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 |
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For the quarterly period ended: June 30, 2010 |
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| Or |
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| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from ____________ to _____________ |
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| Commission File Number: 333-145088 |
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| 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) |
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| (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 has submitted electronically and posted on its corporate Web site, if ay, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that ht registrant was required to submit and post such files). Yes [ ] No [X]
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 August 10, 2010) |
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Table of Contents
PART I – FINANCIAL INFORMATION
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-K previously filed with the Commission on March 25, 2010.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Balance Sheets
| | | June 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (unaudited) | | | (audited) | |
| Assets | | | | | | |
| | | | | | | |
| Current assets: | | | | | | |
| Cash | | $ | 303 | | | $ | 264 | |
| Inventory | | | 468 | | | | 1,051 | |
| Prepaid expenses and current deposits | | | 868 | | | | 1,034 | |
| Total current assets | | | 1,639 | | | | 2,349 | |
| | | | | | | | | |
| Fixed assets, net of accumulated depreciation of $705 and | | | | | | | | |
| $530 as of 6/30/2010 and 12/31/2009, respectively | | | 344 | | | | 519 | |
| | | | | | | | | |
| Total assets | | $ | 1,983 | | | $ | 2,868 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 619 | | | $ | 500 | |
| Total current liabilities | | | 619 | | | | 500 | |
| | | | | | | | | |
| Total liabilities | | | 619 | | | | 500 | |
| | | | | | | | | |
| Stockholders’ equity | | | | | | | | |
| Preferred stock, $0.001 par value, 100,000,000 shares | | | | | | | | |
| authorized, no shares issued and outstanding | | | - | | | | - | |
| Common stock, $0.001 par value, 100,000,000 shares | | | | | | | | |
| authorized, 11,100,000 shares issued and outstanding | | | | | | | | |
| as of 6/30/2010 and 12/31/2009, respectively | | | 11,100 | | | | 11,100 | |
| Additional paid-in capital | | | 69,075 | | | | 61,075 | |
| Deficit accumulated during development stage | | | (78,811 | ) | | | (69,807 | ) |
| Total stockholder’s equity | | | 1,364 | | | | 2,368 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 1,983 | | | $ | 2,868 | |
The accompanying notes are an integral part of these financial statements.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Statements of Operations
(unaudited)
| | | Three Months Ended | | | Six Months Ended | | | Inception | |
| | | June 30, | | | June 30, | | | (January 8, 2007) to | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | | | June 30, 2010 | |
| | | | | | | | | | | | | | | | |
| Revenue | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 510 | |
| Cost of goods sold | | | - | | | | - | | | | - | | | | - | | | | 491 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross profit | | | - | | | | - | | | | - | | | | - | | | | 19 | |
| | | | | | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | | | | | |
| Depreciation expense | | | 88 | | | | 88 | | | | 175 | | | | 175 | | | | 705 | |
| Executive compensation | | | - | | | | - | | | | - | | | | - | | | | 10,000 | |
| General and administrative expenses | | | 2,689 | | | | 3,260 | | | | 8,779 | | | | 8,326 | | | | 67,980 | |
| Total expenses | | | 2,777 | | | | 3,348 | | | | 8,954 | | | | 8,501 | | | | 78,685 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loss before provision for income taxes | | | (2,777 | ) | | | (3,348 | ) | | | (8,954 | ) | | | (8,501 | ) | | | (78,666 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Provision for income taxes | | | - | | | | - | | | | (50 | ) | | | (50 | ) | | | (145 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | $ | (2,777 | ) | | $ | (3,348 | ) | | $ | (9,004 | ) | | $ | (8,551 | ) | | $ | (78,811 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of | | | | | | | | | | | | | | | | | | | | |
| common shares outstanding – basic | | | 11,100,000 | | | | 11,100,000 | | | | 11,100,000 | | | | 11,100,000 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss per share – basic | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | | | |
The accompanying notes are an integral part of these financial statements.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Statements of Cash Flows
(unaudited)
| | | For the six months ended | | | Inception | |
| | | June 30, | | | (January 8, 2007) to | |
| | | 2010 | | | 2009 | | | June 30, 2010 | |
| Operating activities | | | | | | | | | |
| Net loss | | $ | (9,004 | ) | | $ | (8,551 | ) | | $ | (78,811 | ) |
| Adjustments to reconcile net loss to | | | | | | | | | | | | |
| net cash used by operating activities: | | | | | | | | | | | | |
| Shares issued for executive compensation | | | - | | | | - | | | | 10,000 | |
| Depreciation expense | | | 175 | | | | 175 | | | | 705 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | |
| Prepaid expenses and deposits | | | 166 | | | | - | | | | (868 | ) |
| (Increase) decrease in inventory | | | 583 | | | | 1,465 | | | | (468 | ) |
| Increase in accounts payable | | | 119 | | | | 585 | | | | 619 | |
| Net cash used by operating activities | | | (7,961 | ) | | | (6,326 | ) | | | (68,823 | ) |
| | | | | | | | | | | | | |
| Investing activities | | | | | | | | | | | | |
| Purchase of fixed assets | | | - | | | | - | | | | (1,049 | ) |
| Net cash used by investing activities | | | - | | | | - | | | | (1,049 | ) |
| | | | | | | | | | | | | |
| Financing activities | | | | | | | | | | | | |
| Donated capital | | | 8,000 | | | | 3,200 | | | | 15,675 | |
| Issuances of common stock | | | - | | | | - | | | | 54,500 | |
| Net cash provided by financing activities | | | 8,000 | | | | 3,200 | | | | 70,175 | |
| | | | | | | | | | | | | |
| Net increase (decrease) in cash | | | 39 | | | | (3,126 | ) | | | 303 | |
| Cash – beginning | | | 264 | | | | 3,203 | | | | - | |
| Cash – ending | | $ | 303 | | | $ | 77 | | | $ | 303 | |
| | | | | | | | | | | | | |
| Supplemental disclosures: | | | | | | | | | | | | |
| Interest paid | | $ | - | | | $ | - | | | $ | - | |
| Income taxes paid | | $ | - | | | $ | 50 | | | $ | 145 | |
| | | | | | | | | | | | | |
| Non-cash transactions: | | | | | | | | | | | | |
| Shares issued for executive compensation | | $ | - | | | $ | - | | | $ | 10,000 | |
| Number of shares issued for executive compensation | | | - | | | | - | | | | 10,000,000 | |
The accompanying notes are an integral part of these financial statements.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Notes to Financial Statements Unaudited
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 interim financial statements be read in conjunction with the audited financial statements of the Company for the period ended December 31, 2009 and notes thereto included in the Company's annual report on Form 10-K. 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 and 100,000,000 shares of preferred stock, each 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 FASB ASC 915-10, “Development Stage Entities,” the Company is considered a development stage company.
Note 3 - 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 Company had an accumulated deficit of $78,811 as of June 30, 2010. 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. The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.
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. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Notes to Financial Statements
Unaudited
Note 4 –Accounting policies and procedures
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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Loss per share
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company had no dilutive common stock equivalents, such as stock options or warrants as of June 30, 2010.
Recent Accounting Pronouncements
In February 2010, the FASB issued Accounting Standards Update 2010-09 (ASU 2010-09), Subsequent Events (Topic 855), amending guidance on subsequent events to alleviate potential conflicts between FASB guidance and SEC requirements. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and we adopted these new requirements for the period ended June 30, 2010. The adoption of this guidance did not have a material impact on our financial statements.
In March 2010, the FASB issued ASU No. 2010-11, "Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives" (codified within ASC 815 - Derivatives and Hedging). ASU 2010-11 improves disclosures originally required under SFAS No. 161. ASU 2010-11 is effective for interim and annual periods beginning after June 15, 2010. The adoption of ASU 2010-11 is not expected to have any material impact on our financial position, results of operations or cash flows.
In April 2010, the FASB issued ASU No. 2010-17, "Revenue Recognition - Milestone Method (Topic 605): Milestone Method of Revenue Recognition" (codified within ASC 605 - Revenue Recognition). ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. ASU 2010-17 is effective for interim and annual periods beginning after June 15, 2010. The adoption of ASU 2010-17 is not expected to have any material impact on our financial position, results of operations or cash flows.
Note 5-Fixed assets
Fixed assets consisted of the following:
| | | June 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| Computer equipment | | $ | 1,049 | | | $ | 1,049 | |
| | | | | | | | | |
| Accumulated depreciation | | | (705 | ) | | | (530 | ) |
| | | $ | 344 | | | $ | 519 | |
During the three and six month periods ended June 30, 2010, the Company recorded depreciation expense of $88 (2009: $88) and $175 (2009: $175), respectively.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Notes to Financial Statements
Unaudited
Note 6 – Stockholders’ equity
The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 100,000,000 shares of its $0.001 par value preferred 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.
On March 10, 2009, an officer and director of the Company donated cash in the amount of $1,000. The entire amount is considered to be additional paid-in capital.
On May 12, 2009, an officer and director of the Company donated cash in the amount of $2,200. The entire amount is considered to be additional paid-in capital.
On July 23, 2009, an officer and director of the Company donated cash in the amount of $2,600. The entire amount is considered to be additional paid-in capital.
On October 13, 2009, an officer and director of the Company donated cash in the amount of $1,600. The entire amount is considered to be additional paid-in capital.
On February 3, 2010, an officer and director of the Company donated cash in the amount of $5,500. The entire amount is considered to be additional paid-in capital.
On April 27, 2010, an officer and director of the Company donated cash in the amount of $2,500. The entire amount is considered to be additional paid-in capital.
As of June 30, 2010, there have been no other issuances of common stock.
Note 7 – Warrants and options
As of June 30, 2010, there were no warrants or options outstanding to acquire any additional shares of common stock.
COYOTE HILLS GOLF, INC.
(A Development Stage Company)
Notes to Financial Statements
Unaudited
Note 8 – Related party transactions
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.
From inception through June 30, 2010, an officer and director of the Company donated cash in the amount of $15,675. The entire amount is considered to be additional paid-in capital.
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.
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 a 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.
To date, we purchased $4,085 in beginning inventory, consisting of golf apparel for men and women. We began to realize sales during the third quarter of 2008. In the three and six month periods ended June 30, 2010 and 2009, we did not generate any revenues. Sales since our formation on January 8, 2007 to June 30, 2010 were $510. In association with sales of our golf apparel, we incurred cost of goods sold in the amount of $491. This amount represents a historical gross margin of approximately 4% on sales of our products and resulted in a gross profit of $19. After factoring in cost of goods sold, our gross profit was $19 from the period from our inception to June 30, 2010. We do not have any long-term agreements to supply our apparel to any one customer. 0;We have no recurring customers and have no ongoing revenue sources.
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. In the three months ended June 30, 2010, total expenses were $2,777, comprised of $88 in depreciation expense on our computer equipment and $2,689 in general and administrative costs. During the comparable period ended June 30, 2009, we spent $3,348, consisting of $88 in depreciation expense and $3,260 in general and administrative expenses. Our expenditures have historically varied materially from period-to-period and our management cautions that any change in such cannot be relied upon to predict trends or developments in our operational direction.
During the six month period ended June 30, 2010, total expenses were $8,954, consisting of $175 in depreciation expense and $8,779 in general and administrative costs. In comparison, we incurred total expenses of $8,501 in the six months ended June 30, 2009, of which $175 consists of depreciation and $8,326 is attributable to general and administrative expenses.
Aggregate operating expenses from our inception through June 30, 2010 were $78,685, of which $705 is attributable to depreciation expense, $10,000 in executive compensation paid in the form of shares of common stock issued to our two officers/directors for services rendered and $67,980 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.
During the quarters ended June 30, 2010 and 2009, we did not record any provision for income taxes. In the six months ended June 30, 2010 and 2009, provision for income taxes amounted to $50 and $50, respectively, related to the minimum tax payable to the State of Arizona. Since our inception to June 30, 2010, we recorded total provisions for income taxes of $145.
As a result of our minimal level 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 months ended June 30, 2010, we incurred a net loss of $2,777, compared to a net loss of $3,348 in the comparable three month period ended June 30, 2009. In the six month period ended June 30, 2010, our net loss totaled $9,004, compared to a net loss of $8,551 for the six month period ended June 30, 2009. Since our inception, we have accumulated net losses in the amount of $78,811. 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 thro ugh June 30, 2010. There is significant uncertainty projecting future profitability due to our history of losses, lack of revenues, and due to our reliance on the performance of third parties on which we have no direct control.
In order for us to achieve profitability and support our planned ongoing operations, we estimate that we must begin generating a minimum of $40,000 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 twelve months to assist us in reaching our goal of $40,000 in sales.
Our management expects that we will experience net cash out-flows through at least fiscal year 2010, given the 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. We believe that our cash on hand as of June 30, 2010, in the amount of $303, is insufficient to maintain our operations. If we do not generate sufficient revenues and cash flows to support our operations, 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 cannot assure you that any financing can be obtained or, if obtained, that it wi ll 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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Management’s Report On Internal Control Over Financial Reporting
Our 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:
| | 1. | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
| | 2. | 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 |
| | 3. | 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 reporti ng. 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.
As of June 30, 2010, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weakne sses.
The matter involving internal controls and procedures that our management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was:
Lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
The aforementioned material weakness was identified by our Chief Executive Officer in connection with the review of our financial statements as of June 30, 2010. Management believes that the lack of a functioning audit committee did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weakness and enhance our internal controls, we plan to establish a formal audit committee of the Board of Directors. We are also seeking at least one additional person to serve as an outside Director, as well as sit on the audit committee, thereby providing oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II – OTHER INFORMATION
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&# 8217;s shares. Additionally, the services are considered to have been donated, and have resultantly been expensed and recorded as a contribution 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.
| 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. | |
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 | August 10, 2010 |
| Mitch S. Powers | Chief Executive Officer | |
| | | |
| /s/ Stephanie Lynn Erickson | Secretary-Treasurer | August 10, 2010 |
| Stephanie Lynn Erickson | Chief Financial Officer | |
| | | |
| /s/ Stephanie Lynn Erickson | Chief Accounting Officer | August 10, 2010 |
| Stephanie Lynn Erickson | | |
