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EX-31.1 - EXHIBIT 31.1 - KOGETO, INC.v322007_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - KOGETO, INC.v322007_ex32-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2012

 
or

 

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                 to                

 

Commission file number: 000-51997

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

NEVADA 65-0637308
   

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification Number)

 

2174 HEWLETT AVENUE, SUITE 206

MERRICK, NY 11566

(Address of Principal Executive Offices)

(Zip Code)

 

(516) 377-6311

(Registrant’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 such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o 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.

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company x
(Do not check if a 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 ¨ No x

 

The number of shares outstanding of the Registrant’s common stock as of  August 20, 2012 was 554,017 shares.

 

 
 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 

FORM 10-Q

 

June 30, 2012

 

TABLE OF CONTENTS

 

PART I— FINANCIAL INFORMATION  
     
Item 1. Financial Statements 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 7
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
   
Item 4. Controls and Procedures 9
     
PART II— OTHER INFORMATION  
     
Item 1. Legal Proceedings 9
     
Item 1A. Risk Factors 10
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
   
Item 3. Defaults Upon Senior Securities 10
     
Item 4. Submission of Matters to a Vote of Security Holders 10
     
Item 5. Other Information 10
     
Item 6. Exhibits 10
     
SIGNATURES  10

 

2
 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.
 
CONSOLIDATED BALANCE SHEETS
(Unaudited)

  

   June 30,   December 31, 
   2012   2011 
ASSETS          
Current Assets:          
Cash  $1,329   $5,395 
Accounts Receivable – related party        123,052 
Total Current Assets   1,329    128,447 
           
Equipment, net   2,845    5,357 
Other assets   2,826    2,868 
           
TOTAL ASSETS  $7,000   $136,672 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current Liabilities:          
Note payable to bank   100,000    100,000 
Due to stockholders   53,048    42,584 
Accrued expenses   14,950    18,250 
Payroll taxes withheld and accrued   -    1,273 
Total Current Liabilities   167,998    162,107 
           
           
           
Stockholders' Deficit          
Preferred stock, 0.0001 par value, 10,000,000 shares authorized, 10,000,000 issued and outstanding   1,000    1,000 
Common stock, .001 par value, 300,000,000 shares authorized, 554,017 shares issued and outstanding June 30, 2010 and December 31, 2009   554    554 
Capital Stock to be issued (500,000 Shares)   20,000    20,000 
Additional Paid in Capital   3,957,424    3,957,424 
Accumulated Deficit   (4,138,800)   (4,003,237)
    (159,822)   (24,259)
Less: Treasury stock (6,667 common shares)   (1,176)   (1,176)
Total Stockholders' DEFICIT   (160,998)   (25,435)
           
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $7,000   $136,672 

 

See Notes to Unaudited Financial Statements

 

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NORTHEAST AUTOMOTIVE HOLDINGS, INC.

 
CONSOLIDATED STATEMENTS OF OPERATIONS

 

   Three   Three   Six   Six 
   Months   Months   Months   Months 
   Ended   Ended   Ended   Ended 
   June 30,   June 30,   June 30,   June 30, 
   2012   2011   2012   2011 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
                 
Net sales  $-    163,664    -    579,440 
                     
Cost of sales   -    162,376    -    524,853 
                     
Gross profit   -    1,288    -    54,587 
                     
Operating expenses:                    
Officers salaries   -    -    -    20,338 
Interest expense   -    -    -    4,378 
Selling, general and administrative   128,904    13,030    135,563    77,606 
Total operating expenses   128,904    13,030    135,563    102,322 
                     
Loss from operations   (128,904)   (11,742)   (135,563)   (47,735)
                     
Income taxes   -    110    -    1,479 
                     
Net  loss  $(128,904)   (11,852)   (135,563)   (49,214)
                     
Net loss per share basic and diluted  $(0.23)   (0.02)   (0.24)   (0.09)
                     
Weighted average number of shares outstanding   554,017    554,017    554,017    554,017 

 

See Notes to Unaudited Financial Statements

 

4
 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.
 
STATEMENTS OF CASH FLOWS

 

   Six Months   Six Months 
   Ended   Ended 
   June 30, 2012   June 30, 2011 
   (unaudited)   (unaudited) 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(135,563)  $(49,214)
Adjustments to reconcile net loss to net cash used by operating activities:          
Depreciation and amortization   2,554    2,724 
Changes in operating assets and liabilities:   -      
(Increase) decrease in accounts receivable   123,052    (123,052)
(Increase) decrease in inventory   -    415,745 
(Increase) decrease in other assets   -    (1,789)
Increase (decrease) in customer deposits payable   -    (48,430)
Increase (decrease) in accrued expenses   (3,300)   (21,070)
Increase (decrease) in payroll taxes   (1,273)   1,083 
Total adjustments   121,033    225,211 
CASH PROVIDED (USED) BY OPERATING ACTIVITIES   (14,530)   175,997 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from stockholders loans   10,464    - 
Repayment of stockholders loan   -    (249,535)
Proceeds of demand loans        45,700 
Repayment of demand loans   -    (309,453)
CASH PROVIDED (USED)BY FINANCING ACTIVITIES   10,464    (513,288)
           
NET INCREASE (DECREASE) IN CASH   (4,066)   (337,291)
           
CASH          
Beginning of year   5,395    417,948 
           
End of period  $1,329   $80,657 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Cash paid for:          
Income tax payments  $-   $1,479 
Interest payments  $-   $4,378 

 

See Notes to Unaudited Financial Statements.

 

5
 

 

NORTHEAST AUTOMOTIVE HOLDINGS, INC.
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

The Company buys used automobiles at auctions, then repairs, cleans, transports and resells them wholesale throughout the United States.

 

BASIS OF PRESENTATION

 

The accompanying unaudited interim financial statements of 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, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. 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 period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

The accompanying interim financial statements of Northeast Automotive Holdings, Inc. are unaudited.  However, in the opinion of management, the interim data includes all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim period.  The results of operations for the period ended June 30, 2012 are not necessarily indicative of the operating results for the entire year.

 

Going Concern

 

The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a working capital deficiency of ($166,669) at June 30, 2012 and an accumulated deficit of $4,138,800 since inception.

 

While the Company is attempting to produce sufficient revenues, the Company's cash position may not be enough to support the Company's daily operations. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 2 - RELATED PARTY

 

As of June 30, 2012, the Company is indebted to stockholders for $53,048. This amount is unsecured, non-interest bearing, and due on demand.

 

6
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis addresses material changes in the results of operations and financial condition of Northeast Automotive Holdings, Inc. and Subsidiaries (the “Company” or “we”) for the periods presented. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Results of Operations and Financial Condition included in the Company’s Form 10-K for the fiscal year ended December 31, 2011, the unaudited interim Condensed Consolidated Financial Statements and related Notes included in Item 1 of this Report on Form 10-Q (“Form 10-Q”) and the Company’s other SEC filings and public disclosures.

 

This Form 10-Q may contain “forward-looking statements”. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the Company’s market opportunities, strategies, competition and expected activities and expenditures, and at times may be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “intend”, “continue” and variations of these words or comparable words. Forward-looking statements inherently involve risks and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks described below under “Risk Factors” in Part II, Item 1A. The Company undertakes no obligation to update any forward-looking statements for revisions or changes after the date of this Form 10-Q.

 

Overview

 

We are a wholesale automobile sales company which seeks to exploit the inefficiencies and geographic differences in the used vehicle market by purchasing high quality, late model used vehicles from dealers and institutional sellers in Northeastern states and transporting the vehicles for resale in the Pacific Northwest. We are involved only in the wholesale purchase and sale of vehicles acting as a middleman between various dealer and institutional sellers and dealer purchasers.  We generally sell our vehicles only through established third-party auctions which act as a marketplace for used vehicles. We thus help align institutional used vehicle sellers and wholesale buyers over a wide geographic area.

 

Recent Accounting Pronouncements

 

There are no recent accounting pronouncements that have a significant impact on our results of operations, financial position or cash flows.

 

For the Six months Ended June 30, 2012 and June 30, 2011

 

The following table sets forth certain data derived from the unaudited consolidated statements of operations, expressed as a percentage of net revenues for each of the six months period ended June 30, 2012 and June 30, 2011.

 

   Six months ended June 30, 
   2012   2011 
Percentage of net revenues:          
Net revenues   -    100%
Cost of revenues   -    90.6%
Gross profit   -    9.4%
    -      
Sales, general and administrative expenses   -    13.4%
Other operating expenses   -    4.3%
Total operating expenses   -    17.7%
Profit (loss) from operations   -    (8.2)%

 

7
 

 

Revenues

Revenue for the six month period ended June 30, 2012 was $-0- a decrease of $579,440 or 100% as compared to revenues for the six months period ended June 30, 2011 of $579,440. The decrease in revenue was a result of no vehicles being sold in the six months period in 2012 compared to 2011. Specifically, in the six months period ended June 30, 2012 no vehicles were sold as compared to 30 vehicles at an average sales price of $19,315 during the comparable period in 2011.

 

Cost of Sales and Gross Profit Margin

The Company's cost of sales is composed primarily of the cost of purchasing vehicles for resale. Cost of revenues was $-0- or 100% of net revenues during the six months period ended June 30, 2012 as compared to $524,853 for the comparable period in 2011, a decrease of $524,853 or 100%. Thus, our gross margin was 0.0% for the six months period ended June 30, 2012 as compared to 9.4% for the comparable period in 2011. The decrease in our cost of revenue as a percent of revenue is attributable to a decrease in the cost of the vehicles sold during the six months period ended June 30, 2012 as compared to the comparable period in 2011.

 

Operating Expenses

Our operating expenses are comprised primarily of salaries, consulting fees and sales, general and administrative expenses.

 

Sale, General and Administrative

Sale, general and administrative (“SGA”) expenses are composed principally of commission, salaries of administrative personnel, fees for professional services and facilities expenses. These expenses were $135,563 for the six months period ended June 30, 2012 as compared to $524,853 for the comparable period in 2011, a decrease in such expenses of $389,290.

 

Other Expenses

Our combined expenses for officers salaries and interest was $0.00 for the six months period ended June 30, 2012 compared to the comparable period in 2011 when such expenses were $24,716 or 4.3% of net revenue. The decrease in such expenses is attributable to decreased officers’ salaries in 2012 as well as a decrease in interest expense. The following table shows the changes in the components of these expenses during the comparable periods.

 

   Six months
Period Ended
June 30
2012
   Six months
Period Ended
June 30,
2011
   Change   Percent Change 
Officers Salaries  $-   $20,338   $20,338    (100.0)%
                     
Interest Expense  $-   $4,378   $4,378    (100.0)%

 

Operating Gain (Loss)

 

Operating gain or loss is calculated as our revenues less all of our operating expenses. Our operating (loss) for the six months period ended June 30, 2012 was ($135,563) or (100%) of net revenue as compared to an operating loss of ($49,214) or (8.5%) of net revenue for comparable period in 2011, an increase of $86,349. This increase in operating loss was primarily as a result of a decrease in gross profits as well as an increase of operating expense.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As of June 30, 2012, we had cash and cash equivalents of $1,329 invested in standard bank checking accounts and highly liquid money market instruments. Such investments are subject to interest rate and credit risk. Such risks and a change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operations. As of June 30, 2012, we had no outstanding balance on our revolving credit facility with Manheim Auto Financial Services, Inc. Borrowings under such revolving credit facility would bear interest at a variable rate equal to prime plus 2.0%. In addition, as of June 30, 2012, we had an outstanding balance of $100,000 on a bank revolving credit facility which bears interest at a variable rate equal to prime plus 1.0%.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), within 90 days of the filing date of this report. In designing and evaluating the Company’s disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that as of June 30, 2009, the Company’s disclosure controls and procedures were (1) designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s chief executive officer and chief financial officer by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Limitations on the Effectiveness of Internal Controls

 

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, 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 on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the 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. The design of any system of internal control is also 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 circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.

 

There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in the above paragraph.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

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ITEM 1A. RISK FACTORS

 

Not Required for Smaller Reporting Companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer

 

32.1 Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  NORTHEAST AUTOMOTIVE HOLDINGS, INC. 
     
Date: August 20, 2012 By: /s/ William Solko
    William Solko, Chief Executive 
    Officer and Chief Financial Officer 

 

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