Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - Golden Gate Homes, Inc. | Financial_Report.xls |
| EX-32 - Golden Gate Homes, Inc. | ex32.htm |
| EX-31.1 - Golden Gate Homes, Inc. | ex31-1.htm |
| EX-31.2 - Golden Gate Homes, Inc. | ex31-2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
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: 001-32574
GOLDEN GATE HOMES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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87-0745202
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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14 Wall Street, 20th Floor, New York, New York 10005
(Address of principal executive offices)
(212) 385-0955
(Issuer’s telephone number)
Check whether the issuer (1) 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. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).
| Large accelerated filer o | Accelerated filer o |
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Non-accelerated filer o
(Do not check if smaller reporting company)
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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 o No x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 3,837,136 common shares as of November 1, 2011
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
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Page
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Item 1.
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3
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Item 2.
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7
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Item 3.
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8
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Item 4T.
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8
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PART II – OTHER INFORMATION
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||
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Item 1.
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9
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Item 1A.
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9
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Item 5.
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9
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Item 6.
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9
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10
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLDEN GATE HOMES, INC.
BALANCE SHEETS
(UNAUDITED)
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September 30, 2011
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December 31, 2010
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash
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$
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61,148
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$
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1,913
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||||
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Loans to Buyers
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21,062
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-
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||||||
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Other Current Assets
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5,162
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6,397
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||||||
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Total Assets
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87,372
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8,310
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||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||
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Current liabilities:
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||||||||
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Accounts payable and accrued expenses
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45,039
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145,356
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||||||
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Due to related parties
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-
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16,455
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||||||
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Total liabilities
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45,039
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161,811
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||||||
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Stockholders' equity (deficit)
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||||||||
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Preferred stock, $0.0001 par value, 1,000,000 shares authorized, 0 issued and outstanding
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-
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-
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||||||
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Common stock, $0.0001 par value, 600,000,000 shares authorized, 3,837,136 shares and 3,648,511 shares
issued outstanding as of September 30, 2011 and December 31, 2010
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384
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375
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||||||
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Paid-in capital
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2,641,697
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2,580,956
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Accumulated deficit
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(2,599,748
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)
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(2,734,832
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)
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Total Stockholders' equity (deficit)
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42,333
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(153,501
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)
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Total Liabilities and Stockholders' equity (deficit)
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$
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87,372
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$
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8,310
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||||
See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30, 2011
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September 30, 2010
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September 30, 2011
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September 30, 2010
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Brokerage and Fee Income
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$
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49,103
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3,741
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$
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188,384
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$
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3,741
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|||||||||
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Operating Expenses:
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||||||||||||||||
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General & Administrative
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11,033
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235,809
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41,021
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$
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594,250
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|||||||||||
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Impairment of deferred transaction costs
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-
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-
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-
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-
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||||||||||||
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Operating gain or loss
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38,070
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(232,068
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)
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147,363
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(590,509
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)
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||||||||||
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Other income (expense):
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||||||||||||||||
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Interest income
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-
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28
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21
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363
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||||||||||||
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Gain/(loss) on settlement of accounts payable
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-
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-
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(12,300
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)
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-
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|||||||||||
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Total Other income
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-
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28
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(12,279
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)
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363
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|||||||||||
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Net income (loss)
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$
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38,070
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$
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(232,040
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)
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$
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135,084
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$
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(590,146
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)
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Earnings (loss) per common share Basic & Diluted
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$
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0.01
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$
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(0.06
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)
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0.04
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(0.16
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)
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Weighted average number of common shares outstanding Basic & Diluted
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3,838,000
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3,739,087
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3,821,000
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3,688,650
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||||||||||||
See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended
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||||||||
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September 30, 2011
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September 30, 2010
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|||||||
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CASH FLOWS FROM OPERATING ACTIVITIES
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||||||||
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Net income (loss)
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$
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135,084
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$
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(590,146
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)
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|||
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
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||||||||
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Gain/(loss) on settlement of accounts payable
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(12,300)
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-
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||||||
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Shares issued for services
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40,750
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15,150
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Change in:
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||||||||
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Other current assets and prepaid expenses
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1,235
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(8,134
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)
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|||||
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Option Payment Deposit
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(50,000
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)
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||||||
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Accounts payable and accrued expenses
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(88,017
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)
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133,706
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|||||
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Net cash provided by (used in) operating activities
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76,752
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(499,424
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)
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|||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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||||||||
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Loans made to buyers
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(21,062
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)
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-
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|||||
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Net cash provided by investing activities
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(21,062
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)
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-
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|||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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||||||||
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Proceeds from sale of stock
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-
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48,295
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||||||
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Contributed Capital
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20,000
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482,500
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||||||
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Payments on advances from related party
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(16,455)
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-
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||||||
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Net cash provided by (used in) financing activities
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3,545
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530,795
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||||||
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Net change in cash
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59,235
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31,371
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||||||
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Cash at beginning of period
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1,913
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10
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||||||
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Cash at end of period
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$
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61,148
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$
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31,381
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||||
See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Golden Gate Homes, Inc. (hereinafter referred to as the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2010 (the “Form 10-K”) filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2010 as reported in the Form 10-K have been omitted.
NOTE 2 - CONTRIBUTION OF CAPITAL
During the quarter, $20,000 of accounts payable were paid on behalf of the Company by an entity of which the former director and CEO is trustee, which amount is treated as contributed capital and reflected in additional paid-in capital because there are no conditions of repayment.
NOTE 3 – EQUITY
The Company issued 25,000 common shares, valued at $6,250, to an individual for consulting work performed during the third and fourth fiscal quarters of 2010, which was accrued for, and an additional 7,500 shares, valued at $3,750 for consulting work performed during the first quarter of 2011. The value for the additional 7,500 shares issued had been previously reported in the Form 10-K as $5,625, but was reduced to $3,750 to reflect the stock's value more accurately, based on the Company's stock's trading price. The consulting agreement with this individual was terminated on February 15, 2011. In addition, the Company issued 50,000 shares of its common stock as payment for an outstanding payable of approximately $24,700 during the first quarter of 2011. The fair value of the stock was $37,000.
NOTE 4 – RENTAL GUARANTEE ADVANCES
The Company has eight properties being managed under its property management program. The Company has provided rental guarantees for a period of one year for 7% of the purchase price of the property for six of these properties, two of which the Company advanced one-half of the amount of such guarantee to the purchasers. These purchasers have agreed to reimburse the funds advanced for their rental guarantees from funds received from the rental of their properties over a period of 13.5 months for one property and 18 months for the other. At September 30, 2011, an aggregate of $21,062 was outstanding. The Company reflects these advances on its balance sheet as loan advances. The Company expects that the full amount of each advance of rental guarantee will be repaid completely based on the current rent amounts. Of the four remaining properties, three have all been rented at prices higher than their respective rent guarantees, so there does not appear to be any liability to the Company unless the tenants fail to make their rent payments or terminate their leases. With respect to the fourth property, the rental guarantee amount may create a liability approximately $1,000 higher than the expected property management fees expected, but lower than the collective property management fees of all of the rental properties. Therefore, the Company has not reserved against any of these rent guarantees at this time, but may re-evaluate the accounting treatment of this minor liability at year end.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events, and we assume no obligation to update any such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could, ""would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause our future results to differ from those statements include, but are not limited to, those described in the section entitled "Risk Factors" of the Form 10-K. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report and with the section entitled "Risk Factors" of the Form 10-K.
OVERVIEW
The Company’s focus is on marketing high-quality, distressed residential properties in certain US markets (with an initial focus on California and Florida) to international buyers (primarily from Asia) through exclusive selling agreements or consignment arrangements. In the event that the Company is successful in completing a major capital raising transaction, it will also consider purchasing similar assets for resale to the same target market.
In October 2009, the Company entered into an exclusive marketing agreement with Premier Capital, Ltd. (“Premier Capital”). Management believes that Premier Capital is one of the most reputable international real estate consulting firms in Asia, and is highly regarded for selling international properties throughout China and other parts of Asia. Premier Capital was founded in Hong Kong in 1988 and expanded into China in 1997. It has offices in Hong Kong, Beijing, Shanghai, Guangzhou and Shenzhen, the five Asian cities in which the Company markets properties. Premier Capital also has offices in Australia, Singapore and New Zealand.
Premier Capital acts as the Company’s agent in Hong Kong and mainland China to market properties that are approved by Premier Capital and for which the Company has obtained sales options or agreements (“Approved Properties”). The Company pays the bulk of the expenses arising in connection with the marketing of Approved Properties in Hong Kong and China, although Premier Capital bears some of these expenses as well. For its services, Premier Capital is paid a customary brokerage fee for Approved Properties sold in Hong Kong and China.
Premier Capital terminated the exclusive marketing agreement with the Company in April 2011, although it has stated that it will continue to work with the Company to sell the Company’s current inventory as well as future projects. See “PART II - OTHER INFORMATION - ITEM 5. OTHER INFORMATION” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. The Company is in discussions with Premier Capital about entering into an exclusive marketing agreement for another geographical market in the United States, and expects to complete such an agreement on a non-exclusive agreement upon the completion of the current sales program. The Company will also seek additional selling agents to market its properties, although there can be no assurance that the Company will be successful in finding additional selling agents. Inasmuch as Premier Capital has agreed to continue to work with the Company, the Company does not believe that the termination of the exclusive marketing agreement with Premier Capital will have a material adverse effect on the Company’s business, prospects, financial condition and results of operations.
RESULTS OF OPERATIONS
Comparison of Nine Months Ended September 30, 2011 and 2010
For the nine months ended September 30, 2011, we had net income of $135,084, compared to a net loss of $590,146 for the nine months ended September 30, 2010. For the nine months ended September 30, 2011, we incurred $41,021 of general and administrative expenses, compared to $594,250 of general and administrative expenses for the nine months ended September 30, 2010. This decrease in expenses in large part is the result of the Company’s elimination of its full-time staff and the closing of its shared office space as it seeks to improve efficiency and conserve cash. Of the $594,250 of general and administrative expenses reflected on the Company’s Statements of Expenses for the nine months ended September 30, 2010, $48,457 was expended on the Company’s behalf by the entity that holds a controlling interest in the Company to research and develop the Company’s new business plan prior to its acquisition of such control on December 31, 2009.
Comparison of Three Months Ended September 30, 2011 and 2010
For the three months ended September 30, 2011, we had net income of $38,070, compared to a net loss of $232,040 for the three months ended September 30, 2010. For the three months ended September 30, 2011, we incurred $11,033 of general and administrative expenses as compared to the three months ended September 30, 2010, when we incurred $235,809 of general and administrative expenses.
CHANGES IN FINANCIAL CONDITION
Liquidity and Capital Resources
The Company's cash position as of September 30, 2011 is $61,148. As of September 30, 2011, the Company has outstanding payables of $45,039. Capital constraints currently limit the Company’s ability to purchase residential properties for resale to international clients, and consequently the Company is restricted to selling agreements and consignment arrangements. Currently, the Company is out of contract with the developers with whom the Company had entered into such agreements, although the Company has two properties under contract that it expects to close and six additional properties that these developers are allowing the Company to market to its international clients for resale. The Company is seeking to enter into additional selling agreements and consignment arrangements for residential properties that will have lower sales prices than those it has previously sold to minimize the need for prospective international purchasers to obtain financing. The Company has identified certain properties that fit its criteria, but has not entered into any definitive agreements. There can be no assurances that the Company will enter into any such agreements. Absent new agreements, the Company will be unable to generate future revenues beyond the income derived from asset management fees.
Off-Balance Sheet Arrangements
Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. We are exposed to market risk from changes in interest rates and foreign currency exchange rates. Our exposure to interest rate risk is limited to interest income sensitivity for working capital funds placed in a money market account. The effect of interest rate changes does not pose significant market risk to us. Also, we are exposed to foreign currency exchange rates whereby the strengthening of the US currency could make it more expensive for our foreign purchasers to buy our US properties, while a weakening US currency would make our properties less expensive to our international clients. We do not currently hedge against interest rate or currency risks. The effect of other changes, such as commodity prices and/or equity prices, does not pose significant market risk to us.
ITEM 4T. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on that evaluation, management has concluded that, as of September 30, 2011, our internal control over financial reporting was ineffective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2010.
ITEM 5. OTHER INFORMATION
On October 7, 2011, GGH, Inc., a Delaware corporation (“GGH”) that held approximately 91.7% of the outstanding common stock of the Company, distributed all of such shares to its stockholders, Steven Gidumal, the Company’s Chief Executive Officer, Chief Financial Officer and director, Brandon Birtcher , and to two trusts of which Tim Wilkens is the trustee. At the time of the purchase of such shares of common stock, Mr. Birtcher was an officer of GGH, and Mr. Wilkens was an officer and director of GGH, and both Messrs. Birtcher and Wilkens subsequently became officers of the Company after the acquisition of the majority of the Company’s shares of common stock by GGH. Mr. Wilkens also later became a director of the Company. Messrs. Birtcher and Wilkens have since resigned all of their positions with GGH and the Company, and it was determined that Messrs. Gidumal, Birtcher and Wilkens may no longer have their investment interests aligned with respect to the shares of common stock of the Company held by GGH. Accordingly, such shares were distributed to allow the parties to make their own determinations regarding their respective stock ownership.
ITEM 6. EXHIBITS
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NUMBER
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DESCRIPTION
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31.1
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31.2
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32
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.INS
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XBRL Instance Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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101.SCH
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XBRL Taxonomy Extension Schema Linkbase
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
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GOLDEN GATE HOMES, INC.
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Date: November 14, 2011
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By:
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/s/ Steven Gidumal
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Steven Gidumal
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Chairman of the Board, CEO and Chief Financial Officer
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(Principal Executive, Financial and Accounting Officer)
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