UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| [ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended March 31, 2009
| [ ] | 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: 000-27831
GENESIS CAPITAL CORPORATION OF NEVADA
(Exact name of registrant business issuer as specified in its charter)
| | Nevada | | 91-1947658 | |
| | (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) | |
| | | | | |
| | One N.E. First Avenue, Suite 306, Ocala, Florida | | 34470 | |
| | (Address of principal executive offices) | | (zip code) | |
(Registrant’s telephone number, including area code)
(Former Name, former address and former fiscal year, if changed since last report)
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 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.
| | 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 issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of May 15, 2009, there were 10,048 shares of the Registrant's Common Stock, $0.001 par value per share, outstanding.
GENESIS CAPITAL CORPORATION OF NEVADA
For The Quarterly Period Ended March 31, 2009
TABLE OF CONTENTS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.
PART I
FINANCIAL INFORMATION
GENESIS CAPITAL CORPORATION
OF NEVADA
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
GENESIS CAPITAL CORPORATION OF NEVADA
INDEX TO CONDENSED FINANCIAL STATEMENTS
| | PAGE(S) |
| | |
| Condensed Financial Statements (Unaudited): | |
| | |
| 2 |
| | |
| 3 |
| | |
| 4 |
| | |
| 5-18 |
GENESIS CAPITAL CORPORATION OF NEVADACONDENSED BALANCE SHEETS (UNAUDITED)
| | | | | | |
| | | March 31, | | | September 30, | |
| | | 2009 | | | 2008 | |
| CURRENT ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 563 | | | $ | 13,662 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 563 | | | $ | 13,662 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT) | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable | | $ | 10,800 | | | $ | - | |
| Officers Loan | | | 23,152 | | | | 35,219 | |
| Total Current Liabilities | | | 33,952 | | | | 35,219 | |
| | | | | | | | | |
| | | | | | | | | |
| STOCKHOLDERS' (DEFICIT) | | | | | | | | |
| Preferred stock A, $.001 par value; 5,000,000 shares | | | | | | | | |
| authorized and 5,000,000 shares issued and outstanding | | | 5,000 | | | | 5,000 | |
| Preferred stock B, $.001 par value; 5,000,000 shares | | | | | | | | |
| authorized and 5,000,000 shares issued and outstanding | | | 5,000 | | | | 5,000 | |
| Common stock, $.001 par value; 500,000,000 | | | | | | | | |
| shares authorized and 10,048 shares issued | | | | | | | | |
| and outstanding | | | 10 | | | | 10 | |
| Additional paid-in capital | | | 336,285 | | | | 336,285 | |
| Accumulated deficit | | | (379,684 | ) | | | (367,852 | ) |
| | | | | | | | | |
| Total Stockholders' (Deficit) | | | (33,389 | ) | | | (21,557 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND | | | | | | | | |
| STOCKHOLDERS' (DEFICIT) | | $ | 563 | | | $ | 13,662 | |
| | | | | | | | | |
| | | | | | | | | |
The accompanying notes are an integral part of these condensed financial statements.
| | | SIX MONTHS ENDED | | | THREE MONTHS ENDED | |
| | | 2009 | | | 2008 (Restated) | | | 2009 | | | 2008 (Restated) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| CONSULTING REVENUE | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | |
| OPERATING EXPENSES | | | | | | | | | | | | | | | | |
| Professional fees and compensation expenses | | | 10,800 | | | | 31,460 | | | | - | | | | 23,260 | |
| Administrative expenses | | | 1,032 | | | | - | | | | 36 | | | | - | |
| | | | | | | | | | | | | | | | | |
| Total operating expenses | | | 11,832 | | | | 31,460 | | | | 36 | | | | 23,260 | |
| | | | | | | | | | | | | | | | | |
| NET (LOSS) BEFORE PROVISION FOR INCOME TAXES | | | (11,832 | ) | | | (31,460 | ) | | | (36 | ) | | | (23,260 | ) |
| Provision for income taxes | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| NET (LOSS) APPLICABLE TO COMMON SHARES | | $ | (11,832 | ) | | $ | (31,460 | ) | | $ | (36 | ) | | $ | (23,260 | ) |
| | | | | | | | | | | | | | | | | |
| NET (LOSS) PER BASIC AND DILUTED SHARES | | $ | (1.18 | ) | | $ | (3.13 | ) | | $ | (0.00 | ) | | $ | (2.31 | ) |
| | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | | | | | |
| BASIC AND DILUTED SHARES | | | 10,048 | | | | 10,048 | | | | 10,048 | | | | 10,048 | |
The accompanying notes are an integral part of these condensed financial statements.
| | | | | | | |
| | | Six Months ended | | | | |
| | | March 31, | | | | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net loss | | $ | (11,832 | ) | | $ | (31,460 | ) |
| Adjustments to reconcile net loss to net cash | | | | | | | | |
| used in operating activities: | | | | | | | | |
| | | | | | | | | |
| Changes in assets and liabilities: | | | | | | | | |
| | | | | | | | | |
| Increase in accounts payable and accrued expenses | | | 10,800 | | | | - | |
| Total adjustments | | | 10,800 | | | | - | |
| Net cash (used in) operating activities | | | (1,032 | ) | | | (31,460 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| (Decrease) increase in officers loan | | | (12,067 | ) | | | 31,265 | |
| Net cash (used in) provided by financing activities | | | (12,067 | ) | | | 31,265 | |
| | | | | | | | | |
| NET (DECREASE) IN CASH AND | | | | | | | | |
| CASH EQUIVALENTS | | $ | (13,099 | ) | | $ | (195 | ) |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS | | | | | | | | |
| BEGINNING OF PERIOD | | | 13,662 | | | | 12,187 | |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS | | | | | | | | |
| END OF PERIOD | | $ | 563 | | | $ | 11,992 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW | | | | | | | | |
| INFORMATION: | | | | | | | | |
| | | | | | | | | |
| CASH PAID DURING THE PERIOD FOR: | | | | | | | | |
| Interest expense | | $ | - | | | $ | - | |
| | | | | | | | | |
| Income taxes paid | | $ | - | | | $ | - | |
The accompanying notes are an integral part of these condensed financial statements.
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009 AND 2008
The condensed unaudited interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The condensed financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual condensed unaudited statements and notes. Certain information and footnote disclosures normally included in condensed unaudited financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed unaudited financial statements be read in conjunction with the September 30, 2008 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed unaudited financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
These condensed unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the condensed operations, changes in stockholders equity (deficit), and cash flows for the periods presented.
Genesis Capital Corporation of Nevada (the “Company”) was incorporated in the State of Colorado in 1983. The Company has a total of 500,000,000 authorized common shares at March 31, 2009 and 2008, respectively, (par value $.001) with 10,048 shares issued and outstanding at March 31, 2009 and 2008, respectively, and 10,000,000 shares authorized preferred stock (par value of $.001) with 10,000,000 shares issued and outstanding as of March 31, 2009 and 2008.
The Company entered into a Stock Acquisition Agreement with Christopher Astrom, Hudson Consulting Group, Inc. and Global Universal, Inc. of Delaware dated August 30, 2001, which closed on October 30, 2001. This Stock Acquisition Agreement enabled Senior Lifestyle Communities, Inc. to acquire 95% of the issued and outstanding shares of common and preferred stock of the Company for $315,000. For accounting purposes, the transaction has been accounted for as a reverse acquisition, under the purchase method of accounting.
In addition to the Stock Acquisition Agreement, the Company and Senior Lifestyle Communities, Inc. entered into a Share Exchange Agreement and Plan of Reorganization.
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Upon these agreements with Senior Lifestyle Communities, Inc., the Company on November 1, 2001 assumed by assignment, the obligation of certain 8% Series SPA Senior Subordinated Convertible Debentures in the face amount of $1,000,000 received by assignment from Senior Lifestyle Communities, Inc. and Sea Lion Investors, LLC, Equity Planners LLC, and Myrtle Holdings, LLC (collectively “Purchasers”), each a Colorado limited liability company, issue the Company’s debentures of Senior Lifestyle Communities, Inc.
Senior Lifestyle Communities, Inc. is a Nevada Corporation engaged in the development of senior adult residences, incorporated in August, 2001. In addition to Senior Lifestyle Communities, Inc., the Company has Senior Adult Lifestyles, Inc. a wholly-owned subsidiary effective October 30, 2001. Additionally, the Company has not renewed the corporate charters for Senior Lifestyle Communities, Inc. and Senior Adult Lifestyles, Inc. The Company has transferred all assets and liabilities associated with these companies into the parent Genesis Capital Corporation of Nevada as the subsidiaries were dissolved.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue and Cost Recognition
The Company’s financial statements are prepared using the accrual method of accounting. Under this method, revenue is recognized when earned and expenses are recognized when incurred. The Company did not earn any revenue from consulting services in 2009 and 2008. All weighted average calculations have been adjusted to account for the stock splits.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.
The Company maintains cash and cash equivalent balances at a financial institution that is insured by the Federal Deposit Insurance Corporation up to $250,000.
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company has adopted the provisions of Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes. The Company accounts for income taxes pursuant to the provisions of the Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes, which requires an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.
Fair Value of Financial Instruments
The carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.
Earnings (Loss) Per Share of Common Stock
Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings (Loss) Per Share of Common Stock (Continued)
The following is a reconciliation of the computation for basic and diluted EPS:
| | | March 31, 2009 | | | March 31, 2008 (Restated) | |
| | | | | | | |
| Net (loss) | | $ | (11,832 | ) | | $ | (31,460 | ) |
| | | | | | | | | |
| Weighted-average common shares | | | | | | | | |
| outstanding (Basic) | | | 10,048 | | | | 10,048 | |
| | | | | | | | | |
| Weighted-average common stock | | | | | | | | |
| equivalents: | | | | | | | | |
| Stock options | | | - | | | | - | |
| Warrants | | | - | | | | - | |
| Preferred stock conversions | | | - | | | | - | |
| Weighted-average common shares | | | | | | | | |
| outstanding (Diluted) | | | 10,048 | | | | 10,048 | |
The Company issued 400 shares of common stock and 5,000,000 shares of preferred stock series B for services for the year ended September 30, 2007. There were no other issuances of preferred or common stock for the years ended September 30, 2008 and 2007, respectively. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.
There were no outstanding options and warrants at March 31, 2009 and 2008.
GENESIS CAPITAL CORPORATION OF NEVADA
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140.” SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. The adoption of SFAS No. 155 did not have a material impact on the Company’s financial position or results of operations.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140.” SFAS No. 156 requires an entity to recognize a servicing asset or liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract under a transfer of the servicer’s financial assets that meets the requirements for sale accounting, a transfer of the servicer’s financial assets to a qualified special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale or trading securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. Additionally, SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, permits an entity to choose either the use of an amortization or fair value method for subsequent measurements, permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights and requires separate presentation of servicing assets and liabilities subsequently measured at fair value and additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective for transactions entered into after the beginning of the first fiscal year that begins after September 15, 2006. The adoption of SFAS No. 156 did not have a material impact on the Company’s financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The provisions of SFAS No. 157 should be applied prospectively. Management is assessing the potential impact on Genesis’s financial condition and results of operations.
In February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP No. 157-2 defers the effective date of SFAS No. 157 to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods),
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
and long-lived assets, such as property, plant and equipment and intangible assets measured at fair value for an impairment assessment under SFAS No. 144.
The partial adoption of SFAS No. 157 on January 1, 2008 with respect to financial assets and financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis did not have a material impact on the Company's financial statements. See Note 8 for the fair value measurement disclosures for these assets and liabilities. The Company is in the process of analyzing the potential impact of SFAS No. 157 relating to its planned January 1, 2009 adoption of the remainder of the standard.
In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, which amends SFAS No. 87 “Employers’ Accounting for Pensions” (SFAS No. 87), SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS No. 88), SFAS No. 106 “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (SFAS No. 106), and SFAS No. 132R “Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003)” (SFAS No. 132R). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. SFAS No. 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal year ending after December 15, 2006 and the change in measurement date provisions is effective for fiscal years ending after December 15, 2008. This pronouncement has no effect on Genesis Capital at this time.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities, including an amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses shall be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). The Company is currently assessing the impact that SFAS No. 159 will have on its financial statements.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160, This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently assessing the impact that SFAS No. 160 will have on its financial statements.
In March of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133, “Accounting for Derivatives and Hedging Activities.” SFAS No. 161 has the same scope as Statement No. 133 but requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. SFAS No. 161 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May of 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This statement identifies literature established by the FASB as the source for accounting principles to be applied by entities which prepare financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States. This statement is effective 60 days following approval by the SEC of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” This statement will require no changes in the Company’s financial reporting practices.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In May of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 163, “Accounting for Financial Guarantee Insurance – an interpretation of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This statement also clarifies how Statement 60 applies to financial guarantee insurance contracts. This statement is effective for fiscal years beginning after December 15, 2008. This statement has no effect on the Company’s financial reporting at this time.
Reclassifications
Certain amounts for the six and three months ended March 31, 2008 have been reclassified to conform to the presentation of the March 31, 2009 amounts. The reclassifications have no effect on the net (loss) for the six and three months ended March 31, 2008.
NOTE 3 - LOANS PAYABLE - - OFFICERS
This represents amounts advanced to The Company. These amounts have no specific payment terms and are due on demand. No interest has been recorded on these amounts, due to the relative short-term repayments on them.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 4 - STOCKHOLDERS’ EQUITY (DEFICIT)
Common and Preferred Stock
In October 2001, the Company completed a recapitalization whereby, the Company had authorized two classes of stock; preferred stock with a par value of $.001 and 10,000,000 shares authorized, and common stock with a par value of $.001, and 500,000,000 shares authorized.
As of March 31, 2009 and 2008, the Company had issued and outstanding 5,000,000 of its preferred stock series A shares.
As of March 31, 2009 and 2008, the Company had issued and outstanding 5,000,000 of its preferred stock series B shares.
The Company has also issued and outstanding as of March 31, 2009 and 2008, 10,048 of its common shares.
The Company has reclassified back into permanent equity from temporary equity as of September 30, 2007, 7,672 of its common shares. The Company issued 400 shares of common stock for services rendered for the year ended September 30, 2007. There have been no other issuances of preferred or common stock for the years ended September 30, 2008 and 2007, respectively. The Company issued a one hundred to one reverse stock split that took effect on March 29, 2007. The Company also issued a five hundred to one reverse stock split that took effect on May 26, 2008.
On February 22, 2007, the Company filed an Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock with the state of Nevada, which certificate of designation decreased the designated Series A Convertible Preferred Stock from 10,000,000 shares to 5,000,000 shares. Each share of series A convertible preferred stock entitles the holder thereof to 25 votes on all matters, the right to convert each share into 25 shares of common stock and a liquidation preference of $1.00 per share. On February 22, 2007, the Company filed a Certificate of Designation of Series B Convertible Preferred Stock with the state of Nevada, which certificate of designation designated 5,000,000 shares of Series B Convertible Preferred Stock.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 4 - STOCKHOLDERS’ (DEFICIT) (CONTINUED)
Common and Preferred Stock (Continued)
The Company issued 5,000,000 shares of series B shares in consideration for services rendered by the officer of the Company. Each share of series B convertible preferred stock entitles the holder thereof to 250 votes on all matters, the right to convert each share into 250 shares of common stock and a liquidation preference of $1.00 per share.
Options and Warrants
The Company had no options or warrants outstanding at March 31, 2009 and 2008, respectively.
NOTE 5 - INCOME TAXES
The net deferred tax assets in the accompanying balance sheets include the following components at March 31:
| | | 2009 | | | 2008 | |
| | | | | | | |
| Deferred tax assets | | $ | 113,905 | | | $ | 110,356 | |
| Deferred tax valuation allowance | | | (113,905 | ) | | | (110,356 | ) |
| | | | | | | | | |
| Net deferred tax assets | | $ | - | | | $ | - | |
Due to the uncertainty of utilizing the approximate $379,684 and $367,852 in net operating losses, for the six months ended March 31, 2009 and 2008, and recognizing the deferred tax assets, an offsetting valuation allowance has been established.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 6 - GOING CONCERN
The Company incurred a loss for the current period and has had recurring losses for years including and prior to March 31, 2009 and has an accumulated deficit of $379,684.
There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support those operations. This raises substantial doubt about the Company’s ability to continue as a going concern.
Management states that they are confident that they can initiate new operations and raise the appropriate funds to continue in its pursuit of a reverse merger or similar transaction.
The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 7 - FAIR VALUE MEASUREMENTS
On January 1, 2008, the Company adopted SFAS No. 157 “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, provides a consistent framework for measuring fair value under Generally Accepted Accounting Principles and expands fair value financial statement disclosure requirements. SFAS 157’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. SFAS 157 classifies these inputs into the following hierarchy:
Level 1 Inputs– Quoted prices for identical instruments in active markets.
Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs– Instruments with primarily unobservable value drivers.
The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2009.
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 7 - FAIR VALUE MEASUREMENTS (CONTINUED)
Fair Value Measurements on a Recurring Basis as of March 31, 2009:
| Assets | | Level I | | | Level II | | | Level III | | | Total | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Cash equivalents | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| Total Assets | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| Liabilities | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| Total Liabilities | | | - | | | | - | | | | - | | | | - | |
GENESIS CAPITAL CORPORATION OF NEVADANOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2009 AND 2008
NOTE 8 - RESTATEMENT OF FINANCIAL STATEMENTS
The Company has restated its financial statements for the six and three months ended March 31, 2008. Certain expenses paid on behalf of another entity have been reclassified to officer's loans.
| | | | | | | |
| | | Originally Filed | | | Restated | |
| | | For the period | | | For the period | |
| | | ended March 31, | | | ended March 31, | |
| | | 2008 | | | 2008 | |
| | | | | | | |
| Assets | | $ | 11,993 | | | $ | 11,993 | |
| | | | | | | | | |
| Liabilities | | | 127,284 | | | | 33,551 | |
| | | | | | | | | |
| Stockholders' (Deficit) | | | (115,291 | ) | | | (21,558 | ) |
| | | | | | | | | |
| Total Liabilities and Stockholders' (Deficit) | | $ | 11,993 | | | $ | 11,993 | |
| | | Originally Filed | | | Restated | | | Originally Filed | | | Restated | |
| | | For the six | | | For the six | | | For the three | | | For the three | |
| | | months ended | | | months ended | | | months ended | | | months ended | |
| | | March 31, | | | March 31, | | | March 31, | | | March 31, | |
| | | 2008 | | | 2008 | | | 2008 | | | 2008 | |
| | | | | | | | | | | | | |
| OPERATING EXPENSES: | | $ | 125,194 | | | $ | 31,460 | | | $ | 68,950 | | | $ | 23,260 | |
| | | | | | | | | | | | | | | | | |
| NET (LOSS) APPLICABLE TO COMMON SHARES | | $ | (125,194 | ) | | $ | (31,460 | ) | | $ | (68,950 | ) | | $ | (23,260 | ) |
| | | | | | | | | | | | | | | | | |
| NET (LOSS) PER BASIC SHARES | | $ | (0.03 | ) | | $ | (3.13 | ) | | $ | (0.01 | ) | | $ | (2.31 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding, | | | | | | | | | | | | | | | | |
| basic and diluted | | | 4,879,692 | | | | 10,048 | | | | 4,879,692 | | | | 10,048 | |
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT.
Non-Operating Shell Company.
Currently, we are a non-operating shell corporation. We intend to effect a merger, acquisition or other business combination with an operating company by using a combination of capital stock, cash on hand, or other funding sources, if available. We intend to devote substantially all of our time to identifying potential merger or acquisition candidates. There can be no assurances that we will enter into such a transaction in the near future or on favorable terms us, or that other funding sources will be available. A more detailed discussion of the current business plan is set forth below.
History
We were formed as a Colorado corporation on September 19, 1983, under the name Bugs, Inc., for the purpose of using microbial and other agents, including metallurgy, to enhance oil and natural gas production and to facilitate the recovery of certain metals. In July 1989, we changed our name to Genesis Services, Inc. In September 1990, we changed our name to Genesis Capital Corporation.
Since 1994, when we sold our wholly owned subsidiary, U.S. Staffing, Inc., our activities have been limited. In 1999, we merged with Lincoln Health Fund, Inc., a Texas real estate holding company also with minimal activity.
On December 22, 1998, we incorporated Genesis Capital Corporation of Nevada as a Nevada subsidiary with whom we merged so as to effect a re-domicile to Nevada and a reverse split of our common stock. On March 9, 1999, the parties executed Articles of Merger by which our shareholders received one share of new (Nevada) common stock for every 2,000 shares of old (Colorado) common stock. Holders of preferred stock in the old Colorado Corporation received preferred stock in the new Nevada Corporation on a 1:1 basis.
On August 30, 2001, we entered into a Stock Acquisition Agreement with Christopher Astrom (Purchaser); Hudson Consulting Group, Inc. (Seller); and Global Universal, Inc (Seller), pursuant to which Mr. Astrom acquired the right to purchase 54,110,309 shares of our common stock and 1,477,345 shares of preferred stock. In consideration therefor, Mr. Astrom paid $315,000 and transferred to us all of the common stock of Senior Lifestyle Communities, Inc., the parent company of Senior Adult Lifestyle, Inc.
On October 30, 2001, we entered into a Share Exchange Agreement and Plan of Reorganization with Mr. Astrom and Senior Lifestyle Communities, the purpose of which was to accommodate the financing by Mr. Astrom of his $315,000 obligation. Senior Lifestyle Communities issued to a nonaffiliated private source of financing 8% Series SPA Senior Subordinated Convertible Debentures in the initial amount of $360,000.
Pursuant to an Agreement executed on December 26, 2001, made effective as of October 31, 2001 and a Statutory Warranty Deed dated October 30, 2001, we acquired from National Residential Properties, Inc. all of its right, title and interest in (i) a certain parcel of real property in Hebron, Connecticut; and (ii) four contracts to purchase certain parcels of real property in Watertown, New Milford, Granby and East Windsor, Connecticut. In March 2002, we sold to Nathan Kahn and CT Adult Condominiums, LLC all of our interest in the four Connecticut properties.
In June 2002, we issued to Christopher Astrom 3,522,655 shares of Series A Convertible Preferred Stock and designated the entire 5,000,000 shares of Preferred Stock then owned by Mr. Astrom as Series A Convertible Preferred Stock.
On July 1, 2004, we entered into a two (2) year agreement with Wahoo Funding LLC, an affiliated Florida limited liability company, whereby we rendered to Wahoo certain financial and business consulting services in exchange for a total of $700,000. Except for the foregoing contract with Wahoo, we have not engaged in any operations and have been virtually dormant for several years.
Additionally, we have not renewed the corporate charters for Senior Lifestyle Communities, Inc. and Senior Adult Lifestyles, Inc. Prior thereto, we had transferred all assets and liabilities associated with these companies into the parent Genesis Capital Corporation of Nevada.
On or about February 19, 2006, our registration statement filed with the SEC on Form 10-SB became effective. Accordingly, we resumed the filing of reporting documentation in an effort to maximize shareholder value. Our best use and primary attraction as a merger partner or acquisition vehicle is our status as a reporting public company. Any business combination or transaction may potentially result in a significant issuance of shares and substantial dilution to our stockholders.
In February 2007, we filed with the state of Nevada an Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock, and a Certificate of Designation of Series B Convertible Preferred Stock. The Certificate of Designation of Series B Preferred Stock, designated 5,000,000 shares. On February 22, 2007, the Board of Directors approved the issuance to Christopher Astrom of 5,000,000 shares of our Series B Convertible Preferred Stock in exchange for services rendered. The Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock returned the designation to the original 5,000,000 shares.
Each share of Series A convertible preferred stock entitles the holder thereof to twenty-five (25) votes on all matters, the right to convert each share into twenty-five (25) shares of common stock and a liquidation preference of $1.00 per share. Each share of series B convertible preferred stock entitles the holder thereof to two hundred fifty (250) votes on all matters, the right to convert each share into two hundred fifty (250) shares of common stock and a liquidation preference of $1.00 per share.
On March 12, 2007, we effected a 1 for 100 reverse split of our common stock.
On April 21, 2008, we filed a Information Statement on Schedule 14A notifying our stockholders that action has been approved by the holders of at least a majority of the voting power of stockholders, by written consents without holding a meeting of stockholders. By such written consents, on April 24, 2008 we effected a reverse stock split of our common stock in a ratio of one (1) new share for every five hundred (500) existing shares of common stock, with all fractional shares rounded up to the nearest whole share. The reverse stock split did not change the par value nor change the number of authorized shares of our common stock.
Current Business Plan
We are a shell company in that we conduct nominal operations and have nominal assets. At this time, our purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms who or which desire the perceived advantages of an Exchange Act registered corporation. We will not restrict our search to any specific business, industry, or geographical location and we may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. We anticipate that we may be able to participate in only one potential business venture because we have nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
We intend to promote ourselves privately. We have not yet prepared any notices or advertisement. We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders and other factors. Potentially, available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
We will continue to have, little or no capital with which to provide the owners of business opportunities with any significant cash or other assets. However, we believe that we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with acquisition of a business opportunity, including the costs of preparing Form 8K's, 10K's, 10Q’s, agreements and related reports and documents. The Securities Exchange Act of 1934 (the "Exchange Act"), specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act.
The analysis of new business opportunities will be undertaken by, or under the supervision of, our officers and directors. We intend to concentrate on identifying preliminary prospective business opportunities, which may be brought to its attention through present associations of our officers and directors. In analyzing prospective business opportunities, we will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities; the potential for growth or expansion; the potential for profit; the perceived public recognition of acceptance of products, services, or trades; name identification; and other relevant factors. Our officers and directors expect to meet personally with management and key personnel of the business opportunity as part of their investigation. To the extent possible, we intend to utilize written reports and investigation to evaluate the above factors.
Our officers have limited experience in managing companies similar to the Company and shall rely upon their own efforts, in accomplishing our business purpose. We may from time to time utilize outside consultants or advisors to effectuate its business purposes described herein. No policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of our limited resources, it is likely that any such fee would be paid in stock and not in cash.
We will not restrict its search for any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which we may offer. However, we do not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as we have successfully consummated such a merger or acquisition.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and our shareholders will no longer control us. Furthermore, our directors may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our shareholders.
It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of a transaction, we may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter.
As part of our investigation, our officers and directors may personally meet with management and key personnel, may visit and inspect material facilities, obtain analysis and verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures. The manner in which we participate in an opportunity will depend on the nature of the opportunity, our respective needs and desires, the management of the opportunity and the relative negotiation strength.
With respect to any merger or acquisition, negotiations with target company management are expected to focus on the percentage of the Company which the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, our shareholders will in all likelihood hold a substantially lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with substantial assets. Any merger or acquisition can be expected to have a significant dilutive effect on the percentage of shares held by our then shareholders.
We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2009 (Q2 2009)
COMPARED TO THREE MONTHS ENDED MARCH 31, 2008 (Q2 2008)
Revenues
For the three months ended March 31, 2009 and March 31, 2008 we had no revenue.
Operating Expenses
Operating expenses for the three months ended March 31, 2009 were $36 compared to $23,260 for the three months ended March 31, 2008. This decrease was attributed to decreased professional fees and administrative costs associated with activity related to the search for prospective merger or acquisition candidates.
Loss From Operations
Loss from operations for the three months ended March 31, 2009 was $36 compared to $23,260 for the three months ended March 31, 2008. The decrease in net loss is directly attributable to the decrease in operating expenses described above.
Net Loss Applicable To Common Stock
Net loss applicable to Common Stock was $36 for the three months ended March 31, 2009 compared to $23,260 for the three months ended March 31, 2008. Net loss per common share was $0.00 for the three months ended March 31, 2009 and $2.31 for the three months ended March 31, 2008.
SIX MONTHS ENDED MARCH 31, 2009 (Q2 2009)
COMPARED TO SIX MONTHS ENDED MARCH 31, 2008 (Q2 2008)
Revenues
For the six months ended March 31, 2009 and March 31, 2008 we had no revenue.
Operating Expenses
Operating expenses for the six months ended March 31, 2009 were $11,832 compared to $31,460 for the six months ended March 31, 2008. This decrease was attributed to decreased professional fees and administrative costs associated with activity related to the search for prospective merger or acquisition candidates.
Loss From Operations
Loss from operations for the six months ended March 31, 2009 was $11,832 compared to $31,460 for the six months ended March 31, 2008. The decrease in net loss is directly attributable to the decrease in operating expenses described above.
Net Loss Applicable To Common Stock
Net loss applicable to Common Stock was $11,832 for the six months ended March 31, 2009 compared to $31,460 for the six months ended March 31, 2008. Net loss per common share was $1.18 for the six months ended March 31, 2009 and $3.13 for the six months ended March 31, 2008.
LIQUIDITY AND CAPITAL RESOURCES
We do not currently engage in any business activities that provide us with positive cash flows. As such, the costs of investigating and analyzing business combinations for the next approximately twelve (12) months and beyond will be paid with our current cash and other current assets on hand and through funds raised through other sources, which may not be available on favorable terms, if at all. Such costs include filing of Exchange Act reports, and costs relating to consummating an acquisition.
We currently plan to satisfy our cash requirements for the next 12 months by borrowing from affiliated companies with common ownership or control or directly from our officers and directors and we believe we can satisfy its cash requirements so long as it is able to obtain financing from these affiliated companies. We currently expect that money borrowed will be used during the next 12 months to satisfy our operating costs, professional fees and for general corporate purposes. We have also been exploring alternative financing sources.
We will use our limited personnel and financial resources in connection with seeking new business opportunities, including seeking an acquisition or merger with an operating company. It may be expected that entering into a new business opportunity or business combination will involve the issuance of a substantial number of restricted shares of common stock. If such additional restricted shares of common stock are issued, our shareholders will experience a dilution in their ownership interest. If a substantial number of restricted shares are issued in connection with a business combination, a change in control may be expected to occur.
As of March 31, 2009, we had current assets consisting of cash and cash equivalents in the amount of $563. As of March 31, 2009, we had current liabilities in the amount of $33,952.
There are no limitations in our certificate of incorporation restricting our ability to borrow funds or raise funds through the issuance of restricted common stock to effect a business combination. Our limited resources and lack of recent operating history may make it difficult to borrow funds or raise capital. Such inability to borrow funds or raise funds through the issuance of restricted common stock required to effect or facilitate a business combination may have a material adverse effect on our financial condition and future prospects, including the ability to complete a business combination. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business.
Recent Accounting Pronouncements
We continue to assess the effects of recently issued accounting standards. The impact of all recently adopted and issued accounting standards has been disclosed in the Notes.
Critical Accounting Estimates
We are a shell company and, as such, we do not employ critical accounting estimates. Should we resume operations we will employ critical accounting estimates and will make any and all disclosures that are necessary and appropriate.
Off Balance Sheet Transactions
We have no off balance sheet arrangements and have not entered into any transactions involving unconsolidated, limited purpose entities
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
We maintain a set of disclosure controls and procedures designed to ensure that we disclose required information in the reports filed under the Securities Exchange Act and that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based upon their evaluation as of March 31, 2009, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.
Our board of directors was advised by Bagell, Josephs, Levine & Company, L.L.C., our independent registered public accounting firm, that during their performance of audit procedures for 2008, Bagell, Josephs, Levine & Company, L.L.C. identified a material weakness as defined in Public Company Accounting Oversight Board Standard No. 5 in our internal control over financial reporting.
This deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. However, our size prevents us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control Over Financial Reporting
There have been no other changes in our internal controls over financial reporting that occurred during the period covered by this Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Evaluation of and Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
Based on its assessment, management concluded that, as of March 31, 2009, the Company’s internal control over financial reporting is not effective based on those criteria.
This quarterly report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly report.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
OTHER INFORMATION
| Item 1. | Legal Proceedings |
We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
| 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
SIGNATURES
Date: May 15, 2009
By: /s/ RICHARD ASTROM
Richard Astrom
Chief Executive Officer, Director
By: /s/ CHRISTOPHER ASTROM
Christopher Astrom
Chief Financial Officer, Secretary, Director
��
28
