UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 000-52848
| PALMDALE EXECUTIVE HOMES, CORP. |
| (Exact name of small business issuer as specified in its charter) |
| Nevada | | 26-1125521 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
| 6767 W. Tropicana Ave., Suite 207, Las Vegas, NV 89103 |
| (Address of principal executive offices) |
| 09 574 2687327 |
| (Issuer's telephone number) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller reporting company | x |
| (Do not check if a smaller reporting company) | | |
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date 3,561,000 common shares issued and outstanding as of November 14, 2012
Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes x No o
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
BALANCE SHEETS
| | | SEPTEMBER 30 | | | DECEMBER 31 | |
| | | 2012 | | | 2011 | |
| | | (Unaudited) | | | | |
| ASSETS |
| Current Assets | | | | | | |
| Cash | | $ | 19,728 | | | $ | 8,753 | |
| Total Current Assets | | | 19,728 | | | | 8,753 | |
| | | | | | | | | |
| Mineral property | | | 100,000 | | | | 50,000 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 119,728 | | | $ | 58,753 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT |
| LIABILITIES | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 1,382 | | | $ | 2,721 | |
| Accounts payable and accrued expenses - related party | | | 102,759 | | | | 15,236 | |
| Advances - related party | | | 1,860 | | | | 1,860 | |
| Promissory note | | | 75,000 | | | | - | |
| Promissory note - related party | | | 82,569 | | | | 82,569 | |
| Total Current Liabilities | | | 263,570 | | | | 102,386 | |
| | | | | | | | | |
| Total Liabilities | | | 263,570 | | | | 102,386 | |
| | | | | | | | | |
| Commitments | | | | | | | | |
| | | | | | | | | |
| STOCKHOLDERS' DEFICIT | | | | | | | | |
| Common stock, par value $.001, 25,000,000 shares authorized and | | | | | | | | |
| 3,561,000 and 3,511,000 shares issued and outstanding, respectively | | | 3,561 | | | | 3,511 | |
| Additional paid-in capital | | | 107,309 | | | | 82,359 | |
| Deficit accumulated during the exploration stage | | | (254,712 | ) | | | (129,503 | ) |
| Total Stockholders' Deficit | | | (143,842 | ) | | | (43,633 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 119,728 | | | $ | 58,753 | |
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATION
(Unaudited)
| | | Three Months Ended | | | Nine Months Ended | | | Cumulative fromJanuary | |
| | | September 30, | | | September 30, | | | to September 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | | | 2012 | |
| Operating expenses | | | | | | | | | | | | | | | |
| General and administrative | | $ | 10,843 | | | $ | 7,944 | | | $ | 29,094 | | | $ | 15,481 | | | $ | 119,361 | |
| Consulting fees | | | 30,000 | | | | 6,666 | | | | 90,000 | | | | 6,666 | | | | 126,666 | |
| Loss from operations | | | (40,843 | ) | | | (14,610 | ) | | | (119,094 | ) | | | (22,147 | ) | | | (246,027 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | (2,821 | ) | | | (905 | ) | | | (6,115 | ) | | | (905 | ) | | | (8,685 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | $ | (43,664 | ) | | $ | (15,515 | ) | | $ | (125,209 | ) | | $ | (23,052 | ) | | $ | (254,712 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss per share, basic and diluted | | $ | (0.01 | ) | | $ | (0.00 | ) | | $ | (0.04 | ) | | $ | (0.01 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Weighted average number of shares of common stock outstanding | | | 3,561,000 | | | | 3,405,978 | | | | 3,536,000 | | | | 3,402,015 | | | | | |
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | Cumulative from | |
| | | | | | | | | January 14, 2000 | |
| | | Nine Months Ended | | | (Inception) to | |
| | | September 30 | | | September 30 | |
| | | 2012 | | | 2011 | | | 2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net loss | | $ | (125,209 | ) | | $ | (23,052 | ) | | $ | (254,712 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | | | | | |
| Issuance of common stock for services | | | - | | | | 1,870 | | | | 1,870 | |
| Changes in assets and liabilities | | | | | | | | | | | | |
| Prepaid expenses | | | - | | | | - | | | | - | |
| Accounts payable | | | (1,339 | ) | | | 10,793 | | | | 1,382 | |
| Accounts payable and accrued interest - related party | | | 87,523 | | | | 7,571 | | | | 102,759 | |
| Net cash used in operating activities | | | (39,025 | ) | | | (2,818 | ) | | | (148,701 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| Purchase of mineral properties | | | (50,000 | ) | | | (50,000 | ) | | | (100,000 | ) |
| Net cash used in investing activites | | | (50,000 | ) | | | (50,000 | ) | | | (100,000 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Issuance of common stock for cash | | | 25,000 | | | | - | | | | 109,000 | |
| Proceeds from advances - related party | | | - | | | | 1,860 | | | | 33,471 | |
| Proceeds from promissory note | | | 75,000 | | | | - | | | | 75,000 | |
| Proceeds from promissory note - related party | | | - | | | | 50,958 | | | | 50,958 | |
| Net cash provided by financing activities | | | 100,000 | | | | 52,818 | | | | 268,429 | |
| | | | | | | | | | | | | |
| NET CHANGE IN CASH | | | 10,975 | | | | - | | | | 19,728 | |
| | | | | | | | | | | | | |
| CASH - BEGINNING OF PERIOD | | | 8,753 | | | | - | | | | - | |
| | | | | | | | | | | | | |
| CASH - END OF PERIOD | | $ | 19,728 | | | $ | - | | | $ | 19,728 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | | | | | |
| Cash paid for interest | | $ | - | | | $ | - | | | $ | - | |
| Cash paid for taxes | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| NON-CASH TRANSACTIONS: | | | | | | | | | | | | |
| Conversion of advances to promissory note - related party | | $ | - | | | $ | 31,611 | | | $ | 31,611 | |
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(AN EXPLORATION STAGE COMPANY)
Notes to the Financial Statements
(Unaudited)
Note 1 – Basis of Presentation
The accompanying unaudited interim financial statements of Palmdale Executive Homes, Corp. (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended December 31, 2011 as reported in Form 10-K, have been omitted.
Note 2 – Promissory Note
On August 25, 2012, the Company issued an unsecured promissory note for cash proceeds of $75,000 with a term of one year and simple annual interest rate of 8% repayable on August 25, 2013. As at September 30, 2012, interest of $592 was accrued on the promissory note.
Note 3 – Related Party Promissory Note
On August 11, 2011, the Company issued an unsecured promissory note for the full balance of $82,569 owed to Mr. Medina. The promissory note of $82,569 has a term of one year and bears simple annual interest rate of 8%. On August 11, 2012, the Company defaulted on the promissory note with the interest rate increased to 13% under the term of the promissory note. As at September 30, 2012, interest of $8,094 was accrued on the promissory note and is included in accounts payable and accrued expenses – related party.
Note 4 – Related Party Transactions
On September 7, 2011 the Company entered into a month to month consulting agreement with the Chief Operating Officer (“COO”) of the Company at a consulting fee of $5,000 per month. During the nine months ended September 30, 2012, consulting fees of $45,000 were recorded and $47,333 was owed to the COO at September 30, 2012.
On September 7, 2011 the Company entered into a month to month consulting agreement with the Vice President of Geology (the “VP”) of the Company at a consulting fee of $5,000 per month. During the nine months ended September 30, 2012, consulting fees of $45,000 were recorded and $47,333 was owed to the VP at September 30, 2012.
PALMDALE EXECUTIVE HOMES, CORP.
(AN EXPLORATION STAGE COMPANY)
Notes to the Financial Statements
(Unaudited)
Note 5 – Mining Lease and Option to Purchase Agreement
Effective August 11, 2011, the Company entered into a Mining Lease and Option to Purchase Agreement (the “Property Agreement”) with the Ellers Family Revocable Trust of March 24, 2000 (the “Owner”). Under the terms of the Agreement, the Company leased a mining property consisting of 65 acres of real property interests and 13 unpatented mining claims situated in Tuolumne County, California for a term of three years.
In accordance with the Agreement the Company is obligated to expend $150,000 per year of the lease developing the property, and pay annual advance royalty amounts of $50,000 for the first year (paid by an officer of the Company on behalf of the Company as of December 31, 2011), $50,000 in the second year (paid in September, 2012) and $60,000 in the final year.
In addition, the Company must pay a net smelter return royalty of 10% during the term of the lease until expiry of the Agreement or the exercise of the option to purchase. The option to purchase may be exercised by the Company, in its sole discretion, at any time during the three year term of the Agreement. The option to purchase is exercisable for a 75% interest in the property with the Owner retaining a 25% interest as tenants in common. The purchase price of the 75% interest is $2,000,000 in cash plus the ongoing payment of a net smelter return royalty of 2.5% to the Owner.
Effective August 9, 2012 the Company and the Owner amended the Property Agreement whereby the Company’s obligation for the annual exploration expenditures of $150,000 are to be met by December 31, 2012, December 31, 2013 and August 11, 2014.
Note 6 – Stockholders’ Equity
On May 16, 2012 the Company issued 50,000 shares of its common stock for gross cash proceeds of $25,000.
Item 2. Management's Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in conformity with generally accepted accounting principles in the United States of America for interim financial statements. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.
As used in this quarterly report, the terms "we", "us", "our company", “Company” and "Palmdale" mean Palmdale Executive Homes, Corp., unless otherwise indicated. All dollar amounts refer to US dollars unless otherwise indicated.
General
Our Business – General
We were incorporated on January 14, 2000 under the laws of the state of Nevada. We are an exploration stage company with no revenues to date. As of the date hereof, we can be defined as a "shell" company, an entity which is generally described as having no or nominal operations and with no or nominal assets or assets consisting solely of cash and cash equivalents.
Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
History
We initially intended to purchase either so-called "troubled" property in the area of Palmdale, California or acquire deeds of trust in default held by lenders in the area. As an alternative, we contemplated constructing modular-prefabricated homes in the area. We believed that for little or no money applicable to a down payment, we could acquire the ownership of one or more homes and, in addition, acquire deeds of trust in default on properties.
Current Business
In the wake of record high gold prices, management decided to lease a gold mining property located in Tuolumne County, California. On August 11, 2011, we entered into a Mining Lease and Option to Purchase Agreement with the Ellers Family Revocable Trust of March 24, 2000 (“Agreement”). The property consists of 65 acres of real property interests and 13 unpatented mining claims. The lease has a term of three years. Pursuant to the Agreement and Amended Agreement signed on August 9, 2012, we are obligated to expend $150,000 per year of the lease developing the property by December 31, 2012, December 31, 2013 and August 11, 2014 respectively. In addition, we must pay annual advance royalty amounts of $50,000 for the first year (paid by an officer of the Company in September, 2011), $50,000 in the second year (paid in September, 2012) and $60,000 in the final year. We must also pay a net smelter return royalty of 10% during the term of the lease until expiry of the Agreement or the exercise of the option to purchase. The advance royalty payments are credited against any net smelter returns royalties payable during the term year in question. The option to purchase is exercisable for a 75% interest in the property with the Ellers Family Revocable Trust of March 24, 2000 retaining a 25% interest as tenants in common. The purchase price of the 75% interest is $2,000,000 in cash plus the ongoing payment of a net smelter return royalty of 2.5% to the Ellers Family Revocable Trust of March 24, 2000. If the property option is exercised all lease terms and related obligations expire upon the closing of such sale.
At this point we do not have adequate cash or working capital. Our operations rely on our officers’ advances and sale of our equity to cover our expenses. The property has not been developed and no work has commenced, nor will commence until we receive adequate funding. As of the date of report, the agreement is in good standing.
We are an exploration stage company.
Employees
Currently there are no full time or part-time employees of our company. However, our President, Santiago Medina, our Chief Operating Officer, Mr. Defensor and our Vice President-Geology, Mr. Calpito are consultants of our company. We may engage one or more consultants to assist with manegement of our company and to oversee operations at the Providence Mines site. If business is successful and we experience rapid growth, our current officers and directors may be required to hire new personnel to improve, implement and administer our operational, management, financial and accounting systems.
Results of Operations
Nine months ended September 30, 2012 and 2011
For the nine months ended September 30, 2012, we incurred expenditures of $125,209 and posted losses of $125,209. For the nine months ended September 30, 2011, we incurred expenditures of $23,052 and posted losses of $23,052.
Operating expenses for the nine months ending September 30, 2012, were $119,094 compared to operating expenses for the nine months ended September 30, 2011 of $22,147. Of the operating expenses, general and administrative expense increased from $15,481 in 2011 to $29,094 in the same nine month period in 2012 due to our increased accounting and audit fees and our office administrative cost. We incurred total consulting fees of $90,000 payable to our Chief Operating Officer and Vice President of Geology for the nine months ended September 30, 2012, compared to $6,666 for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, we accrued interest expenses of $6,115 on two promissory notes, compared to $905 for the nine months ended September 30, 2011 on one promissory note.
Three months ended September 30, 2012 and 2011
For the three months ended September 30, 2012, we incurred expenditures of $43,664 and posted losses of $43,664. For the three months ended September 30, 2011, we incurred expenditures of $15,515 and posted losses of $15,515.
Operating expenses for the three months ending September 30, 2012 were $40,843 compared to operating expenses for the three months ended September 30, 2011 of $14,610. Of the operating expenses, general and administrative expense increased from $7,944 in 2011 to $10,843 in the same three month period in 2012 due to our increased accounting and audit fees and our office administrative cost. We incurred total consulting fees of $30,000 payable to our Chief Operating Officer and Vice President of Geology for the three months ended September 30, 2012, compared to $6,666 for the three months ended in September 30, 2011. For the three months ended September 30, 2012, we accrued interest expenses of $2,821 on two promissory notes, compared to interest expense of $905 on on promissory note for the three months ended September 30, 2011.
We will require additional financing before we generate significant revenues. We intend to raise the capital required to meet any additional needs through sales of our securities in secondary offerings or private placements. We have no agreements in place to do this at this time.
There are no assurances that we will be able to obtain additional funds required for our continued operations. In such event that we do not raise sufficient additional funds by secondary offering or private placement, we will consider alternative financing options, if any, or be forced to scale down or perhaps even cease our operations.
Liquidity and Capital Resources
At September 30, 2012, there was a working capital deficit of $243,842 compared to working capital deficit of $93,633 on December 31, 2011.
At September 30, 2012, our total current assets were $19,728 compared to $8,753 on December 31, 2011.
At September 30, 2012, our total current liabilities were $263,570 compared to $102,386 on December 31, 2011.
At September 30, 2012, we had advances from a related party of $1,860, promissory note payable of $75,000 and promissory note payable to our President, Santiago Medina of $82,569. Mr. Medina has loaned us a total of $84,429 for payment on our property and partial payment of costs associated with general and administrative expenses.
Plan of Operations
We intend to develop the mining property we have leased in Tuolumne County, California known as the Providence Mines property. We anticipate that we will expend approximately $240,000 on operations over the next twelve months.
Over the next twelve months we intend to raise funds through sales of our common stock in private placements to qualified investors or we may consider alternative methods of funding. These funds will be used to develop our leased mining property.
Recently Issued Accounting Standards
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
Off Balance Sheet Arrangements
As of September 30, 2012 and the date of this report, we did not have any off balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
As a “smaller reporting company”, we are not required to provide the information under this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer who is also our principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer who is also our principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. However, because we have limited transactions which are all approved, carried out and reviewed by our director and officer, the impact of the limitations are not material.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On May 16, 2012 the Company received $25,000 from subscriptions for 50,000 common shares at $0.50 per share. The shares were sold to non-U.S. persons pursuant to the provisions of Regulation S of the Securities Act of 1933.
On November 24, 2011, the Company received $50,000 from subscriptions for 100,000 common shares at $0.50 per share. The shares were sold to non-U.S. persons pursuant to the provisions of Regulation S of the Securities Act of 1933.
On August 11, 2011 we issued 11,000 shares of restricted common stock to Tosca Capital Corp. pursuant to the terms of a Finder’s Fee Agreement entered into in connection with the lease of the Providence Mines property.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safty Disclosures
None
Item 5. Other Information
None
Item 6. Exhibits.
Exhibits required by Item 601 of Regulation S-K
Exhibit Number and Exhibit Title
| Exhibit No. | | Document Description |
| | | |
| 31.1 | | Section 302 Certification of Chief Executive Officer and Chief Financial Officer |
| | | |
| 32.1 | | Section 906 Certification of Chief Executive Officer and Chief Financial Officer |
| 101.INS ** | | XBRL Instance Document |
| | | |
| 101.SCH ** | | XBRL Taxonomy Extension Schema Document |
| | | |
| 101.CAL ** | | XBRL Taxonomy Extension Calculation Linkbase Document |
| | | |
| 101.DEF ** | | XBRL Taxonomy Extension Definition Linkbase Document |
| | | |
| 101.LAB ** | | XBRL Taxonomy Extension Label Linkbase Document |
| | | |
| 101.PRE ** | | XBRL Taxonomy Extension Presentation Linkbase Document |
** XBRL (Extensible Business Reporting Language) information is 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, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | PALMDALE EXECUTIVE HOMES, CORP. | |
| | | | |
| Date: November 14, 2012 | By: | /s/ Santiago Medina | |
| | | Santiago Medina | |
| | | Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director | |
| | | (Principal Executive and Principal Financial and Accounting Officer) | |
