NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Whitemark Homes, Inc. ("Whitemark" or the "Company") was incorporated on July
30, 1975 under the laws of the State of Colorado. On April 1, 2000, Whitemark
disposed of its prior business operations and acquired Whitemark Homes, Inc.
("Whitemark Florida") along with certain related entities (the "Whitemark
Group") in a transaction accounted for as a reverse acquisition. Whitemark
Florida changed its name to Whitemark Homes of Florida, Inc. and the Company
changed its name to Whitemark Homes, Inc. Effective September 30, 2007, the
Company discontinued its real estate development operations.
Basis of Presentation and Going Concern
Management acknowledges its responsibility for the preparation of the
accompanying interim consolidated financial statements which reflect all
adjustments, consisting of normal recurring adjustments, considered necessary in
its opinion for a fair statement of its consolidated financial position and the
consolidated results of its operations for the interim period presented. These
consolidated financial statements should be read in conjunction with the summary
of significant accounting policies and notes to consolidated financial
statements included in the Company's Form 10-K annual report for the year ended
December 31, 2010. The accompanying unaudited consolidated financial statements
for Whitemark Homes and Subsidiaries have been prepared in accordance with
accounting principles generally accepted in the United States of America (the
"U.S.") for interim financial information and with the instructions to Form 10-Q
and Article 8-03 of Regulation S-X. Operating results for interim periods are
not necessarily indicative of results that may be expected for the fiscal year
as a whole.
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. The consolidated
financial statements include the Company and its wholly-owned inactive
subsidiaries, Whitemark Homes of Florida, Inc., a Florida corporation, which
wholly owns Home Funding, Inc, a Florida corporation. White Homes of Florida,
Inc. also holds a 99% interest in two inactive Florida limited liability
partnerships; Whitemark at Fox Glen, Ltd. and Sheeler Hills Ltd. and a
wholly-owned interest in four limited liability companies; Whitemark at Oak
Park, LLC, Whitemark at Corner Lake, LLC, Whitemark at Glenbrook, LLC, and
Whitemark at Little Creek. LLC. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
As reflected in the accompanying consolidated financial statements, the Company
had a net loss and net cash used in operations of $163,639 and $0, respectively,
for the nine months ended September 30, 2011 and a working capital deficiency,
accumulated deficit, and a stockholders' deficit of $675,067, $28,010,019, and
$675,067, respectively, at September 30, 2011. In addition, the Company is
inactive as of September 30, 2011, currently has no operations or sources of
revenue and is in default on certain promissory notes. . These conditions raise
substantial doubt about the Company's ability to continue as a going concern The
ability of the Company to continue as a going concern is dependent on the
Company's ability to further implement its business plan which involves
identifying a merger with an operating company, raise additional capital, and
generate revenues. Currently, management is seeking capital to implement its
business plan. Management believes that the actions presently being taken
provide the opportunity for the Company to continue as a going concern. The
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the U.S. requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses, and the related disclosures at the date of the
financial statements and during the reporting period. Actual results could
materially differ from these estimates. Significant estimates in the 2011 and
2010 periods include the valuation of deferred tax assets and the valuation of
the beneficial conversion features on convertible debt.
Fair Value of Financial Instruments
The Company adopted ASC Topic 820, Fair Value Measurements. ASC Topic 820
clarifies the definition of fair value, prescribes methods for measuring fair
value, and establishes a fair value hierarchy to classify the inputs used in
measuring fair value as follows:
o Level 1-Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities available at the measurement date.
o Level 2-Inputs are unadjusted quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar
assets and liabilities in markets that are not active, inputs other
than quoted prices that are observable, and inputs derived from or
corroborated by observable market data.
o Level 3-Inputs are unobservable inputs which reflect the reporting
entity's own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best
The carrying amounts reported in the balance sheets for cash, accounts payable,
accrued expenses, notes payable, and amounts due to related parties approximate
their fair market value based on the short-term maturity of these instruments.
The Company did not identify any assets or liabilities that are required to be
presented on the balance sheets at fair value in accordance with ASC Topic 820.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company had no
cash equivalents at September 30, 2011 and December 31, 2010.
Concentrations of Credit Risk
Financial instruments that potentially subject us to significant concentrations
of credit risk consist principally of cash. The Company performs certain credit
evaluation procedures and does not require collateral for financial instruments
subject to credit risk. The Company maintains its cash in accounts with major
financial institutions in the United States. Deposits in these banks may exceed
the amounts of insurance provided on such deposits. As of September 30, 2011 and
December 31, 2010, there was $5,380 and $5,380, respectively, held in an escrow
account maintained by the Company's attorney and bank deposits did not exceed
federally insured limits. Historically, the Company has not experienced any
losses on our deposits of cash.
The Company is governed by the Income Tax Law of the United States. The Company
utilizes ASC Topic 740, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the consolidated financial
statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences between the
tax bases of assets and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
The Company applied the provisions of ASC 740-10-50, "Accounting For Uncertainty
In Income Taxes", which provides clarification related to the process associated
with accounting for uncertain tax positions recognized in our financial
statements. Audit periods remain open for review until the statute of
limitations has passed. The completion of review or the expiration of the
statute of limitations for a given audit period could result in an adjustment to
the Company's liability for income taxes. Any such adjustment could be material
to the Company's results of operations for any given quarterly or annual period
based, in part, upon the results of operations for the given period. As of
December 31, 2011 and 2010, management believes the Company had no material
uncertain tax positions, and will continue to evaluate for uncertain positions
in the future.
The Company accounts for stock-based instruments issued to employees in
accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in
the statement of operations the grant-date fair value of stock options and other
equity based compensation issued to employees. The Company accounts for
non-employee share-based awards in accordance with ASC Topic 505-50.
Advertising is expensed as incurred. For the nine months ended September 30,
2011 and 2010, the Company did not incur advertising expenses.
Research and Development
Research and development costs are expensed as incurred. For the nine months
ended September 30, 2011 and 2010, the Company did not incur research and
Net Loss per Share of Common Stock
Basic net loss per common share is computed by dividing net loss available to
common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock,
common stock equivalents and potentially dilutive securities outstanding during
each period. Potentially dilutive common shares consist of common shares
issuable upon the conversion of convertible promissory notes (using the
if-converted method). All potentially dilutive common shares were excluded from
the computation of diluted shares outstanding as they would have an
anti-dilutive impact on the Company's net losses and consisted of the following:
Nine Months ended
Convertible notes 97,746,000 146,619,367
Total 97,746,000 146,619,367
These common stock equivalents may be dilutive in the future. The Company's
authorized number of shares of common stock is limited to 100,000,000 common
shares and 97,962,131 were outstanding at September 30, 2011; only 2,037,869
additional shares are authorized for issuance as of September 30, 2011.
Recent Accounting Pronouncements
Accounting standards that have been issued or proposed by FASB that do not
require adoption until a future date are not expected to have a material impact
on the financial statements upon adoption.