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 unaudited consolidated financial statements are the combined statements of operations of the Company and its subsidiaries for the period April 22, 1997 to June 30, 2014.

The accompanying unaudited consolidated financial statements have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the six months ended June 30, 2014 are not necessarily indicative of the results that can be expected for the year ending December 31, 2014.

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 company’s financial assets and liabilities approximate the fair value 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 Company’s 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.

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.

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 June 30, 2014, the Company has $835,102 in excess of federally insured limits.

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.

Long Term Investments

Non-marketable equity investments are carried at cost.  Investments held by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the investment may not be recoverable.  In the event that facts and circumstances indicate that the cost may be impaired, an evaluation of recoverability would be performed.

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 upon consolidation.

Property & Equipment

Property and equipment are stated at cost.  The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the various classes of property, as follows:

Expenditures for additions, improvements and betterments that extend the useful lives of existing assets, if material, are generally capitalized.  Expenditures for maintenance and repairs are charged to expense as incurred. 

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed.

Revenue Recognition

Revenue is recognized upon the completion of the sale 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 Company’s sales delivered within the State.  The Company collects that sales tax from customers and remits the entire amount to the State.  The Company’s 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 June 30, 2014 and 2013, there were no common stock equivalents outstanding.

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915)”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial statements. The provisions of the amendments are effective for the Company’s calendar year 2015, however, early adoption is permitted and, accordingly, we have implemented this guidance effective June 30, 2014.

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 costs.  The Company paid the purchase price in cash at closing.

Property and equipment are stated at cost and consist of the following categories as of June 30, 2014 and December 31, 2013:

During the three months ended June 30, 2014, the Company transferred $41,033 from construction in progress to Buildings & Improvements, as the related asset was completed and ready for its intended use on April 8, 2014.

Note 4 – Long Term Investments

On April 10, 2014, the Company purchased for a price of $30,000 a 1.67% interest in Texstar Preferred Partner Joint Venture III, LP (“Texstar”).  Texstar owns an 80% working interest and a 60% net revenue interest in the Engleke Lease, an oil and gas lease covering the Austin Chalk, Eagle Ford and Buda reservoirs located in the Luling-Banyon field area in Guadalupe County, Texas. This lease contains 14 oil and gas wells, 12 producing wells and2 injection wells that are employing re-stimulation and secondary recovery efforts. This investment is accounted for using the cost method of accounting.  Accordingly, the investment is stated at acquisition cost and distributions are recorded as income when received.  It is not practical to estimate the fair value of this investment; however, management believes that the carrying value at June 30, 2014 was not impaired.

Note 5 - Stockholders’ Equity

The company has authorized 320,000,000 shares, of which 300,000,000 are Common Stock, par value $0.001 per share with 8,040,625 shares of Common Stock issued and outstanding and 20,000,000 shares of Preferred Stock, par value $0.001 per share, with 1,000,000 shares designated as Series A Preferred Stock, $0.001 par with 10,000 shares of Series A Preferred Stock issued and outstanding at June 30, 2014.

The Series A Preferred Stock have the following designations, rights, and preferences:

·         The stated value of each shares is $0.001,

·         Each share shall entitle the holder thereof to 300 votes on all matters submitted to a vote of the stockholders of the Company,

·         Except as otherwise provided in the Certificate of Designation, the Company’s Articles, or by law, the holders of Series A Preferred Stock shall have general voting rights and shall vote together as one class, with all holders of shares of any other capital stock of the Company, on all matters submitted to a vote of stockholders of the Company, and

·         The holders of the Series A Preferred Stock shall not have any conversion rights.

On May 3, 2014, the Company issued 10,000 shares of its common stock for the acquisition of assets classified as Buildings & Improvements at June 30, 2014. These shares were valued based on the fair value of service provided ($10,000).

Note 6 - Significant Transactions with Related Parties

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 Accounting Officer at the time, 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 Campbell’s 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.

On March 17, 2014, the Company sold to: (i) Kent Campbell, its Chief Executive Officer, 6,000 shares of its unregistered preferred stock for a purchase price of $0.10 per share for a total of $600, and (ii) Denis Espinoza, its Chief Operations Officer, 4,000 shares of its unregistered preferred stock for a purchase price of $0.10 per share for a total of $400.

Note 7 - 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.

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 company’s financial assets and liabilities approximate the fair value 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 Company’s 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.

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.

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 June 30, 2014, the Company has $835,102 in excess of federally insured limits.

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.

Long Term Investments

Non-marketable equity investments are carried at cost.  Investments held by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the investment may not be recoverable.  In the event that facts and circumstances indicate that the cost may be impaired, an evaluation of recoverability would be performed.

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 upon consolidation.

Property & Equipment

Property and equipment are stated at cost.  The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the various classes of property, as follows:

Expenditures for additions, improvements and betterments that extend the useful lives of existing assets, if material, are generally capitalized.  Expenditures for maintenance and repairs are charged to expense as incurred. 

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed.

Revenue Recognition

Revenue is recognized upon the completion of the sale 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.

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 June 30, 2014 and 2013, there were no common stock equivalents outstanding.

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915)”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial statements. The provisions of the amendments are effective for the Company’s calendar year 2015, however, early adoption is permitted and, accordingly, we have implemented this guidance effective June 30, 2014.