Attached files
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| EXCEL - IDEA: XBRL DOCUMENT - Golden Gate Homes, Inc. | Financial_Report.xls |
| EX-32.1 - 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 June 30, 2012
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
Non-accelerated filer o Smaller reporting company x
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes 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: 3,837,688 common shares as of August 6, 2012.
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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9
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PART II – OTHER INFORMATION
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Item 1.
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10
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Item 1A.
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10
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Item 2.
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10
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Item 6.
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10
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11
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLDEN GATE HOMES, INC.
BALANCE SHEETS
(UNAUDITED)
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June 30, 2012
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December 31, 2011
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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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40,426
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$
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45,120
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||||
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Rental guarantee advances
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9,005
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16,105
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Prepaid Expenses and other current assets
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6,060
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6,060
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Total Assets
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55,491
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67,285
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current liabilities:
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Accounts payable and accrued expenses
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20,296
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26,015
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Total liabilities
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20,296
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26,015
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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, $0.0001 par value, 600,000,000 shares authorized, 3,837,688 shares
issued outstanding as of June 30, 2012 and December 31, 2011, respectively
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384
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384
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Paid-in capital
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2,641,697
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2,641,697
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Deficit accumulated during the development stage
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(2,606,886
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)
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(2,600,811
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)
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Total Stockholders' equity (deficit)
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35,195
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41,270
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Total Liabilities and Stockholders' equity (deficit)
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$
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55,491
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$
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67,285
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See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
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Six Months Ended
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June 30, 2012
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June 30, 2011
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June 30,2012
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June 30, 2011
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Brokerage and Fee Income
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$
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16,348
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116,531
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$
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17,102
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$
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139,281
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Operating Expenses:
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General & Administrative
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14,025
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23,058
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23,177
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$
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29,988
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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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Net operating income (loss)
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2,323
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93,473
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(6,075
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) |
109,293
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Other income (expense):
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Interest income
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-
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-
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21
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Gain/(loss) on settlement of debt
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-
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13
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(12,300
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)
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Gain/(loss) on derivative liabilities
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-
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-
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-
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-
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Gain/(loss) on write-off related party
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(5,917
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)
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-
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Total Other income
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(5,904
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)
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(12,279
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)
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Net income (loss)
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2,323
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87,569
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(6,075
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) |
97,014
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Income tax expense (benefit)
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-
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-
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-
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-
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Distribution in trust fund earnings
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-
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-
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-
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-
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Net income (loss)
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$
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2,323
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$
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87,569
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$
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(6,075
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) |
$
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97,014
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Earnings (loss) per common share Basic & Diluted
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$
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0.00
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$
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0.02
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0.00
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0.03
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Weighted average number of common shares outstanding Basic & Diluted
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3,837,688
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3,830,000
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3,837,688
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3,812,000
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See notes to unaudited financial statements.
GOLDEN GATE HOMES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended
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June 30, 2012
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June 30, 2011
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$ | (6,075 | ) | $ | 97,014 | |||
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
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Shares issued for services
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- | 40,750 | ||||||
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Change in:
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Other current assets and prepaid expenses
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- | 1,090 | ||||||
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Accounts payable and accrued expenses
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(5,719 | ) | (30,942 | ) | ||||
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Due to related party
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- | (13,295 | ) | |||||
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Net cash provided by (used in) operating activities
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(11,794 | ) | 94,617 | |||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Loans made to buyers
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- | (24,589 | ) | |||||
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Repayment on rental guarantee advances
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7,100 | - | ||||||
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Net cash provided by investing activities
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7,100 | (24,589 | ) | |||||
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Net change in cash
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(4,694 | ) | 70,028 | |||||
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Cash at beginning of period
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45,120 | 1,913 | ||||||
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Cash at end of period
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$ | 40,426 | $ | 71,941 | ||||
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Supplemental disclosures:
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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 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, 2011 (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, 2011 as reported in the Form 10-K have been omitted.
NOTE 2 – RENTAL GUARANTEE ADVANCES
The Company has nine 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 seven of these properties, three have which have now expired. Of the four remaining properties, the Company advanced one-half of the amount of such guarantee to the purchasers of two properties. These two 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 June 30, 2012, an aggregate of $9,005 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. With respect to the other two properties, one has been rented at a price higher than its rent guarantee, so there does not appear to be any liability to the Company unless the tenant fails to make the rent payments or terminates the lease, and the other has a rental guarantee amount that 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. The other half of the funds for the rental guarantees were advanced by Premier Capital, Ltd. (“Premier Capital”), the Company’s selling agent in Asia. The Company collects the reimbursements from the purchasers on behalf of Premier Capital. At June 30, 2012, the Company had collected $2,150 on behalf of Premier Capital but had not yet forwarded the funds. These funds are reflected on the Company’s balance sheet as a current liability.
NOTE 3 –RELATED PARTY
As of June 30, 2012, a related party was paid $1,000 for consulting services provided to the Company.
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 focus of Golden Gates Homes, Inc (the “Company”) is on marketing high-quality, distressed residential properties in certain US markets (currently in 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. 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 of property listings as well as future projects. 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 Six Months Ended June 30, 2012 and 2011
For the six months ended June 30, 2012, we had a net loss of $6,075, compared to net income of $97,014 for the six months ended June 30, 2011. For the six months ended June 30, 2012, we incurred $23,177 of general and administrative expenses, compared to $29,988 of general and administrative expenses for the six months ended June 30, 2011.
Comparison of Three Months Ended June 30, 2012 and 2011
For the three months ended June 30, 2012, the Company closed on one sale in which it generated $13,963 in revenue and collected cancellation fees on two properties in which it collected $925, and had net income of $2,323, compared to net income of $93,473 for the three months ended June 30, 2011. For the three months ended June 30, 2012, we incurred $14,025 of general and administrative expenses as compared to the three months ended June 30, 2011, when we incurred $23,058 of general and administrative expenses.
CHANGES IN FINANCIAL CONDITION
Liquidity and Capital Resources
The Company's cash position as of June 30, 2012 is $40,426. As of June 30, 2012, the Company has outstanding payables of $20,296. The future of the Company is dependent upon the Company’s ability to consummate sales of properties and the development of new business opportunities. 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 one of these developers is allowing the Company to market certain of its properties 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.
The Company has taken numerous steps to conserve cash. We have closed our shared office in Napa and eliminated our full-time employees. However, given the Company’s current cash position, it may be difficult for the Company to enter into any new agreements to market properties to its international clients without obtaining additional funding.
The Company can make no assurances that any additional financing will be available to it when needed or, if available, that it can be obtained on commercially reasonable terms.
To conserve on the Company's capital requirements, the Company may issue shares of its common stock to pay certain expenses.
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 June 30, 2012, 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 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
None.
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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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: August 9, 2012
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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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