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:June 30, 2008 | |
Or | |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from ____________ to _____________ | |
Commission File Number: 333-145088 | |
COYOTE HILLS GOLF, INC. | |
(Exact name of registrant as specified in its charter) | |
Nevada | 20-8242820 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
711 N. 81ST Place, Mesa, AZ | 85207 |
(Address of principal executive offices) | (Zip Code) |
(480) 335-7351 | |
(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 issuer (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 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 [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Common Stock, $0.001 par value | 11,100,000 shares |
(Class) | (Outstanding as at June 30, 2008) |
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Table of Contents
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5 | |
6 | |
7 | |
Management's Discussion and Analysis of Financial Condition and Results of Operation | 10 |
11 | |
12 | |
12 | |
13 | |
14 |
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PART I - FINANCIAL INFORMATION
Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's Annual Report on Form 10-KSB previously filed with the Commission on March 28, 2008, and subsequent amendments made thereto.
3
COYOTE HILLS GOLF, INC.
(a Development Stage Company)
| June 30, | December 31, | |||
2008 | 2007 | ||||
(unaudited) | (audited) | ||||
Assets | |||||
Current assets: | |||||
Cash | $ | 30,971 | $ | 5,669 | |
Inventory | 4,085 | - | |||
Prepaid expenses and current deposits | 750 | 750 | |||
Total current assets | 35,806 | 6,419 | |||
Fixed assets, net of accumulated depreciation of $65 and | |||||
$0 as of 6/30/08 and 12/31/07, respectively | 1,043 | - | |||
Total assets | $ | 36,849 | $ | 6,419 | |
Liabilities and Stockholders’ Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 4,357 | $ | 118 | |
Total current liabilities | 4,357 | 118 | |||
Stockholders’ equity | |||||
Common stock, $0.001 par value, 100,000,000 shares | |||||
authorized, 11,100,000 and 10,300,000 shares issued | |||||
and outstanding as of 6/30/08 and 12/31/07, respectively | 11,100 | 10,300 | |||
Additional paid-in capital | 53,675 | 14,975 | |||
(Deficit) accumulated during development stage | (32,283) | (18,974) | |||
32,492 | 6,301 | ||||
Total liabilities and stockholders’ equity | $ | 36,849 | $ | 6,419 | |
The accompanying notes are an integral part of these financial statements.
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COYOTE HILLS GOLF, INC.
(a Development Stage Company)
Condensed Statements of Operations
Three Months Ended | Six Months Ended | January 8, 2007 | |||
June 30, | June 30, | (Inception) to | |||
2008 | 2007 | 2008 | 2007 | June 30, 2008 | |
Revenue | $- | $- | $- | $- | $- |
Cost of goods sold | 33 | - | 33 | - | 33 |
Gross profit | (33) | - | (33) | - | (33) |
Expenses: | |||||
Depreciation expense | 6 | - | 6 | - | 6 |
Executive compensation | - | - | - | 10,000 | 10,000 |
General and administrative expenses | 7,877 | 3,000 | 13,225 | 3,190 | 22,199 |
Total expenses | 7,883 | 3,000 | 13,231 | 13,190 | 32,205 |
(Loss) before provision for income taxes | (7,916) | (3,000) | (13,264) | (13,190) | (32,238) |
Provision for income taxes | - | - | (45) | - | (45) |
Net (loss) | $(7,916) | $(3,000) | $(13,309) | $(13,190) | $(32,283) |
Weighted average number of | |||||
common shares outstanding - basic and fully diluted | 10,765,934 | 10,300,000 | 10,532,967 | 10,166,864 | |
Net (loss) per share - basic and fully diluted | $(0.00) | $(0.00) | $(0.00) | $(0.00) | |
The accompanying notes are an integral part of these financial statements.
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COYOTE HILLS GOLF, INC.
(a Development Stage Company)
Condensed Statements of Cash Flows
Six Months Ended | January 8, 2007 | ||
June 30, | (Inception) to | ||
2008 | 2007 | June 30, 2008 | |
Operating activities | |||
Net (loss) | $(13,309) | $(13,190) | $(32,283) |
Adjustments to reconcile net (loss) to | |||
net cash (used) by operating activities: | |||
Shares issued for executive compensation | - | 10,000 | 10,000 |
Prepaid expenses and deposits | - | - | (750) |
Depreciation | 6 | - | 6 |
Changes in operating assets and liabilities: | |||
(Increase) in inventory | (4,085) | - | (4,085) |
Increase in accounts payable | 4,239 | - | 4,357 |
Net cash (used) by operating activities | (13,149) | (3,190) | (22,755) |
Investing activities | |||
Purchase of fixed assets | (1,049) | - | (1,049) |
Net cash (used) by investing activities | (1,049) | - | (1,049) |
Cash flows from financing activities | |||
Donated capital | - | 275 | 275 |
Issuances of common stock, net | 39,500 | 15,000 | 54,500 |
Net cash provided by financing activities | 39,500 | 15,275 | 54,775 |
Net increase (decrease) in cash | 25,302 | 12,085 | 30,971 |
Cash - beginning | 5,669 | - | - |
Cash - ending | $30,971 | $12,085 | $30,971 |
Supplemental disclosures: | |||
Interest paid | $- | $- | $- |
Income taxes paid | $- | $- | $- |
Non-cash transactions: | |||
Shares issued for services - related party | $- | $10,000 | $10,000 |
Number of shares issued for services | - | 10,000,000 | 10,000,000 |
The accompanying notes are an integral part of these financial statements.
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COYOTE HILLS GOLF, INC.
(a Development Stage Company)
Notes to Condensed Financial Statements
Note 1 - Basis of presentation
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the audited financial statements of the Company for the period ended December 31, 2007 and notes thereto included in the Company's registration statement on Form SB-2, as amended. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Note 2 - History and organization of the company
The Company was organized January 8, 2007 (Date of Inception) under the laws of the State of Nevada, as Coyote Hills Golf, Inc. The Company is authorized to issue up to 100,000,000 shares of its common stock with a par value of $0.001 per share.
The business of the Company is to sell golf apparel and equipment via the Internet. The Company has limited operations and in accordance with Statement of Financial Accounting Standards No. 7 (SFAS #7), “Accounting and Reporting by Development Stage Enterprises,” the Company is considered a development stage company.
Note 3 - Going concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss of ($32,283) and had no sales for the period from January 8, 2007 (inception) to June 30, 2008. Management recently conducted a public offering of its common stock for cash. However, the future of the Company is dependent upon its ability to obtain additional financing and upon future profitable operations from the development of its new business opportunities. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
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COYOTE HILLS GOLF, INC.
(a Development Stage Company)
Notes to Condensed Financial Statements
Note 4 - Fixed assets
Fixed assets consisted of the following:
June 30, | |||
2008 | 2007 | ||
Computer equipment | $ 1,049 | $ - | |
Accumulated depreciation | (6) | - | |
$ 1,043 | $ - | ||
During the three month periods ended June 30, 2008 and 2007, the Company recorded depreciation expense of $6 and $0, respectively.
Note 5 - Stockholders’ equity
The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock.
On January 12, 2007, an officer and director of the Company paid for incorporation fees on behalf of the Company in the amount of $175. The entire amount is not expected to be repaid and is considered to be additional paid-in capital.
On January 12, 2007, the Company issued 10,000,000 shares of its $0.001 par value common stock as founders’ shares to its two officers and directors in exchange for services rendered in the amount of $10,000.
On February 8, 2007, an officer and director of the Company donated cash in the amount of $100. The entire amount is considered to be additional paid-in capital.
On March 28, 2007, the Company issued 300,000 shares of its $0.001 par value common stock for cash in the amount of $15,000 in a private transaction to one shareholder.
On May 8, 2008, the Company completed a public offering, whereby it sold 800,000 shares of its par value common stock for total gross cash proceeds in the amount of $40,000. Total offering costs related to this issuance was $500.
As of June 30, 2008, there have been no other issuances of common stock.
Note 6 - Warrants and options
As of June 30, 2008, there were no warrants or options outstanding to acquire any additional shares of common stock.
Note 7 - Related party transactions
On January 12, 2007, an officer and director of the Company paid for incorporation fees on behalf of the Company in the amount of $175. The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.
On January 12, 2007, the Company issued 10,000,000 shares of its $0.001 par value common stock as founders’ shares to its two officers and directors in exchange for services rendered in the amount of $10,000.
On February 8, 2007, an officer, director and shareholder of the Company donated cash in the amount of $100. The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.
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COYOTE HILLS GOLF, INC.
(a Development Stage Company)
Notes to Condensed Financial Statements
Note 7 - Related party transactions (continued)
The Company does not lease or rent any property. Office services are provided without charge by an officer and director of the Company. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
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Management's Discussion and Analysis of Financial Condition and Results of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about Coyote Hills Golf, Inc.’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, Coyote Hills Golf’s actual results may differ materially from those indicated by the forward-looking statements.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates"and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
Management’s Discussion and Results of Operation
Coyote Hills Golf, Inc. was incorporated in Nevada on January 8, 2007. We are attempting to establish ourselves as an online retailer of golf-related apparel, equipment and supplies, primarily targeting male consumers aged 40 and over in the middle- to high-income ranges. We consider this demographic group to have sufficient disposable income, to be brand conscious and typically experience a moderate to high level of pressure to be early adopters of golf equipment. These factors make this an ideal target market for us.
From the period since our inception on January 8, 2007 to June 30, 2008, we did not generate any revenues. We have established a preliminary web site, published at www.CoyoteHillsGolf.net. This site is expected to serve as our singular store-front, through which all of our sales will eventually be realized. During the three months ended June 30, 2008, we purchased $4,085 in inventory, consisting of golf apparel for men and women. With the website function and with saleable inventory on-hand, we expect to begin to realize sales during the third quarter of 2008.
Although we did not realize sales, we recorded $33 in cost of goods sold during the three and six months ended June 30, 2008. This is directly attributable to freight-in charges for the inventory we purchased during the quarter ended June 30, 2008. No cost of goods sold was recognized in the three and six months ended June 30, 2007.
In the execution of our business, we incur depreciation expense and various general and administrative costs. General and administrative expenses mainly consist of office expenditures and accounting and legal fees. During the three months ended June 30, 2008, we spent $7,883, consisting of $6 in depreciation expense on our computer equipment and $7,877 in general and administrative expenses. In the comparable three month period ended June 30, 2007, we incurred $3,000 in total expenses, made up solely of general and administrative expenses.
During the six months ended June 30, 2008, total operating expenses were $13,231, of which $13,225 was general and administrative and $6 was depreciation expense. In contrast, total operating expenses during the year ago six month period ended June 30, 2007 were $13,190, of which general and administrative expense was $3,190 and executive compensation in the amount of $10,000 related specifically to the issuance of 10,000,000 shares of common stock to our two officers and directors for services rendered.
Aggregate operating expenses from our inception through June 30, 2008 were $32,205, of which $6 is attributable to depreciation expense, $10,000 in executive compensation paid in the form of shares common stock issued to our two officers and directors for services rendered and $22,199 in general and administrative expenses related to the execution of our business plan. No development related expenses have been or will be paid to our affiliates. We expect to continue to incur general and administrative expenses for the foreseeable future, although we cannot estimate the extent of these costs.
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As a result of our lack of revenues and incurring ongoing expenses related to the implementation of our business, we have experienced net losses in all periods since our inception on January 8, 2007. In the three month period ended June 30, 2008, our net loss totaled $7,916, compared to a net loss of $3,000 in the prior period ended June 30, 2007. During the six months ended June 30, 2008, our net loss was $13,309, compared to a net loss of $13,190 in the year ago six month period ended June 30, 2007. Since our inception, we have accumulated net losses in the amount of $32,293. We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow. We have not been profitable from our inception through present 2008. There is significant uncertainty projecting future profitability due to our history of losses, lack of revenues, and due to our reliance o n the performance of third parties on which we have no direct control.
In an effort to obtain operating capital, on August 31, 2007, we filed a Registration Statement on Form SB-2 (SEC File Number 333-145088) to register a public offering of our common stock. The Securities and Exchange Commission deemed the Registration Statement effective on September 14, 2007. On May 8, 2008, we closed the offering, in which we sold an aggregate of 800,000 shares of our common stock for gross offering proceeds of $40,000. After taking into account offering costs in the amount of $500, net proceeds from this offering was $39,500.
We believe that our remaining cash on hand as of June 30, 2008, in the amount of $30,971, is sufficient to maintain our operations for the next approximately 12 months. However, in order for us to achieve profitability and support our planned ongoing operations, we estimate that we must begin generating a minimum of $25,000 sales in the next 12 months. Unfortunately, we cannot guarantee that we will generate additional sales, let alone achieve that target. Our management has identified increasing exposure of our website as our top priority for the next six months to assist us in reaching our goal of $25,000 in sales.
Our management expects that we will experience net cash out-flows for the fiscal year 2008, given developmental nature of our business. We have only recently begun to accumulate an inventory of golf-related merchandise for sale and have not yet developed any advertising or marketing campaign to generate awareness of our brand and website. If we do not generate sufficient revenues and cash flows to support our operations over the next 12 months, or if our costs of operations increase unexpectedly, we may need to raise capital by conducting additional issuances of our equity or debt securities for cash. We can not assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. As such, our principal accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations.
Our management does not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our current officers and directors appear sufficient at this time. Our officers and directors work for us on a part-time basis, and are prepared to devote additional time, as necessary. We do not expect to hire any additional employees over the next 12 months.
No development related expenses have been or will be paid to our affiliates.
Our management does not expect to incur research and development costs.
We do not have any off-balance sheet arrangements.
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
We have not paid for expenses on behalf of our directors. Additionally, we believe that this fact shall not materially change.
We currently do not have any material contracts and or affiliations with third parties.
Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the Securities Exchange Act, 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 our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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Based on an evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.
Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Offerings
On January 12, 2007, we issued 5,000,000 shares of our common stock to Mitch S. Powers, and issued another 5,000,000 shares of our common stock to Stephanie Lynn Erickson, our founding shareholders, officers and directors. This sale of stock did not involve any public offering, general advertising or solicitation. The shares were issued in exchange for services performed by these founding shareholders on our behalf in the amount of $10,000. Mr. Powers and Ms. Erickson received compensation in the form of common stock for performing services related to the formation and organization of our Company, including, but not limited to, designing and implementing a business plan and providing administrative office space for use by the Company; thus, these shares are considered to have been provided as founder’s shares. Additionally, the services are considered to have been donated, and have resultantly been expensed and recorded as a c ontribution to capital. At the time of the issuance, both Mr. Powers and Ms. Erickson had fair access to and were in possession of all available material information about our company, as Mr. Powers is the President and a director of Coyote Hills Golf, Inc., and Ms. Erickson is the Secretary-Treasurer of the company. The shares bear a restrictive transfer legend. On the basis of these facts, we claim that the issuance of stock to our founding shareholders qualifies for the exemption from registration contained in Section 4(2) of the Securities Act of 1933.
On March 28, 2007, we sold 300,000 shares of our common stock to Kamiar Khatami, an acquaintance of our founding shareholders. The shares were issued for total cash in the amount of $15,000. The shares bear a restrictive transfer legend. At the time of the issuance, Mr. Khatami had fair access to and was in possession of all available material information about our company, as she is a friend of the president and director of Coyote Hills Golf, Inc. The shares bear a restrictive transfer legend. On the basis of these facts, we claim that the issuance of stock to our founding shareholder qualifies for the exemption from registration contained in Section 4(2) of the Securities Act of 1933.
Use of Proceeds
On August 31, 2007, we filed a Registration Statement on Form SB-2 (SEC File Number 333-145088) to register a public offering of up to 2,000,000 shares of our common stock at a price per share of $0.05. The Securities and Exchange Commission deemed the Registration Statement effective on September 14, 2007. On May 8, 2008, we closed the offering, in which we sold an aggregate of 800,000 shares of our common stock for gross offering proceeds of $40,000. After taking into account offering costs in the amount of $500, net proceeds from this offering was $39,500. The offering was made on a best-efforts, self-underwritten basis and no advertising was used in connection therewith. None of the proceeds was payable, directly nor indirectly, to any officer, director, affiliate or shareholder of the Issuer. The table below sets forth the anticipated use of funds and the amount expended as of June 30, 2008:
Amount | Amount | Estimated | |
Allocated | Expended | Completion | |
Accounting | $10,000 | $1,250 | Ongoing |
Advertising & marketing | $ 4,000 | $ - | Ongoing |
Inventory | $ 7,000 | $4,118 | Use as needed |
Legal & professional | $ 5,000 | $4,436 | Ongoing |
Office expenses and supplies | $ 4,000 | $1,406 | Recurring |
Website services | $ 5,000 | $1,822 | Use as needed |
Working capital | $ 4,500 | $ 57 | Use as needed |
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Exhibits and Reports on Form 8-K
Exhibit Number | Name and/or Identification of Exhibit |
3 | Articles of Incorporation & By-Laws |
(a) Articles of Incorporation * | |
(b) By-Laws * | |
31 | Rule 13a-14(a)/15d-14(a) Certifications |
(a) Mitch S. Powers | |
(b) Stephanie Lynn Erickson | |
32 | Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350) |
* Incorporated by reference herein filed as exhibits to the Company’s Registration Statement on Form SB-2 previously filed with the SEC on August 3, 2007, and subsequent amendments made thereto. | |
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Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COYOTE HILLS GOLF, INC. | ||
(Registrant) | ||
Signature | Title | Date |
/s/ Mitch S. Powers | President and | July 31, 2008 |
Mitch S. Powers | Chief Executive Officer | |
/s/ Stephanie Lynn Erickson | Secretary-Treasurer | July 31, 2008 |
Stephanie Lynn Erickson | Chief Financial Officer | |
/s/ Stephanie Lynn Erickson | Chief Accounting Officer | July 31, 2008 |
Stephanie Lynn Erickson | ||
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