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 Quarter Ended June 30, 2012
[ ]
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 000-53084
WESTGATE ACQUISITIONS CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
87-0639379
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
2681 East Parleys Way, Suite 204, Salt Lake City, Utah 84109
(Address of principal executive offices)
(801) 322-3401
(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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
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 [ ] 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.
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 [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
Class
Outstanding as of August 20, 2012
Common Stock, $0.00001 par value
6,000,000
TABLE OF CONTENTS
Heading
Page
PART I — FINANCIAL INFORMATION
Item 1.
Financial Statements
3
Item 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations
10
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
12
Item 4(T).
Controls and Procedures
12
PART II — OTHER INFORMATION
Item 1.
Legal Proceedings
13
Item 1A.
Risk Factors
13
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
13
Item 3.
Defaults Upon Senior Securities
13
Item 4.
Mine Safety Disclosures
13
Item 5.
Other Information
13
Item 6.
Exhibits
14
Signatures
15
2
PART I — FINANCIAL INFORMATION
Item 1.
Financial Statements
The accompanying unaudited balance sheet of Westgate Acquisitions Corporation at June 30, 2012, related unaudited statements of operations, statements of stockholders’ equity (deficit) and cash flows for the three and six months ended June 30, 2012 and 2011and the period from September 8, 1999 (date of inception) to June 30, 2012, have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2011audited financial statements. Operating results for the period ended June 30, 2012, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2012 or any other subsequent period.
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| | | | | | | | |
WESTGATE ACQUISITIONS CORPORATION |
(A Development Stage Company) |
Condensed Balance Sheets |
| | | | | | | | |
ASSETS |
| | | | | | | | |
| | | | June 30, | | December 31, |
| | | | 2012 | | 2011 |
| | | | (Unaudited) | | |
| | | | | | | | |
CURRENT ASSETS | | | | | |
| | | | | | | | |
| Cash | | $ | - | | $ | - |
| | | | | | | | |
| | Total Current Assets | | - | | | - |
| | | | | | | | |
| | TOTAL ASSETS | $ | - | | $ | - |
| | | | | | | | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
| | | | | | | | |
CURRENT LIABILITIES | | | | | |
| | | | | | | | |
| Accounts payable | $ | 7,500 | | $ | 6,687 |
| Accrued interest - related party | | 18,270 | | | 15,269 |
| Note payable - related party | | 65,325 | | | 58,228 |
| | | | | | | | |
| | Total Current Liabilities | | 91,095 | | | 80,184 |
| | | | | | | | |
STOCKHOLDERS' DEFICIT | | | | | |
| | | | | | | | |
| Common stock; 20,000,000 shares authorized, | | | | | |
| at $0.00001 par value, 1,500,000 shares issued | | | | | |
| and outstanding | | 15 | | | 15 |
| Additional paid-in capital | | 32,685 | | | 29,685 |
| Deficit accumulated during the development stage | | (123,795) | | | (109,884) |
| | | | | | | | |
| | Total Stockholders' Deficit | | (91,095) | | | (80,184) |
| | | | | | | | |
| | TOTAL LIABILITIES AND STOCKHOLDERS' | | | | | |
| | DEFICIT | $ | - | | $ | - |
| | | | | | | | |
The accompanying notes are an integral part of these condensed financial statements. |
WESTGATE ACQUISITIONS CORPORATION
(A Development Stage Company)
Notes to Condensed Financial Statements
June 30, 2012 and December 31, 2011
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2012, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2011 audited financial statements. The results of operations for the periods ended June 30, 2012 and 2011 are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet
Established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.
WESTGATE ACQUISITIONS CORPORATION
(A Development Stage Company)
Notes to Condensed Financial Statements
June 30, 2012 and December 31, 2011
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic and Diluted EPS
The Company computes net loss per share in accordance with SFAS No. 128,"Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive. At June 30, 2012 and June 30 2011, no potentially dilutive shares were issued or outstanding.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or statements.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company has recorded expenses paid on its behalf by shareholders as a related party note payable. The note bears interest at 10 percent, is unsecured and is due and payable upon demand. The balance of this payable totaled $65,325 and $58,228 at June 30, 2012, and December 31, 2011, respectively. The balance in interest accrued on the note totaled $18,270 and $15,269 as at June 30, 2012 and December 31, 2011, respectively.
During the six months ended at June 30, 2012, Company shareholders performed services valued at $3,000 which have been recorded as a contribution to capital.
NOTE 5 – SUBSEQUENT EVENTS
Pursuant to an agreement to acquire certain mining claims dated July 13, 2012, certain shareholders agreed to contribute 1,250,000 issued and outstanding commons back to the Company, which the Company then cancelled. In addition, the Company authorized and effected a forward stock split of the Company’s issued and outstanding shares on twenty (20) shares to one (1) share basis. Finally, the Company authorized the issuance of 1,000,000 post-split common shares as consideration of the claims acquired.
In accordance with ASC 855-10 Company management reviewed all material events through the date of this report and determined that there are no additional material subsequent events to report.
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Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Westgate Acquisitions Corporation (“Westgate”) is a development stage company with limited operations. Expenses associated with operating our business, including preparing and filing this and other reports with the SEC, have been paid for by advances from stockholders. We anticipate that necessary future funds to maintain corporate viability will most likely be provided by officers, directors or principal stockholders. However, unless we are able to finalize an acquisition of or merger with an operating business or obtain significant outside financing, there is substantial doubt about our ability to continue as a going concern.
Recent Events
On July 18, 2012, we entered into an acquisition agreement with Blue Cap Development Corp., a private Nevada corporation (“Blue Cap”), whereby Westgate will acquire certain mining and/or mineral claims and/or leases located in Sections 15, 16, 21, 22, T 8 S, R 15 E, New Mexico Principal Meridian, Lincoln County, New Mexico (the “Claims”). The agreement is subject to completion of due diligence and certain other usual conditions, including completion of appropriate documents to finalize the transfer of the Claims. We anticipate that the acquisition will be completed during the third quarter of 2012.
In anticipation of the acquisition agreement, Westgate’s Board of Directors unanimously approved on July 13, 2012 a forward split of its 1.5 million issued and outstanding shares of common stock on a twenty (20) shares for one (1) share basis. Contemporaneous with the forward stock split, three principal stockholders, Edward F. Cowle, H. Deworth Williams and Geoff Williams, agreed to contribute back to Westgate for cancellation an aggregate of 1,250,000 pre-split shares of common stock. The forward stock split and share cancellation was effected on July 18, 2012, which resulted in Westgate currently having issued and outstanding 5.0 million shares of common stock.
Pursuant to the terms of the acquisition agreement, in exchange for Blue Cap assigning the Claims to Westgate, Westgate will issue to Blue Cap 1.0 million unregistered shares of Westgate’s authorized, but previously unissued common stock. The amount of shares to be issued was negotiated between the parties and the 1.0 million shares will represent approximately 16.67% of Westgate’s 6.0 million total outstanding shares immediately following the transaction.
Two principals of Blue Cap, Edward F. Cowle and H. Deworth Williams, are principal stockholders of Westgate, owning approximately 59% of Westgate’s common stock prior to the acquisition agreement and transactions contemplated thereby. Because of the related nature of the parties to the transaction, Westgate endeavored to conduct an independent investigation of Blue Cap and the Claims and research the merits and value of acquiring the Claims.
Westgate’s President, Geoff Williams, oversaw the investigation and consulted with outside advisors. The company researched information and documents related to the Blue Cap Claims and consulted with other persons familiar with the properties and the industry. Following the review of all available information, we determined that the acquisition of the Claims presents a unique opportunity for the company. We also believe that the acquisition can be accomplished for a fair, negotiated consideration and the acquisition would be in the best interest of our stockholders.
If we successfully complete the acquisition of Claims from Blue Cap, we intend to develop a plan to commence an exploration program for the possibility of deposits of rare earth elements on the Claims. Rare earth elements are essential for a diverse and expanding array of high-technology applications and for many current and emerging alternative energy technologies, such as electric vehicles, energy-efficient lighting, and wind power. Examples of products that use rare earth elements are computer hard drives, smart phones, TV screens and wind turbines. Rare earth elements are also critical for a number of key
defense systems such as lasers, radar, missile-guidance systems and other electronics. Management anticipates that the company will need to secure adequate funding to develop and implement an exploration program. There can be no assurance that we will be able finalize the acquisitions of Claims or that we can secure the necessary funding to fulfill our goals, or that any future funding will be available on terms favorable to the company, or at all.
Results of Operations
We have not recorded any revenues since inception. During the three month period ended June 30, 2012 (“second quarter”), we incurred a net loss of $7,042 compared to a $5,493 loss during the three months ended June 30, 2011. The increased loss for the second quarter of 2012 is attributed to the 34% increase in general and administrative expenses, from $4,115 in the second quarter of 2011 to $5,497 for the second quarter of 2012, due to an increase in legal and accounting costs related to requisite SEC filing requirements. Interest expense for the second quarter of 2012 increased 12% to $1,545 from $1,378 for the 2011 period, due to increased loans from stockholders.
During the six month period ended June 30, 2012 (“first half”), we incurred a net loss of $13,911 compared to a $12,888 loss during the first half of 2011. The 8% increase in loss in the first half of 2012 is attributed to the 7% increase in general and administrative expenses, from $10,198 in the first half of 2011 to $10,910 for the first half of 2012, also due to an increase in legal and accounting costs related to requisite SEC filing requirements. Interest expense for the first half of 2012 increased 12% to $3,001 from $2,690 for the 2011 period, due to increased loans from stockholders.
In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations.
Liquidity and Capital Resources
During the six months ended June 30, 2012, a principal stockholder paid our expenses. At June 30, 2012 we had a note payable - related party of $65,325 compared to $58,228 at December 31, 2011. Accrued interest on the related party note payable increased from $15,269 at December 31, 2011 to $18,270 at June 30, 2012, reflecting ongoing interest on the note payable. Also, during this same period, accounts payable increased from $6,687 to $7,500.
We expect to continue to rely on stockholders to pay expenses because we have no cash reserves or sources of revenues until we complete a merger with or acquisition of an operating business. There is no assurance that we will complete such a merger or acquisition or that stockholders will continue indefinitely to pay our expenses.
At June 30, 2012, we had a stockholders’ deficit of $91,095 compared to a stockholders' deficit of $80,184 at December 31, 2011. The increase in stockholders' deficit at June 30, 2012 is attributed to ongoing business expenses, particularly legal and accounting expenses, and increases in notes payable and related interest thereon.
Plan of Operation
We anticipate the closing of the Claims acquisition during the third quarter of 2012. At the time of a successful closing, of which there can be no assurance, we intend to develop a plan to commence an exploration program for the possibility of deposits of rare earth elements on the Claims. Initially and during the next twelve months, we plan on using consultants to assist in the development of an exploration program. It will be necessary for us to secure funding to engage qualified consultants and to develop our program.
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Because we lack funds, it may be necessary for officers, directors or stockholders to advance funds and we will accrue expenses until a funding can be accomplished. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, directors will defer any compensation until such time as we have sufficient funds. As of the date hereof, we have not made any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital.
If we need to raise capital, most likely the only method available would be the private sale of securities. Because we are a development stage company, it is unlikely that we could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender. There can be no assurance that we will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms.
We do not intend to immediately use any employees, with the possible exception of part-time clerical assistance on an as-needed basis. We will most likely initially use outside advisors or consultants as requisite funds are available. We do not anticipate making any significant capital expenditures until we have sufficient funds.
Forward-Looking and Cautionary Statements
This report includes "forward-looking statements" that may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters.
When used in this report, the words "may," "will," expect," anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. We caution readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements. These risks and uncertainties, many of which are beyond our control, include:
●
the sufficiency of existing capital resources and the ability to raise additional capital to fund cash requirements for future operations;
●
uncertainties following any successful acquisition or merger related to the future rate of growth of the acquired business and acceptance of its products and/or services;
●
volatility of the stock market, particularly within the technology sector; and
●
general economic conditions.
Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
This item is not required for a smaller reporting company.
Item 4(T). Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and
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communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, concluded that, as of June 30, 2012, our disclosure controls and procedures were not effective due to a lack of adequate segregation of duties and the absence of an audit committee.
Changes in Internal Control Over Financial Reporting. Management has evaluated whether any change in our internal control over financial reporting occurred during the second quarter of fiscal 2012. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the second quarter of fiscal 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1.
Legal Proceedings
There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.
Item 1A.
Risk Factors
This item is not required for a smaller reporting company.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
This Item is not applicable.
Item 3.
Defaults Upon Senior Securities
This Item is not applicable.
Item 4.
Mine Safety Disclosures
This Item is not applicable.
Item 5.
Other Information
This Item is not applicable.
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Item 6.
Exhibits
Exhibit 31.1
Certification of C.E.O. and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1
Certification of C.E.O. and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101*
Interactive Data File
*
In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.
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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.
WESTGATE ACQUISITIONS CORPORATION
Date: August 20, 2012
By: /S/ GEOFF WILLIAMS
Geoff Williams
President, C.E.O. and Director
(Principal Accounting Officer)
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