UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended: March 31, 2013
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: 0-19470
TGFIN HOLDINGS, INC.
(Exact name of registrant as specified in its Charter)
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Delaware | 13-4069968 |
(State or other Jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
101 North Main Street, Suite B
Smithfield, Utah 84335
(Address of Principal Executive Offices)
( 435) 563-8080
(Registrant’s Telephone Number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes [X] No [ ]
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] The Company has no corporate Web site.
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years
Not applicable.
Outstanding Shares
At May 28, 2013 there were 2,332,105 shares of the Registrant's Common Stock and 50,400 shares of Series 1 Class A 8% Cumulative Preferred Stock outstanding.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Unaudited Consolidated Balance Sheet
as of March 31, 2013 and Audited Consolidated
Balance Sheet as of December 31, 2012
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Unaudited Consolidated Statements of
Operations, for the Three Month Periods
Ended March 31, 2013 and 2012
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Unaudited Consolidated Statements of Cash
Flows, for the Three Month Periods Ended
March 31, 2013 and 2012
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Notes to Unaudited Consolidated Financial Statements
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Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation
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Item 3. Quantitative and Qualitative Disclosures About
Market Risks
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Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
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SIGNATURES
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PART I FINANCIAL INFORMATION
ITEM 1 CONSOLIDATED FINANCIAL STATEMENTS
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
March 31, 2013
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| | March 31, 2013 (Unaudited) | | | December 31, 2012 |
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ASSETS | | | | | |
Current Assets: | | | | | |
Cash | $ | 33,962 | | $ | 370 |
Prepaid expenses | | 1,500 | | | - |
Total Current Assets | | 35,462 | | | 370 |
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Total Assets | $ | 35,462 | | $ | 370 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | |
Current Liabilities: | | | | | |
Accounts payable | $ | 19,060 | | $ | 13,558 |
Accrued expenses | | 10,440 | | | 8,863 |
Common stock subscription payable | | 34,000 | | | - |
Common stock payable | | 255,771 | | | 255,771 |
Stock compensation payable | | 38,000 | | | 36,000 |
Convertible notes payable | | 79,000 | | | 74,000 |
Total Current Liabilities | | 436,271 | | | 388,192 |
Stockholders’ Equity: | | | | | |
Preferred stock ($0.01 par value) 1,000,000 shares authorized, 50,400 shares issued and outstanding | | 504 | | | 504 |
Common stock ($0.01 par value) 50,000,000 shares authorized, 2,332,105 and 2,332,105 issued and outstanding | | 23,321 | | | 23,321 |
Additional paid-in-capital | | 4,157,671 | | | 4,140,671 |
Retained deficit prior to development stage | | (1,077,063) | | | (1,077,063) |
Retained deficit during development stage | | (3,505,242) | | | (3,475,255) |
Total Stockholders’ Deficit | | (400,809) | | | (387,822) |
Total Liabilities and Stockholders’ Deficit | $ | 35,462 | | $ | 370 |
The accompanying notes are an integral part of these consolidated financial statements.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The accompanying notes are an integral part of these consolidated Financial Statements.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 and DECEMBER 31, 2012
NOTE 1: THE COMPANY AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company
The Company consists of TGFIN Holdings, Inc. ("TGFIN") and its sole and wholly-owned operating subsidiary, TradinGear.Com Incorporated ("TradinGear", together, the "Company"). TGFIN was incorporated under the laws of Delaware in March 1985 (originally as Mark, Inc.). TradinGear was incorporated under the laws of the State of Delaware on July 7, 1999. TGFIN Holdings, Inc. previously a shell company, other than a business combination related shell company, as those terms are defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2) completed a transaction on February 19, 2010 that had the effect of causing it to cease to be a shell company, as defined in Rule 12b-2, by reactivating its previously inactive operating subsidiary, Tradingear.com Incorporated (“Tradingear”) in order to resume its previous business of developing software, under a new d/b/a: iDEV3.
TradinGear currently produces software applications (“Apps”) for telephones and other hand-held devices.
Condensed financial statements
The accompanying financial statements have been prepared by the Company without audit. They include information of TGFIN and TradinGear. In the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2013, the results of operations for the three month periods ended March 31, 2013 and 2012, and the cash flows for the three month periods ended March 31, 2013 and 2012, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the periods ended March 31, 2013 and 2012 are not necessarily indicative of the operating results for the respective full years.
Revenue recognition
The company sells its current software at the Online Apple Store, which records all sales made on a daily basis. The company recognizes its portion of the sales as revenue as of the date of the sale.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 and DECEMBER 31, 2012
NOTE 2: COMMITMENTS AND CONTINGENCIES
Litigation
In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of March 31, 2013 there were no claims asserted or threatened against the Company.
NOTE 3: GOING CONCERN
The Company has been a Development Stage Company since April 1, 2003. It has continuously sought an acceptable merger or acquisition candidate during that period and has incurred losses each year. For the quarter ended March 31, 2013 the company lost $29,987 and had a Retained Deficit of $4,582,305. The company’s cash reserves of $33,962 as of March 31, 2013 are not adequate to fund all of the anticipated expenses for the year ending December 31, 2013. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
The company plans to merge with, acquire existing Apps or companies, and continue to operate during the year ending December 31, 2013. Should the acquired or merged operating entity not have sufficient resources of its own to fund the combined entity’s operations, the Company will issue stock to raise sufficient operating capital if sufficient capital is not raised from operations.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 and DECEMBER 31, 2012
(Continued)
NOTE 4: CONVERTIBLE NOTES PAYABLE
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| | March 31, 2013 | | | December 31, 2012 |
Convertible 8% Demand Notes Payable | $ | 79,000 | | $ | 74,000 |
Total Notes payable | $ | 79,000 | | $ | 74,000 |
The Convertible 8% Notes Payable were originated on various dates in 2010, 2011 and 2012. Additional notes payable were received on January 3, 2013 for $5,000 to reflect working capital funding provided by Sam Gaer, the, company’s then single largest shareholder. The Notes originated in 2010 are convertible into common stock of TGFIN at $.30 per share at any time at the holder’s option. The Notes originated in 2011 are convertible into common stock of TGFIN at $.15 per share at any time at the holder’s option. The Notes originated in 2012 and 2013 are convertible into common stock of TGFIN at $.10 per share at any time at the holder’s option. Accrued interest related to these notes as of March 31, 2013 was $10,440. Effective December 19, 2012 all rights to the Notes were assigned to Marni Gaer, the spouse of Sam Gaer.
NOTE 5: STOCK OPTIONS AND WARRANTS
A summary of the status of the Company's outstanding stock options and warrants (all of which were exercisable) as of March 31, 2013 and December 31, 2012 and changes during the periods then ended, is presented below:
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| Shares | | | 2013 Weighted Average Exercise Price | | Shares | | | 2012 Weighted Average Exercise Price |
Outstanding, beginning of quarter | 60,000 | | $ | .30 | | 60,000 | | $ | .30 |
Granted | 0 | | | 0 | | 0 | | | 0 |
Expired/Cancelled | 0 | | | 0 | | 0 | | | 0 |
Exercised | 0 | | | 0 | | 0 | | | 0 |
Outstanding end of quarter | 60,000 | | $ | .30 | | 60,000 | | $ | .30 |
Exercisable | 60,000 | | $ | .30 | | 60,000 | | $ | .30 |
Effective December 19, 2012 all rights to the Options were assigned to Marni Gaer, the spouse of Sam Gaer.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 and DECEMBER 31, 2012
(Continued)
NOTE 6: CAPITAL STOCK
Common stock
The authorized capital stock of the Company consists of 50,000,000 shares of common stock, par value $.01 per share, of which 2,332,105 were outstanding at March 31, 2013.
On January 1, 2013 the Company awarded 10,000 shares of common stock to each Director in accordance with a Board Resolution. The shares were valued at the market price at the date of issuance of $.10 per share, resulting in compensation expense of $2,000, of which $500 was recognized in the quarter ended March 31, 2013, and since as of May 28, 2013, the shares have not been issued, the Company recognized additional stock compensation payable of $2,000 for the quarter.
Preferred stock
The Series 1 Class A 8% Cumulative Convertible Preferred Stock has a par value of $0.01 per share. As of March 31, 2013 there were 50,400 shares outstanding. Holders of preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share. Dividends are payable semi-annually on September 15 and March 15. No dividends have been paid since March 15, 1993, resulting in dividends in arrears at March 31, 2013 of approximately $564,480 or $11.20 per share. Dividends are not payable on any other class of stock ranking junior to the preferred stock until the full cumulative dividend requirements of the preferred stock have been satisfied. The preferred stock carries a liquidation preference equal to its stated value plus any unpaid dividends. Holders of the preferred stock are entitled to one-tenth of a vote for each share of preferred stock held. The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis.
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TGFIN HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013 and DECEMBER 31, 2012
(Continued)
NOTE 7: SUBSEQUENT EVENTS
Termination of Asset Acquisition
On December 31, 2012 the Company entered into an agreement to purchase certain assets and technologies (“Assets”) from IceLounge Media, Inc. (“IMI”), an unrelated party, in exchange for 49% of TGFIN's common stock. On April 15, 2013 both parties mutually agreed to terminate the agreement prior to closing without obligation, penalty or consequence to either party. The Assets were returned to Ice Lounge and TGFIN’s common stock was not issued. The Company had expensed $255,771 as Research and development cost, or $.10 per share of the 2,557,708 shares to be issued. The Company will recognize the termination of the agreement as of April 15, 2013.
Cancelation of Common Stock subscription payable
On March 21 and April 4, 2013 two investors subscribed to purchase 70,000 shares of common stock of the Company for $14,000 or $.20 a share. On April 11, 2013 the stock subscriptions were canceled and the Company returned the investment in cash.
Common stock payable
On April 22, 2013 the company sold 125,000 shares of its common stock for $25,000 or $.20 per share.
Corporate actions
On April 15, 2013 the company filed a Definitive 14C for the purpose of changing the Company’s name and effectuating a ten (10) to one (1) reverse split of the Company’s common stock.
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no additional events to disclose.
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PART 1 FINANCIAL INFORMATION (Continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
Management's Discussion and Analysis:
The following discussion should be read in conjunction with the consolidated historical financial statements of the Company and related notes thereto included elsewhere in this Form 10-Q and the Annual Report on Form 10-K for the year ended December 31, 2012. This discussion contains forward-looking statements regarding the business and industry of the Company within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of the Company and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements.
The information set forth and discussed below for the three month periods ended March 31, 2013 and 2012 is derived from the consolidated financial statements included elsewhere herein. The financial information set forth and discussed below is un-audited but, in the opinion of management, reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of such information. The results of operations of the Company for the fiscal quarter ended March 31, 2013 may not be indicative of results expected for the entire fiscal year ended December 31, 2013.
Liquidity and Capital Resources:
At its current level of operations, the Company will need to begin profitable operations, borrow and or raise additional capital during the next fiscal year.
Capital expenditures planned for the current year are not expected to be significantly different than those of the previous year.
Results of Operations:
Operating costs of $29,990 for the three months ended March 31, 2013 increased by $12,980, or 76.3% versus those of the three months ended March 31, 2012, due primarily to (1) the timing of work performed and corresponding invoices received for Legal and Professional expenses, which resulted in an increase of $8,106 or 490.1% and (2) an increase in the imputed cost of donated labor of $5,000 or 42%, due to increased activity with respect to the asset purchase, which was subsequently terminated, versus those of the three months ended March 31, 2012.
PLAN OF OPERATIONS
Management's Plans are to seek App providers who wish to “equitize” their Apps’ potential by selling their developed App(s) for shares in TGFIN.
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The company will always be open to other merger or acquisition candidates, depending upon the circumstances and opportunity offered. Management's main objective is to seek to increase shareholder value. All viable alternatives will be evaluated, including, but not limited to: investments, mergers, purchases, or the offering of Company securities, etc. Alternatives that provide existing shareholders with the greatest potential benefit will be favored.
Management encourages its shareholders to communicate directly with the Company for its typical investor relations, including address changes and for general corporate information by calling or writing to the Company at its administrative offices or by posting a message to idev3.com. Management also encourages shareholders to keep their address current with the Company.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This quarterly report includes forward looking statements which involve risks and uncertainties. Such statements can be identified by the use of forward-looking language such as "will likely result", "may", "are expected to", "is anticipated", "estimate", "believes", "projected", or similar words. All statements other than statements of historical fact included in this section, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company's actual results could differ materially from those anticipated in any such forward-looking statements as a result of various risks, including, without limitation, the dependence on a single line of business; the failure to close proposed financing; rapid technological change; inability to attract and retain key personnel; the potential for significant fluctuations in operating results; the loss of a major customer; and the potential volatility of the Company's common stock.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company operates minimally and has no meaningful asses subject to market risk. Therefore, this item is not applicable given the company’s current operations.
ITEM 4: CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. You should note that the design of any system of controls is based in part upon certain assumptions about the likelihood
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of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon the foregoing evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that such 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.
Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting that occurred during the first quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings
In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of March 31, 2013 there were no other claims asserted or threatened against the Company.
ITEM 1A. Risk Factors
This item is not required of smaller reporting companies.
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds
During the Quarter ended March 31, 2013 the company sold 125,000 shares for $25,000 or $.20 per share.
ITEM 3 Defaults on Senior Securities
Holders of Series 1 Class A 8% Cumulative Convertible Preferred Stock are entitled to receive cumulative dividends at the annual rate of $.56 per share, payable semi-annually on September 15 and March 15 of each year beginning September 15, 1992. Unpaid dividends have resulted in aggregate dividends in arrears of $564,480. The potential liability for dividends in arrears is contingent upon the Company's declaration of a dividend. The company does not plan to declare a dividend.
ITEM 4 Mine Safety Disclosures
None; not applicable.
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ITEM 5 Other Information.
None.
ITEM 6 Exhibits
Exhibits
31.1 302 Certification
31.2 302 Certification
32 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002
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.
Date: May 28, 2013
TGFIN Holdings, Inc.
(Registrant)
By_/s/ Scott Emerson Lybbert_
Scott Emerson Lybbert, President
Principal Executive Officer,
Principal Financial Officer
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