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Note 1 - Organization
Great Plains Holdings, Inc. (the Company) was incorporated under the laws of the state of Nevada on December 30, 1999 under the name LILM, Inc. The Company changed its name on December 3, 2013 as part of its plans to diversify its business through the acquisition and operation of commercial real estate, including but not limited to self-storage facilities, apartment buildings, 55+ senior manufactured homes communities, and other income producing properties. Historically, the Company has principally engaged in manufacture and marketing of the LiL Marc urinal used in the training of young boys.
Included in the following financial statements are the combined statements of operations of the Company and its subsidiaries for the period April 22, 1997 to December 31, 2013.
The accompanying balance sheet of the Company and its subsidiaries as of December 31, 2013 and 2012 and related statements of operations for the years ended December 31, 2013 and 2012, and the period April 22, 1997 ( date of inception of predecessor) to December 31, 2013, and related statements of cash flows for the year ended December 31, 2013 and 2012, and the period April 22, 1997 (date of inception of predecessor) to December 31, 2013, have been prepared in accordance with the requirements for conformity with accounting principles generally accepted in the United States of America.
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Note 2 - Summary of Significant Accounting Policies
Use of Estimates
We use estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced sale or liquidation. Significant differences can arise between the fair value and carrying amount of financial instruments that are recognized at historical cost amounts. The carrying value of the companys financial assets and liabilities approximate the fair value because of the short maturity of those instruments.
Accounting Method
The Company recognizes income and expenses based on the accrual method of accounting.
Accounts Receivable
Accounts receivable are recorded when invoices are issued and the amount management expects to collect is reported on the balance sheet. Accounts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Companys historical losses, the existing economic condition in the industry, and the financial stability of its customers.
Advertising
The Company expenses all advertising costs as they are incurred.
Amortization
Amortization is provided based on the straight line method over the estimated useful life.
Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market accounts and overnight investments at banks. Cash is maintained in banks insured by the FDIC for an aggregate of up to $250,000. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Comprehensive Income
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130), required that total comprehensive income be reported on the financial statements. The Company has no additional components of Comprehensive Income required for disclosure which are not properly reflected on the Income Statement and Statement of Retained Earnings.
Concentrations of Risk
Financial Instruments which potentially subject the Company to concentrations of risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with major financial institutions. At December 31, 2013, the Company has $1,229,152 in excess of federally insured limits.
Depreciation
Depreciation is provided based on the straight line method. The annual depreciation rates are based on useful lives ranging from five to forty years.
Dividend Policy
The Company has not yet adopted a policy regarding dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out (FIFO) basis and market is determined on the basis of replacement cost or net realizable value.
Principles of Consolidation
The accompanying consolidated financials include the accounts of the Company and its subsidiaries from its inception. All significant intercompany accounts and balances have been eliminated in consolidation.
Revenue Recognition
Revenue is recognized upon the completion of the sales and shipment of the product. The product is sold via the internet and is delivered to customers or to wholesale resellers using a ground courier service.
Sales Taxes
The State of Florida imposes a sales tax ranging from 6.0% to 7.5% on all of the Companys sales delivered within the State. The Company collects that sales tax from customers and remits the entire amount to the State. The Companys accounting policy is to exclude the tax collected and remitted to the State from revenue and cost of sales.
Shipping and Handling Costs
The Company classifies freight billed to customers as sales revenue and related freight costs as cost of sales.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then the basic and diluted per share amounts are the same. As of December 31, 2013 and 2012, there were no common stock equivalents outstanding.
Recent Accounting Pronouncements
The Company does not expect that the adoption of recent accounting pronouncements will have a material impact on its financial statements.
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Note 3 - Property and Equipment
On December 26, 2013, the Company acquired two adjacent parcels of land located in Wildwood, Florida totaling approximately 0.90 acres. The property includes a 1,400 square foot corporate office building and an additional parcel of land that includes a mobile home. The real estate and improvements located on it were acquired from TD Bank, N.A., an unrelated party, for a purchase price of $47,500 plus customary closing cost. The Company paid the purchase price in cash at closing.
Machinery and equipment includes costs for an injection mold we acquired on August 2, 2010 to produce the base and stand for the LiL Marc training urinal. The Company has determined the mold went into service on January 1, 2011 and is being depreciated, using the straight-line method, over a 5 year period.
Property and equipment are stated at cost and consist of the following categories as of December 31, 2013 and 2012:
| December 31, | |
| 2013 | 2012 |
Land | $ 5,651 | $ - |
Machinery and Equipment | 14,380 | 1,700 |
Buildings and Improvements | 43,677 | - |
Total Property and Equipment | 63,708 | 1,700 |
Less: Accumulated Depreciation and Amortization | (3,645) | (680) |
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Net Property and Equipment | $ 60,063 | $ 1,020 |
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Note 4 Acquisition
By agreement dated October 23, 2013, the Company purchased all of the outstanding membership units of Ashland Holdings, LLC ("Ashland") from Kent Campbell, the Companys Chief Executive Officer and its controlling shareholder, for a purchase price of $20,000. At the time of purchase, Ashland's sole asset consisted of $19,000 in cash and it had no operations. The Companys acquisition of Ashland was accounted for using the acquisition method whereby the Company was the acquirer for financial reporting purposes and Ashland was the acquired company. The carryover basis for Ashlands assets was used as both companies were controlled by Mr. Campbell. As a result of this acquisition, the Companys consolidated financial statements after completion of the acquisition include the assets and liabilities of both the Company and Ashland and Ashlands operations from the April 1, 2013 date of inception through December 31, 2013.
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Note 5 - Stockholders Equity
The company has authorized 300,000,000 common shares, par value $0.001 per share, and 20,000,000 preferred shares, par value $.001 per share. As of December 31, 2013, there were 7,993,125 and ~ 0 shares of common stock and preferred stock, respectively, issued and outstanding. There are no designations for the preferred stock. The Companys board of directors is permitted, in its discretion, to designate one or more series of the preferred stock with the rights, privileges and preferences of each series to be fixed by the board of directors from time to time in the future, without shareholder approval. During 2013, the Company issued 5,359,375 shares of its unregistered Common Stock to 5 shareholders, including officers and directors of the Company, at a price of $0.32 per share for an aggregate of $1,715,000 in proceeds to the Company.
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Note 6 - Income Taxes
On December 31, 2013, the Company had a net operating loss available for carryforward of $261,922. The income tax benefit of approximately $89,026 from the carryforward has been fully offset by a valuation allowance as we have determined the ability to use the future tax benefit is doubtful. The net operating loss will expire starting in 2020.
Year Ended | Estimated NOL Carry-Forward | NOL Expires | Estimated Tax Benefit from NOL | Valuation Allowance | Net Tax Benefit |
2000 | 8,867 | 2020 | 3,015 | (3,015) | - |
2001 | 13,537 | 2021 | 4,603 | (4,603) | - |
2002 | 13,858 | 2022 | 4,712 | (4,712) | - |
2003 | 18,081 | 2023 | 6,148 | (6,148) | - |
2004 | 1,731 | 2024 | 589 | (589) | - |
2005 | 12,692 | 2025 | 4,315 | (4,315) | - |
2006 | 15,821 | 2026 | 5,379 | (5,379) | - |
2007 | 19,881 | 2027 | 6,760 | (6,760) | - |
2008 | 14,674 | 2028 | 4,989 | (4,989) | - |
2009 | 16,971 | 2029 | 5,770 | (5,770) | - |
2010 | 13,493 | 2030 | 4,558 | (4,558) | - |
2011 | 11,825 | 2031 | 4,021 | (4,021) | - |
2012 | 20,263 | 2032 | 6,889 | (6,889) | - |
2013 | 80,228 | 2033 | 27,278 | (27,278) | - |
| $261,922 |
| $89,026 | $(89,026) | $ - |
The total valuation allowance as of December 31, 2013 was $89,026, which increased by $27,278 for the year ended December 31, 2013.
As of December 31, 2013 and 2012, the Company has no unrecognized income tax benefits. The Companys policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the years ended December 31, 2013, and 2012 and no interest or penalties have been accrued as of December 31, 2013 and 2012. As of December 31, 2013 and 2012, the Company did not have any amounts recorded pertaining to uncertain tax positions.
The tax years from 2011 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.
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Note 7 - Significant Transactions with Related Parties
During fiscal 2013, George Norman, the Companys former Chief Executive Officer and a Director advanced the sum of $16,845 to the Company as a working capital loan, and paid $8,024 in expenses on behalf of the Company.
Pursuant to the terms of a Share Purchase Agreement dated September 25, 2013 (the Share Purchase Agreement), Alewine sold 1,788,475 of its 1,863,475 shares of the Companys common stock in a private transaction to Kent Campbell (1,466,225 shares) and Denis Espinoza (322,250 shares) .
On September 26, 2013 all amounts due by the Company to Mr. Norman and Alewine in the amount of $77,625 consisting of $73,988 principal and $3,637 in accrued interest, were repaid by the Company, as provided for in the Share Purchase Agreement.
On September 26, 2013, the Company sold 5,000,000 of its unregistered common stock to Kent Campbell, its Chief Executive Officer and a Director for a purchase price of $0.32 per share for a total of $1,600,000.
On October 15, 2013, the Company sold to: (i) Sarah Campbell, its Chief Administrative Officer, 100,000 shares of its unregistered common stock for a purchase price of $0.32 per share for a total of $32,000, and (ii) Thomas G. Campbell (Kent Campbells father), 150,000 shares of its restricted common stock for a purchase price of $0.32 per share for a total purchase price of $48,000.
By agreement dated October 23, 2013, the Company purchased all of the outstanding membership units of Ashland Holdings, LLC, a Florida limited liability company ("Ashland") from Mr. Campbell for a purchase price of $20,000. At the time of purchase Ashland's sole asset consisted of $19,000 in cash.
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Note 8 - Commitments and Contingencies
On October 16, 2013 the Company entered into a lease with an unaffiliated third party for a warehouse for a term of one year. The lease may be terminated by the Company with 30 days notice within the first 6 months of the lease term. The warehouse occupies approximately 1,250 square feet of space with a monthly rent of $960 for the first six months and $1,065 per month thereafter. The Company has terminated this lease effective April 15, 2014 and will move its product assembly, shipping operations and executive offices to its recently acquired Wildwood, Florida property.
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Note 9 Subsequent Events
Subsequent to December 31, 2013 the Company issued 37,500 shares of its unregistered common stock to two shareholders for a purchase price of $0.32 per share for a total of $12,000.
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Use of Estimates
We use estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
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Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced sale or liquidation. Significant differences can arise between the fair value and carrying amount of financial instruments that are recognized at historical cost amounts. The carrying value of the companys financial assets and liabilities approximate the fair value because of the short maturity of those instruments.
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Accounting Method
The Company recognizes income and expenses based on the accrual method of accounting.
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Accounts Receivable
Accounts receivable are recorded when invoices are issued and the amount management expects to collect is reported on the balance sheet. Accounts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Companys historical losses, the existing economic condition in the industry, and the financial stability of its customers.
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Advertising
The Company expenses all advertising costs as they are incurred.
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Amortization
Amortization is provided based on the straight line method over the estimated useful life.
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Cash and Cash Equivalents
Cash and cash equivalents are defined as demand deposits, money market accounts and overnight investments at banks. Cash is maintained in banks insured by the FDIC for an aggregate of up to $250,000. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
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Comprehensive Income
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130), required that total comprehensive income be reported on the financial statements. The Company has no additional components of Comprehensive Income required for disclosure which are not properly reflected on the Income Statement and Statement of Retained Earnings.
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Concentrations of Risk
Financial Instruments which potentially subject the Company to concentrations of risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with major financial institutions. At December 31, 2013, the Company has $1,229,152 in excess of federally insured limits.
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Depreciation
Depreciation is provided based on the straight line method. The annual depreciation rates are based on useful lives ranging from five to forty years.
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Dividend Policy
The Company has not yet adopted a policy regarding dividends.
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Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
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Inventories
Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out (FIFO) basis and market is determined on the basis of replacement cost or net realizable value.
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Principles of Consolidation
The accompanying consolidated financials include the accounts of the Company and its subsidiaries from its inception. All significant intercompany accounts and balances have been eliminated in consolidation.
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Revenue Recognition
Revenue is recognized upon the completion of the sales and shipment of the product. The product is sold via the internet and is delivered to customers or to wholesale resellers using a ground courier service.
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Shipping and Handling Costs
The Company classifies freight billed to customers as sales revenue and related freight costs as cost of sales.
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Recent Accounting Pronouncements
The Company does not expect that the adoption of recent accounting pronouncements will have a material impact on its financial statements.
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| December 31, | |
| 2013 | 2012 |
Land | $ 5,651 | $ - |
Machinery and Equipment | 14,380 | 1,700 |
Buildings and Improvements | 43,677 | - |
Total Property and Equipment | 63,708 | 1,700 |
Less: Accumulated Depreciation and Amortization | (3,645) | (680) |
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Net Property and Equipment | $ 60,063 | $ 1,020 |
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Year Ended | Estimated NOL Carry-Forward | NOL Expires | Estimated Tax Benefit from NOL | Valuation Allowance | Net Tax Benefit |
2000 | 8,867 | 2020 | 3,015 | (3,015) | - |
2001 | 13,537 | 2021 | 4,603 | (4,603) | - |
2002 | 13,858 | 2022 | 4,712 | (4,712) | - |
2003 | 18,081 | 2023 | 6,148 | (6,148) | - |
2004 | 1,731 | 2024 | 589 | (589) | - |
2005 | 12,692 | 2025 | 4,315 | (4,315) | - |
2006 | 15,821 | 2026 | 5,379 | (5,379) | - |
2007 | 19,881 | 2027 | 6,760 | (6,760) | - |
2008 | 14,674 | 2028 | 4,989 | (4,989) | - |
2009 | 16,971 | 2029 | 5,770 | (5,770) | - |
2010 | 13,493 | 2030 | 4,558 | (4,558) | - |
2011 | 11,825 | 2031 | 4,021 | (4,021) | - |
2012 | 20,263 | 2032 | 6,889 | (6,889) | - |
2013 | 80,228 | 2033 | 27,278 | (27,278) | - |
| $261,922 |
| $89,026 | $(89,026) | $ - |
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