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 MARCH 31, 2008
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION 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 (I.R.S. Employer
incorporation or organization) Identification No.)
59 Tennis Club Drive
Rancho Mirage, California 92270
________________________________________ __________
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (714) 524-2198
N/A
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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. Yes /X/ No / /
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes /X/ No / /
State the number of shares outstanding of each of the issuer's classes of common
equity, for the period covered by this report and as at the latest practicable
date:
At March 31, 2008, and as of the date hereof, there were outstanding
5,000,000 shares of the Registrant's Common Stock, $.001 par value.
Transitional Small Business Disclosure Format: Yes / / No /X/
-1-
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
MARCH 31, 2008
DECEMBER 31, 2007
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
CONTENTS
________________________________________________________________________________
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders' Deficit 6
Statements of Cash Flows 7
Notes to Financial Statements 8-12
________________________________________________________________________________
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
BALANCE SHEETS
March 31, December 31,
2008 2007
_____________ ____________
ASSETS
CURRENT ASSETS $ 0 $ 0
________ ________
Total current assets $ 0 $ 0
________ ________
Total assets $ 0 $ 0
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 2,100 $ 1,800
Officers advances 7,613 5,813
________ ________
Total current liabilities $ 9,713 $ 7,613
________ ________
STOCKHOLDERS' DEFICIT
Common stock: $.001 par value;
authorized 25,000,000 shares;
issued and outstanding: 3,400,000 shares at
March 31, 2008 and December 31, 2007. 3,400 3,400
Additional paid in capital 30,600 30,600
Accumulated deficit during development stage (43,713) (41,613)
________ ________
Total stockholders' deficit $ (9,713) $ (7,613)
________ ________
Total liabilities and
stockholders' deficit $ 0 $ 0
======== ========
See Accompanying Notes to Financial Statements.
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Jan. 14, 2000
Quarter Ended Year Ended (inception) to
March 31, December 31, March 31,
2008 2007 2008
_____________ ____________ ______________
Revenues $ 0 $ 0 $ 0
Cost of revenue 0 0 0
__________ __________ __________
Gross profit $ 0 $ 0 $ 0
General, selling and administrative expenses 2,100 4,703 43,713
__________ __________ __________
Operating loss $ (2,100) $ (4,703) $ (43,713)
Nonoperating income (expense) 0 0 0
__________ __________ __________
Net loss $ (2,100) $ (4,703) $ (43,713)
========== ========== ==========
Net loss per share, basic
and diluted $ (0.00) $ (0.00) $ (0.01)
========== ========== ==========
Average number of shares
of common stock outstanding 3,400,000 3,400,000
========== ==========
See Accompanying Notes to Financial Statements.
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' DEFICIT
Accumulated
Deficit
Common Stock Additional During
_______________________________ Paid-In Development
Shares Amount Capital Stage Total
______________ _____________ ____________ ______________ ____________
February 20, 2000, issue
common stock 3,400,000 $ 3,400 $ 30,600 $ 0 $ 34,000
Net loss, December 31, 2000 (35,200) (35,200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2000 3,400,000 $ 3,400 $ 30,600 $ (35,200) $ (1,200)
Net loss, December 31, 2001 (200) (200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2001 3,400,000 $ 3,400 $ 30,600 $ (35,400) $ (1,400)
Net loss, December 31, 2002 (200) (200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2002 3,400,000 $ 3,400 $ 30,600 $ (35,600) $ (1,600)
Net loss, December 31, 2003 (710) (710)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2003 3,400,000 $ 3,400 $ 30,600 $ (36,310) $ (2,310)
Net loss, December 31, 2004 (200) (200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2004 3,400,000 $ 3,400 $ 30,600 $ (36,510) $ (2,510)
Net loss, December 31, 2005 (200) (200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2005 3,400,000 $ 3,400 $ 30,600 $ (36,710) $ (2,710)
Net loss, December 31, 2006 (200) (200)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2006 3,400,000 $ 3,400 $ 30,600 $ (36,910) $ (2,910)
Net loss, December 31, 2007 (4,703) (4,703)
______________ _____________ ____________ ______________ ____________
Balance, December 31, 2007 3,400,000 $ 3,400 $ 30,600 $ (41,613) $ (7,613)
Net loss, March 31, 2008 (2,100) (2,100)
______________ _____________ ____________ ______________ ____________
Balance, March 31, 2008 3,400,000 $ 3,400 $ 30,600 $ (43,713) $ (9,713)
============== ============= ============ ============== =============
See Accompanying Notes to Financial Statements.
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Jan. 14, 2000
Quarter Ended Year Ended (inception) to
March 31, December 31, March 31,
2008 2007 2008
_________________ ____________ ______________
Cash Flows From
Operating Activities
Net loss $ (2,100) $ (4,703) $ (43,713)
Adjustments to reconcile net loss
to cash used in operating activities:
Changes in assets and liabilities
Increase (decrease) in accounts payable 300 (110) 2,100
__________ __________ __________
Net cash used in operating activities $ (1,800) $ (4,813) $ (41,613)
__________ __________ __________
Cash Flows From Investing Activities $ 0 $ 0 $ 0
__________ __________ __________
Cash Flows From Financing Activities
Issuance of common stock $ 0 $ 0 $ 34,000
Increase in officer advances 1,800 4,813 7,613
__________ __________ __________
Net cash provided by financing activities $ 1,800 $ 4,813 $ 41,613
__________ __________ __________
Net increase (decrease) in cash $ 0 $ 0 $ 0
Cash, beginning of period $ 0 $ 0 $ 0
__________ __________ __________
Cash, end of period $ 0 $ 0 $ 0
========== ========== ==========
Supplemental Information and Non-monetary
Transactions:
Interest paid $ 0 $ 0 $ 0
========== ========== ==========
Income taxes paid $ 0 $ 0 $ 0
========== ========== ==========
See Accompanying Notes to Financial Statements.
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PALMDALE EXECUTIVE HOMES, CORP.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS:
Palmdale Executive Homes, Corp. ("Company") was organized January 14, 2000 under
the laws of the State of Nevada. The Company currently has no operations and, in
accordance with Statement of Financial Accounting Standard (SFAS) No. 7,
"ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES," is considered a
Development Stage Enterprise.
A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES IS AS FOLLOWS:
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH
For the Statements of Cash Flows, all highly liquid investments with maturity of
three months or less are considered to be cash equivalents. There were no cash
equivalents as of March 31, 2008 and December 31, 2007.
INCOME TAXES
Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES," and clarified by FIN
48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES--AN INTERPRETATION OF FASB
STATEMENT NO. 109." A deferred tax asset or liability is recorded for all
temporary differences between financial and tax reporting. Temporary differences
are the differences between the reported amounts of assets and liabilities and
their tax basis. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effect of changes in tax laws and rates on the
date of enactment.
SHARE BASED EXPENSES
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123R "SHARE BASED PAYMENT." This statement is a revision to SFAS 123 and
supersedes Accounting Principles Board (APB) Opinion No. 25, "ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES," and amends FASB Statement No. 95, "STATEMENT OF CASH
FLOWS." This statement requires a public entity to expense the cost of employee
services received in exchange for an award of equity instruments. This statement
also provides guidance on valuing and expensing these awards, as well as
disclosure requirements of these equity arrangements. The Company adopted SFAS
No. 123R upon creation of the company and expenses share based costs in the
period incurred.
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PALMDALE EXECUTIVE HOMES, CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have cash, no material
assets, nor does it have operations or a source of revenue sufficient to cover
its operation costs and allow it to continue as a going concern. The Company
will be dependent upon the raising of additional capital through placement of
our common stock in order to implement its business plan, or merge with an
operating company. There can be no assurance that the Company will be successful
in either situation in order to continue as a going concern. The officers and
directors have committed to advancing certain operating costs of the Company.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157). SFAS 157 provides guidance for using fair value to measure assets and
liabilities. SFAS 157 addresses the requests from investors for expanded
disclosure about the extent to which companies measure assets and liabilities at
fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007 and will be adopted by the Company in the first quarter of fiscal year
2009. We do not expect that the adoption of SFAS 157 will have a material impact
on our financial condition or results of operations.
FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments
that were originally issued as employee compensation and then modified, and that
modification is made to the terms of the instrument solely to reflect an equity
restructuring that occurs when the holders are no longer employees, then no
change in the recognition or the measurement (due to a change in classification)
of those instruments will result if both of the following conditions are met:
(a). There is no increase in fair value of the award (or the ratio of intrinsic
value to the exercise price of the award is preserved, that is, the holder is
made whole), or the antidilution provision is not added to the terms of the
award in contemplation of an equity restructuring; and (b). All holders of the
same class of equity instruments (for example, stock options) are treated in the
same manner. The provisions in this FSP shall be applied in the first reporting
period beginning after the date the FSP is posted to the FASB website. We will
evaluate whether the adoption will have any impact on your financial statements.
In February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115" (hereinafter "SFAS No. 159"). This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use of fair
value measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This statement is effective
-9-
PALMDALE EXECUTIVE HOMES, CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
as of the beginning of an entity's first fiscal year that begins after November
15, 2007, although earlier adoption is permitted. Management has not determined
the effect that adopting this statement would have on the Company's financial
condition or results of operations.
In December 2007, the FASB issued SFAS 141(R), "Business Combinations-- a
replacement of FASB Statement No. 141." This Statement replaces SFAS 141,
"Business Combinations," and requires an acquirer to recognize the assets
acquired, the liabilities assumed, including those arising from contractual
contingencies, any contingent consideration, and any noncontrolling interest in
the acquiree at the acquisition date, measured at their fair values as of that
date, with limited exceptions specified in the statement. SFAS 141(R) also
requires the acquirer in a business combination achieved in stages (sometimes
referred to as a step acquisition) to recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full
amounts of their fair values (or other amounts determined in accordance with
SFAS 141(R)). In addition, SFAS 141(R)'s requirement to measure the
noncontrolling interest in the acquiree at fair value will result in recognizing
the goodwill attributable to the noncontrolling interest in addition to that
attributable to the acquirer. SFAS 141(R) amends SFAS No. 109, "Accounting for
Income Taxes," to require the acquirer to recognize changes in the amount of its
deferred tax benefits that are recognizable because of a business combination
either in income from continuing operations in the period of the combination or
directly in contributed capital, depending on the circumstances. It also amends
SFAS 142, "Goodwill and Other Intangible Assets," to, among other things,
provide guidance on the impairment testing of acquired research and development
intangible assets and assets that the acquirer intends not to use. SFAS 141(R)
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. We are currently assessing the potential impact that
the adoption of SFAS 141(R) could have on our financial statements.
In December 2007, the FASB issued SFAS 160, "Noncontrolling Interests in
Consolidated Financial Statements." SFAS 160 amends Accounting Research Bulletin
51, "Consolidated Financial Statements," to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. SFAS
160 also changes the way the consolidated income statement is presented by
requiring consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It also
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS 160 requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated and requires expanded
disclosures in the consolidated financial statements that clearly identify and
distinguish between the interests of the parent owners and the interests of the
noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal periods,
and interim periods within those fiscal years, beginning on or after December
15, 2008. We are currently assessing the potential impact that the adoption of
SFAS 141(R) could have on our financial statements.
-10-
PALMDALE EXECUTIVE HOMES, CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. STOCKHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of the Company consists of 25,000,000 shares with
par value of $0.001. On February 20, 2000 the Company authorized and issued
3,400,000 shares of its $0.001 par value common stock in consideration of
$34,000 in cash.
The Company has not authorized any preferred stock.
NET LOSS PER COMMON SHARE
Net loss per share is calculated in accordance with SFAS No. 128, "EARNINGS PER
SHARE." The weighted-average number of common shares outstanding during each
period is used to compute basic loss per share. Diluted loss per share is
computed using the weighted averaged number of shares and dilutive potential
common shares outstanding. Dilutive potential common shares are additional
common shares assumed to be exercised.
Basic net loss per common share is based on the weighted average number of
shares of common stock outstanding of 3,400,000 during 2008, 2007, and since
inception. As of March 31, 2008 and since inception, the Company had no dilutive
potential common shares.
NOTE 3. INCOME TAXES
We did not provide any current or deferred U.S. federal income tax provision or
benefit for any of the periods presented because we have experienced operating
losses since inception. Per Statement of Accounting Standard No. 109 -
Accounting for Income Tax and FASB Interpretation No. 48 - Accounting for
Uncertainty in Income Taxes an interpretation of FASB Statement No.109, when it
is more likely than not that a tax asset cannot be realized through future
income the Company must allow for this future tax benefit. We provided a full
valuation allowance on the net deferred tax asset, consisting of net operating
loss carryforwards, because management has determined that it is more likely
than not that we will not earn income sufficient to realize the deferred tax
assets during the carryforward period.
The components of the Company's deferred tax asset as of December 31, 2007 and
December 31, 2006 are as follows:
2007 2006
________ ________
Net operating loss carryforward $ 14,565 $ 12,919
Valuation allowance (14,565) (12,919)
________ ________
Net deferred tax asset $ 0 $ 0
======== ========
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PALMDALE EXECUTIVE HOMES, CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 3. INCOME TAXES (CONTINUED)
A reconciliation of income taxes computed at the statutory rate to the income
tax amount recorded is as follows:
Since
2007 2006 Inception
________ ____ _________
Tax at statutory rate (35%) $ 1,646 $ 70 $ 14,565
Increase in valuation allowance (1,646) (70) (14,565)
________ ____ _________
Net deferred tax asset $ 0 $ 0 $ 0
======== ==== =========
The net federal operating loss carry forward will expire between 2016 and 2026.
This carry forward may be limited upon the consummation of a business
combination under IRC Section 381.
NOTE 4. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer or
resident agent of the corporation provides office services without charge. Such
costs are immaterial to the financial statements and accordingly, have not been
reflected therein. The officers and directors for 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 interest. The Company has not formulated a policy for the
resolution of such conflicts. As of March 31, 2008 and December 31, 2007 the
company owed officers $7,613 and $5,813 respectively.
NOTE 5. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common stock of the Company.
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion contained herein contains "forward-looking statements" that
involve risk and uncertainties. These statements may be identified by the use of
terminology such as "believes," "expects," "may," "should" or anticipates" or
expressing this terminology negatively or similar expressions or by discussions
of strategy. The cautionary statements made in this Form 10QSB should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10QSB. Our actual results could differ materially from those
discussed in this report.
Generally.
General Plan.
The Company's business strategy is to be a reporting registrant with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "1934 Act") and to be available as a shell to facilitate the financing of
private or small public companies.
Because of the diverse structures used for the transactions which are
negotiated for business combinations, coupled with financing of the resulting
entity, the role of the Company will be unknown until a business combination is
located. We believe that these transactions usually involves a privately
negotiated sale of an issuer's equity security or equity-linked securities to an
investor, wherein the sale is conditioned upon a subsequent resale registration
statement filed with the Securities and Exchange Commission. The privately
negotiated sale involving private companies usually require no disclosures
because they are governed by the guidelines and safe harbor provisions under
Section 4(2) or Regulation D of the Securities Act of 1933, as amended.
We further believe that certain of the participants in certain transactions
desire the ability to disclose the financing terms and conditions of the
business combination and as the additional participant in the transaction, we
can facilitate such a disclosure. This disclosure is part of our obligation as a
reporting registrant under the 1934 Act. These disclosures will commence upon
the negotiation of the business combination through the closing as compared to
having no disclosures until the resale registration statement if filed with the
Securities and Exchange Commission.
We further believe that the participants who desire the disclosure can be
divided into the fundamental investors (private equity/venture capital funds,
mutual funds and accredited investors) or technical investors (hedge funds,
arbitrage funds, institutional funds and accredited investors).
We will not restrict our search to any specific business, industry, or
geographical location and we may participate in a business venture of virtually
any kind or nature. We may seek a business opportunity with investors or with
entities which have recently commenced operations, or which wish to utilize the
public marketplace in order to raise additional capital in order to expand into
new products or markets, to develop a new product or service, or for other
corporate purposes.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, we believe that there are numerous firms seeking
the benefits of an issuer who has complied with the 1934 Act. Such benefits may
include immediate disclosure of relevant factors involving the business
combination, facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock options or
similar benefits to key employees, and providing liquidity (subject to
restrictions of applicable statutes) for all shareholders.
-13-
It is anticipated that we will incur nominal expenses in the implementation
of our business plan described herein. The participate in the proposed business
combination will be required to provide financing. Because we have no capital
with which to pay other minimal anticipated expenses, present management of the
Company will pay these charges with his personal funds, as interest free loans
to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective business combination.
Acquisition of Opportunities.
In implementing a structure for a particular business acquisition, we may
become a party to a merger, consolidation, reorganization, or joint venturer,
with another corporation or entity. We may also acquire stock or assets of an
existing business. On the consummation of a transaction, it is probable that the
present management and sole shareholder of the Company will no longer be in
control of the Company. In addition, our director may, as part of the terms of
the acquisition transaction, resign and be replaced by new directors without a
vote of shareholders and may sell his stock in the Company to the participates,
or either.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code. Because of the diverse
structures used for the transactions which are negotiated for business
combinations, coupled with financing of the resulting entity, the role of the
Company will be unknown until a business combination is located. We believe that
these transactions usually involves a privately negotiated sale of an issuer's
equity security or equity-linked securities to an investor, wherein the sale is
conditioned upon a subsequent resale registration statement filed with the
Securities and Exchange Commission.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. These will be disclosed in our
filings with the Securities and Exchange Commission. Although the terms of such
agreements cannot be predicted, generally such agreements will require some
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
We have no present intent to acquire or merge with any entity which cannot
provide independent audited financial statements at the time of closing of the
proposed transaction and supply other information that is normally disclosed in
filings with the Securities and Exchange Commission. We are subject to all of
the reporting requirements included in the 1934 Act. These rules are intended to
protect investors by deterring fraud and abuse in the securities markets through
the use of shell companies. Included in these requirements is the affirmative
-14-
duty of the Company to file independent audited financial statements as part of
its Form 8-K to be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's audited
financial statements included in its annual report on Form 10-KSB. In addition,
in the filing of the Form 8-K that we file to report an event that causes us to
cease being a shell company, we are required to include that information that is
normally reported by a company in its original Form 10 or Form 10-SB. This
information will usually be available prior to the filing of a resale
registration statement under the Securities Act of 1933, as amended.
Accounting for a Business Combination.
In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS" No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against these new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified an recognized apart from goodwill. SFAS
No. 142 requires the use of a non-amortization approach to account for purchased
goodwill and certain intangibles. Under a non-amortization approach, goodwill
and certain intangibles is more than its fair value. Goodwill is the excess of
the acquisition costs of the acquired entity over the fair value of the
identifiable net assets acquired. The Company is required to test goodwill and
intangible assets that are determined to have an indefinite life for impairments
at least annually. The provisions of SFAS No. 142 require the completion of an
annual impairment test with any impairment recognized in current earnings. The
provisions of SFAS No. 141 and SFAS No. 142 may be applicable to any business
combination that we may enter into in the future.
We have also been informed that most business combinations will be
accounted for as a reverse acquisition with us being the surviving registrant.
As a result of any business combination, if the acquired entity's shareholders
will exercise control over us, the transaction will be deemed to be a capital
transaction where we are treated as a non-business entity. Therefore, the
accounting for the business combination is identical to that resulting from a
reverse merger, except no goodwill or other intangible assets will be recorded.
For accounting purposes, the acquired entity will be treated as the accounting
acquirer and, accordingly, will be presented as the continuing entity.
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The Securities and Exchange Commission has adopted a rule (Rule 419) which
defines a blank-check company as (i) a development stage company, that is (ii)
offering penny stock, as defined by Rule 3a51-1, and (iii) that has no specific
business plan or purpose or has indicated that its business plan is engage in a
merger or acquisition with an unidentified company or companies. We have been
informed that the Securities and Exchange Commission position is that the
securities issued by all blank check companies that are issued in unregistered
offerings must be registered with the Commission before resale.
On June 29, 2005, the Securities and Exchange Commission adopted final
rules amending the Form S-8 and the Form 8-K for shell companies like us. The
amendments expand the definition of a shell company to be broader than a company
with no or nominal operations/assets or assets consisting of cash and cash
equivalents, the amendments prohibit the use of a From S-8 (a form used by a
corporation to register securities issued to an employee, director, officer,
consultant or advisor, under certain circumstances), and revise the Form 8-K to
require a shell company to include current Form 10 or Form 10-SB information,
including audited financial statements, in the filing on Form 8-K that the shell
company files to report the acquisition of the business opportunity. The rules
are designed to assure that investors in shell companies that acquire operations
or assets have access on a timely basis to the same kind of information as is
available to investors in public companies with continuing operations.
Financial Condition.
Our auditor's going concern opinion for the prior year ended and the
notation in the financial statements indicate that we do not have significant
cash or other material assets and that we are relying on advances from
stockholders, officers and directors to meet limited operating expenses. We do
not have sufficient cash or other material assets or do we have sufficient
operations or an established source of revenue to cover our operational costs
that would allow us to continue as a going concern. We are insolvent in that we
are unable to pay our debts in the ordinary course of business as they become
due.
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Liquidity and Operational Results.
The Company has no current operating history and does not have any revenues
or earnings from operations. The Company has no assets or financial resources.
We will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. This may
result in the Company incurring a net operating loss that will increase
continuously until the Company can consummate a business combination with a
profitable business opportunity. There is no assurance that the Company can
identify such a business opportunity and consummate such a business combination.
We are dependent upon our officers to meet any de minimis costs that may
occur. Lawrence M. Simons, Sr. M.D., an officer and director of the Company, has
agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act; provided that he is an officer and director of the
Company when the obligation is incurred. All advances are interest-free.
Liquidity.
As of March 31, 2008, we had total liabilities of $9,713 and we had a
negative net worth of $9,713. As of December 31, 2007, we had total liabilities
of $7,613 and a negative net worth of $7,613.
We have had no revenues from inception through December 31, 2007 and we had
no revenues for the period ended March 31, 2008. We have a loss from inception
through December 31, 2007 of $41,713 and a loss from inception through March 31,
2008 of $41,613.
We have officer's advances of $7,613 from inception to March 31, 2008. The
officer's advances as of December 31, 2007 were $5,813.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES.
Internal control over financial reporting refers to the process designed
by, or under the supervision of, our Chief Executive Officer and Chief Financial
Officer, and effected by our 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 generally accepted accounting principles, and includes those policies and
procedures that:
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorization
of our management and directors; and
o Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisitions, use or disposition of our assets that
could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance
of achieving financial reporting objectives because of its inherent limitations.
It is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. It also can be
circumvented by collusion or improper management override.
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Because of such limitations, there is a risk that material misstatements
may not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process certain safeguards to reduce, thought not eliminate, this risk.
Management is responsible for establishing and maintaining adequate internal
control over our financial reporting. To avoid segregation of duty due to
management accounting size, management had engaged an outside CPA to assist in
the financial reporting.
Management has used the framework set forth in the report entitled Internal
Control - Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of our internal control over financial reporting. Based upon this
assessment, management has concluded that our internal control over financial
reporting was effective as of and for the year ended December 31, 2007 with the
following exceptions:
o As a part of our year end review of our disclosure controls and
procedures, we determined that several of our procedures require
additional documentation; no sufficient testing where conducted and
further segregation of duties needs to be put in place. It is our
belief that those control procedures are being performed, however
documentation of their execution is not available. We are implementing
additional documentation procedures in order to address this weakness.
Management has concluded that other than as described above, our internal
control over financial reporting was effective as of and for the year ended
December 31, 2007 and the current quarter then ended.
The Company is not an "accelerated filer" for the 2007 fiscal year because
it is qualified as a "small business issuer". Hence, under current law, the
internal controls certification and attestation requirements of Section 404 of
the Sarbanes-Oxley act will not apply to the Company. This Annual report on Form
10-K does not include an attestation report of our registered public accounting
firm regarding internal control over financial reporting. Management's report
was not subject to attestation by our registered public accounting firm pursuant
to temporary rules of the Securities Exchange Commission that permit us to
provide only management's report in this Annual Report on Form 10-K.
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PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.................................................None
ITEM 1A - RISK FACTORS.
There has been no material change in the risk factors previously disclosed.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.......None
ITEM 3 - DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES..................None
ITEM 4 - SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS..................None
ITEM 5 - OTHER INFORMATION.................................................None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter for which this
report is filed. The following exhibits are filed with this report:
31.1 Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive
Officer.
31.2 Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial
Officer.
32.1 Section 1350 Certification - Chief Executive Officer.
32.1 Section 1350 Certification - Chief Financial Officer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 12, 2008
PALMDALE EXECUTIVE HOMES, CORP.
By: /s/ SUZETTE M. MAJOR
_____________________________________
Suzette M. Major
President
By: /s/ TRICIA A. NICKSON
_____________________________________
Tricia A. Nickson
Secretary and Treasurer
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