holdings against us in November 2004. Unpaid portions of the JJFN Judgment bear simple interest at the statutory interest rate of 9% per annum:
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Original judgment
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$ | 1,100,000 | ||
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Interest 1999 through June 2005
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643,500 | |||
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Partial payment made November 2004
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(155,000 | ) | ||
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Balance, June 30, 2005
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1,588,500 | |||
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Interest June 2005 through June 2006
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77,902 | |||
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Amount exchanged for Common Stock
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(1,500,000 | ) | ||
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Balance, June 30, 2006
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166,402 | |||
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Interest July 2006 through June 2007
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14,657 | |||
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Balance, June 30, 2007
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181,059 | |||
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Interest July 2007 through June 2008
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14,648 | |||
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Balance, June 30, 2008
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195,707 | |||
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Interest July 2008 through June 2009
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14,647 | |||
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Balance, June 30, 2009
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210,354 | |||
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Interest July 2009 through June 2010
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14,648 | |||
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Balance, June 30, 2010
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225,002 | |||
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Interest July 2010 through December 2010
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7,324 | |||
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Balance, December 31, 2010
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$ | 232,326 |
Note 6 – Affiliated Party Debt Transaction
To date, our operations have been funded by Strategic Capital Resources, Inc. (“Strategic”) which is an entity controlled by one of our executive officers who is also our majority shareholder. Listed below is a summary of the debt we owe to Strategic.
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Six Months Ended
December 31, 2010 |
Year Ended
June 30, 2010 |
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Due to major shareholder/creditor, beginning of period
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$ | 305,318 | $ | 235,318 | ||||
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Additional borrowings
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37,536 | 70,000 | ||||||
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Repayments
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— | — | ||||||
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End of period
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$ | 342,854 | $ | 305,318 | ||||
Additional borrowings for the six months ended December 31, 2010 comprised of $15,000 of cash advances, interest on debt of $19,536 and Management Fee of $3,000.
See Note 8 to the audited financial statements for the years ended June 30, 2010 and 2009.
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Note 7 – Income Taxes
FASB ASC 740 – “Income Taxes” provides for the recognition and measurement of deferred income tax benefits based on the likelihood of their realization in future years. A valuation allowance must be established to reduce deferred income tax benefits if it is more likely than not that, a portion of the deferred income tax benefits will not be realized. Therefore, a valuation allowance equal to the potential deferred tax benefit has been established in full, resulting in no deferred tax benefit as of the balance sheet dates.
Note 8 – Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed assuming the exercise or conversion of common stock equivalent shares, if dilutive, consisting of unissued shares under options and warrants. Since the 1,100,000 shares under outstanding warrants and the potential conversion of the $232,326 convertible debt into 2,323,260 shares are both anti-dilutive due to the Company’s net loss, no diluted per share amounts are presented.
Note 9 – Subsequent Events
The Company has evaluated subsequent events and no material events have occurred.
This Space Intentionally Left Blank
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The following discussion and analysis presents a review of the operating results of the Company for the three and six months ended December 31, 2010 and 2009, respectively, and the financial condition of the Company at December 31, 2010. The discussion and analysis should be read in conjunction with the financial statements and accompanying notes included herein, as well as the Company’s audited financial statements for the years ended June 30, 2010 and 2009 on Form 10-K filed with the Securities Exchange Commission.
Overview
We have virtually no operating history and due to the uncertain nature of the markets we address or intend to address, it is difficult to predict our future results of operations.
Our Business Strategy
Our current business plan is to serve as a vehicle for the acquisition of or merger or consolidation with a target business. We intend to effect a business combination with a target business which we believe has significant growth potential. The business combination may be with a financially stable, mature company or a company that is in its early stages of development or growth.
Financial Condition and Changes
Cash
We have minimal cash and are dependent in the short term on affiliated parties to continue to infuse capital to meet our obligations. There is no assurance that this funding will continue.
Accrued
Expenses and Other Current Liabilities
Accrued expenses at December 31, 2010 and June 30, 2010 consisted primarily of professional fees. Listed below is a summary of the transactions related to accrued expenses and other liabilities:
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December 31, 2010
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June 30, 2010
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(Decrease)
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Legal fees
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$ | 42,269 | $ | 43,658 | $ | (1,389 | ) | |||||
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Accounting fees
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7,000 | 10,000 | (3,000 | ) | ||||||||
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Miscellaneous,other
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13,597 | 13,781 | (184 | ) | ||||||||
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Total Accrued Expenses and Other Liabilities
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$ | 62,866 | $ | 67,439 | $ | (4,573 | ) | |||||
Accrued legal fees are primarily the result of costs incurred in early 2008 related to our filing of the registration statement on Form 14C with the Securities and Exchange Commission and our failed merger. These legal fees are being disputed. For further information on the failed Merger, refer to the Financial Statements and Note 4 in our Annual Report on Form 10-K for the year ended June 30, 2010.
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Convertible Judgment Debt Payable
Listed below is a summary of the transactions related to the JJFN Judgment obtained by JJFN Holdings against us in November 2004. Unpaid portions of the JJFN Judgment bear simple interest at the rate of 9% per annum:
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Original judgment
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$ | 1,100,000 | ||
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Interest 1999 through June 2005
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643,500 | |||
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Partial payment made November 2004
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(155,000 | ) | ||
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Balance, June 30, 2005
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1,588,500 | |||
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Interest June 2005 through June 2006
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77,902 | |||
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Amount exchanged for Common Stock
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(1,500,000 | ) | ||
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Balance, June 30, 2006
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166,402 | |||
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Interest July 2006 through June 2007
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14,657 | |||
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Balance, June 30, 2007
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181,059 | |||
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Interest July 2007 through June 2008
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14,648 | |||
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Balance, June 30, 2008
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195,707 | |||
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Interest July 2008 through June 2009
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14,647 | |||
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Balance, June 30, 2009
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210,354 | |||
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Interest July 2009 through June 2010
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14,648 | |||
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Balance, June 30, 2010
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225,002 | |||
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Interest July 2010 through December 2010
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7,324 | |||
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Balance, December 31, 2010
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$ | 232,326 |
Affiliated Party Debt
To date, our operations have been funded by Strategic which is controlled by one of our executive officers and our majority shareholder. Listed below is a summary of the transactions related to the debt we owe to Strategic:
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Balance, June 30, 2010
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$ | 305,318 | ||
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Advances
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15,000 | |||
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Interest
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19,536 | |||
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Management Fee
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3,000 | |||
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Balance, December 31, 2010
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$ | 342,854 |
Results of Operations
We have generated no revenues since our fiscal year ended 1998 and will not generate revenues until, at the earliest, the completion of a business combination. There can be no assurance that we will be able to consummate a business combination on terms acceptable to us and our stockholders or at all.
Three Months Ended December 31, 2010 Compared to the Three Months Ended December 31, 2009
General and administrative expenses were $7,340 for the three months ended December 31, 2010, as compared to $4,966 for the three months ended December 31, 2009, a increase of $2,374.
13
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2010
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2009
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Accounting Fees
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$ | 4,500 | $ | 2,000 | ||||
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Legal Fees
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246 | 349 | ||||||
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Management Fees
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1,500 | 1,500 | ||||||
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Stock Transfer Fees
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275 | 715 | ||||||
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Edgarized Fees
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441 | 402 | ||||||
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Miscellaneous
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378 | 0 | ||||||
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TOTAL
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$ | 7,340 | $ | 4,966 | ||||
Six months ended December 31, 2010 compared to the six months ended December 31, 2009.
General and administrative expenses were $16,432 for the six months ended December 31, 2010, as compared to $10,068 for the six months ended December 31, 2009, an increase of $6,364.
Listed below is a summary of these expenses:
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2010
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2009
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Accounting Fees
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$ | 9,000 | $ | 4,000 | ||||
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Legal Fees
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1,106 | 867 | ||||||
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Management Fees
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3,000 | 3,000 | ||||||
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Edgarization Costs
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1,397 | 1,246 | ||||||
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Stock Transfer Fees
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560 | 955 | ||||||
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Miscellaneous
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1,369 | 0 | ||||||
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TOTAL
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$ | 16,432 | $ | 10,068 | ||||
Liquidity and Capital Resources
At December 31, 2010, our cash balance was $1,306 and we had a working capital deficit of $636,740.
To date, the Company’s operations have been funded by Strategic which is controlled by the Company’s President. This funding included paying professional fees, interest on the affiliated debt as well as accruing $500 per month for management fees.
For the six months ended December 31, 2010, we had negative cash flows from operating activities of $40,541 compared to negative cash flows of $30,945 for the six months ended December 31, 2009. We have been dependent upon proceeds of loans from Strategic to fund continuing activities. For the six months ended December 31, 2010, our loans from Strategic increased by $37,536.
We currently do not have sufficient cash to meet any of our current or anticipated obligations for the next twelve months and there can be no assurance we will ultimately obtain the necessary financing. In addition to any third-party financing that may be obtained, we currently expect that loans from our stockholders may be a continuing source of liquidity to meet our obligations. Accordingly, we will need to seek funding in the near future. Our independent auditors have issued a going concern paragraph in their opinion on the financial statements for the fiscal year ended June 30, 2010 that states there is substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent on our ability to access capital through debt and equity funding.
14
Critical Accounting Policies
The significant accounting policies are summarized as follows:
Use of Estimates
Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses, convertible judgment debt payable and stockholder payable approximate their fair market value based on the short-term maturity of these instruments.
FASB ASC 820 requires disclosures about the fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of December 31, 2010 and 2009. Accordingly, the estimates presented in these statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
Management has estimated the fair values of cash, accounts payable and accrued expenses to be approximately their respective carrying values reported on these statements because of their short maturities.
Our accounting policies and recent accounting pronouncements are described in Note 5 to our audited financial statements for the fiscal years ended June 30, 2010 and 2009 on Form 10-K filed with the Securities Exchange Commission.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt.
Additionally, we are not a party to any derivative contracts or synthetic leases.
The Company does not have exposure to many market risks, such as potential loss arising from adverse change in market rates and prices, such as foreign currency exchange and interest rates. We do not hold any derivatives or other financial instruments for trading or speculative purposes.
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Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Principal Financial and Accounting Officer are responsible for establishing and maintaining disclosure controls and procedures for us. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Principal Financial and Accounting Officer, to allow timely decisions regarding required disclosure.
Our management does not expect that our disclosure controls or our internal controls will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the con troll systems are met. In addition, 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 a 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 by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of December 31, 2010, the end of the period covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the evaluation date, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
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Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Our management has concluded that, as of December 31, 2010 our internal control over financial reporting is effective based this criteria.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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None
You should carefully consider all the risks described as previously discussed on our June 30, 2010 Form 10-K, which constitute the material risks facing us. If any of those risks or the following risks actually occur, our business could be harmed. In connection with our preparation of this quarterly report, management has reviewed and considered these risk factors and has determined that the following risk factors should be read in connection with the existing risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2010. Please also refer to the other information about us contained in this Form 10-Q, including our financial statements and related notes.
Deterioration of economic conditions could negatively impact our Company.
Our Company may be adversely affected by changes in domestic and/or international economic conditions, including changes in inflation, interest or exchange rates, availability of capital markets and the effects of governmental initiatives to manage economic conditions.
Deterioration of national and global economic conditions could, among other things:
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Impair our ability to access additional funds,
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Make it more difficult or costly for us to obtain financing in order to execute our business plan,
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Impair our efforts to identify potential investors and business combination opportunities,
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Significantly effect our ability to issue shares or debt securities to complete a business combination.
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We are unsure of the duration and severity of this economic crisis. If the crisis persists or worsens and economic conditions remain weak over a long period, the likelihood of the crisis will have a significant impact on our Company.
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31.1
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Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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31.2
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Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MONARCH INVESTMENT PROPERTIES, INC. | ||
| (Registrant) | ||
| Date: February 1, 2011 | ||
| By: |
/s/ Philip Bloom
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| Philip Bloom | ||
| Treasurer and Chief Financial | ||
| Officer (Principal Financial and Accounting Officer) | ||
| Date: February 1, 2011 | ||
| By: |
/s/ David Miller
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| David Miller | ||
| President and Director (Principal Executive Officer) | ||
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