UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended January 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 333-174404
___________________________________
M STREET GALLERY, INC
.(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida |
45-1443512 |
(State or other jurisdiction or incorporation or organization) |
(I.R.S. Employer Identification No.) |
5175 Club Rd., Haverhill, FL |
33415 |
(Address of principal executive offices) |
(Zip Code) |
Registrants telephone number, including area code: 561-200-7721
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 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 [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller Reporting Company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [ ] No [X]
The registrant had 2,645,000 shares of common stock outstanding as of January 31, 2013
-1-
M STREET GALLERY, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
January 31, 2013 (UNAUDITED) |
April 30, 2012 |
||
Assets |
|||
Current Assets |
|||
Cash |
$ 209 |
$ 1,074 |
|
Total current assets |
$ 209 |
$ 1,074 |
|
Total assets |
$ 209 |
$ 1,074 |
|
Liabilities and Stockholders (Deficit) |
|||
Current Liabilities |
|||
Accounts payable and accrued liabilities |
$5,000 |
$ 6,750 |
|
Accrued compensation related party |
50,000 |
20,000 |
|
Total liabilities |
$55,000 |
$ 26,750 |
|
Stockholders (Deficit) |
|||
Common Stock (50,000,000 shares authorized at $.0001 par, 2,645,000 shares issued and outstanding at January 31, 2013 and April 30, 2012, respectively) |
264 |
264 |
|
Additional paid in capital |
26,636 |
15,986 |
|
Accumulated deficit during development stage |
(81,691) |
(41,926) |
|
Total Stockholders (Deficit) |
(54,791) |
(25,676) |
|
Total Liabilities and Stockholders (Deficit) |
$ 209 |
$ 1,074 |
The accompanying notes are an integral part of the financial statements
-2-
M STREET GALLERY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2013 AND 2012 AND CUMULATIVELY FROM MARCH 11, 2011 (DATE OF INCEPTION) TO
JANUARY 31, 2013
(UNAUDITED)
Three Months Ended |
Three Months Ended |
Nine Months Ended |
Nine Months Ended |
Cumulative From March 11, 2011 (Inception) to |
|
January 31, 2013 |
January 31, 2012 |
January 31, 2013 |
January 31, 2012 |
January 31, 2013 |
|
Revenues (net) |
$ - |
$ 2,800 |
$ - |
$2,800 |
$ 2,800 |
Operating Expenses |
12,195 |
13,299 |
39,765 |
32,204 |
84,491 |
Net (Loss) from Operations Before Provision for Income Tax |
$ (12,195) |
$ (10,499) |
$(39,765) |
$(29,404) |
$(81,691) |
Provision For Income Tax |
- |
- |
- |
- |
- |
Net (Loss) |
$ (12,195) |
$ (10,499) |
$(39,765) |
$(29,404) |
$(81,691) |
Net (Loss) per common share, Basic |
$(0.00) |
$(0.00) |
$(0.01) |
$(0.00) |
$ (0.03) |
Weighted average number of common shares outstanding |
2,645,000 |
2,645,000 |
2,645,000 |
2,645,000 |
2,645,000 |
The accompanying notes are an integral part of the financial statements
-3-
M STREET GALLERY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 2013 AND 2012 AND CUMULATIVELY FROM MARCH 11, 2011 (DATE OF INCEPTION) TO
JANUARY 31, 2013
(UNAUDITED)
Nine Months Ended January 31, 2013 |
Nine Months Ended January 31, 2012 |
Cumulative From March 11, 2011 (Inception) to January 31, 2013 |
|
Cash Flows From Operating Activities: |
|||
Net (Loss) |
$(39,765) |
$(29,404) |
$(81,691) |
Adjustments to reconcile Net (Loss) to Net Cash Provided (Used) in Operating Activities: Expenses paid by stockholder |
- |
1,500 |
1,500 |
Changes in operating assets and liabilities: |
|||
(Increase) Decrease in accounts receivable |
- |
- |
- |
Increase (Decrease) in accounts payable and accrued liabilities |
(1,750) |
5,000 |
5,000 |
Increase in accrued compensation related party |
30,000 |
10,000 |
50,000 |
Net Cash (Used) in Operating Activities |
(11,515) |
(12,904) |
(25,191) |
Cash Flows From Financing Activities: |
|
||
Proceeds of sale of common stock to founder |
- |
- |
250 |
Proceeds of sale of common stock |
- |
- |
14,500 |
Capital contribution by shareholder |
10,650 |
- |
10,650 |
Net cash provided in financing activities |
$ 10,650 |
- |
$ 25,400 |
Net Increase(Decrease) in cash |
(865) |
(12,904) |
209 |
Cash beginning of period |
1,074 |
14,750 |
-0- |
Cash end of period |
$ 209 |
$ 1,846 |
$ 209 |
Supplemental Disclosures of Cash Flow Information: |
|||
Expenses paid with cash |
|||
Income taxes |
$0 |
$0 |
$0 |
Interest expense |
$0 |
$0 |
$0 |
The accompanying notes are an integral part of the financial statements
-4-
M STREET GALLERY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
January 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was organized under the laws of the State of Florida on March 11, 2011.
The Company is in the developmental stage. The Companys plan is to manufacture and sell a comprehensive supply of one of a kind oil on canvas art productions utilizing its website.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development stage companies. A development stage company is one which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues to date.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US Dollars.
The financial information included herein as of January 31, 2013, for the three and nine month period ended January 31, 2013 and 2012, has been presented without an audit, pursuant to accounting principles for the interim financial information generally accepted in the United States of America and the rules of the Securities and Exchange Commission.
-5-
M STREET GALLERY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
January 31, 2013
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). The Company has adopted an April 30 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $209 cash as of January 31, 2013.
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and cash equivalents. The carrying amounts of cash approximate fair value because of the short term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect those estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.
Income Taxes
In accordance with ASC 740, deferred income taxes and benefits will be provided for the results of operations of the Company. The tax effects of temporary differences and carry-forwards that give rise to significant portion of deferred tax assets and liabilities will be recognized as appropriate.
Use of 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, the 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.
-6-
M STREET GALLERY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
January 31, 2013
Revenue Recognition
The company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock Based Compensation
Stock based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Companys net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Companys net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of January 31, 2013.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial positions or cash flow.
NOTE 3 Capital Transactions
In March 2011, the Company sold 2,500,000 shares of their restricted common stock to the President and Founder of the company for $250.
In March 2011, the Company sold 91,000 shares of their restricted common stock, under Regulation S of the Securities Act of 1933, as amended, for the above issuances to non US citizens or residents. The shares were offered at a per share price of $.10, for an aggregate sum of $9,100.
In April, 2011, Pursuant to Rule 505 of Regulation D of the Securities Act of 1933, as amended, the company sold 54,000 shares of restricted common stock for $5,400.
In May, 2011, $1,500 in legal costs associated with the registration was paid for by a principal stockholder/officer as a gift to the company and was accounted for as contributed capital.
In June and July 2012, a total of $2,800 was contributed to the company by a principal stockholder/officer as a gift to the company and was accounted for as contributed capital.
In August 2012, a total of $3,900 was contributed to the company by a principal stockholder/officer as a gift to the company, and was accounted for as contributed capital.
In November 2012 and January 2013, a total of $3,950 was contributed to the company by a principal stockholder/officer as a gift to the company, and was accounted for as contributed capital.
NOTE 4 Related Parties
Commencing November 1, 2011 the CEO and President Mr. Mackenroth has begun accruing a salary of $40,000 per year. The payment of this will be deferred until funds are available.
NOTE 5 Income Taxes
As of January 31, 2013, the company had a net operating loss carry forward for income tax reporting purposes of $81,961 that expire in 15 years.
Federal income taxes at statutory rate |
34% |
State tax rate, net of federal income tax |
4 |
Offsetting Valuation Adjustment |
(38) |
Effective income tax rate |
0% |
No tax benefit is being accrued due to no current expectation of profits.
NOTE 6 Subsequent Events
The Company has evaluated subsequent events from January 31, 2013 through the date whereupon the financial statements were issued and has determined that there are no items to disclose.
-7-
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Business Overview
We were incorporated in the State of Florida on March 11, 2011, for the purpose of providing an online marketplace for art work created by German artist Reinhold Mackenroth, on the internet. M Street Gallery is an active participant in the creation and sale of original oil based paintings. We are fully operational and plan to build on that momentum going forward with our business plan. Our website is located at www.MstreetGallery.com.
We offer a modest array of unique and custom oil on canvas artwork, created by German artist Reinhold Mackenroth, marketed towards individual retail customers. In addition, we also offer custom portraits services.
Results of Operations Three Months and Nine Months Ended January 31, 2013 compared to the Three Months and Six Months Ended January 31, 2012
Revenue
For the three and nine months ended January 31, 2013, we have had no revenue. For the three and nine months ended January 31, 2012, we had revenue of $2,800 and $2,800 respectively.
Other General and Administration Expenses
For the three and nine months ended January 31, 2013, other general and administration expenses were $12,195 and $39,765 as compared to $13,299 and $32,204 for the three months and six months ended January 31, 2012. The decrease of $1,104 or 8.3% for the three months period ended January 31, 2013 and 2012 is viewed as the normalization of our quarterly expenses, now that costs associated with registration have been completed; these expenses are mainly focused on compensation and professional fees. The increase of $7,561 or 23.5% for the nine months period ended January 31, 2013 and 2012 are costs mainly associated with compensation and professional fees. The $10,000 in compensation has been deferred until funds are available.
Net Loss
The net loss for the three and nine months ended January 31, 2013 was $12,195 and $39,765 as compared to $13,299 and $32,204 for the comparable periods in 2012. Change in losses is a result of the above items listed.
Liquidity and Capital Resources
At January 31, 2013, the company had $209 in available cash compared to $1,074 in available cash at April 30, 2012.
For the three months ended January 31, 2013 a total of $3,950 was contributed to the company by a principal stockholder as contributed capital to the company.
Since our current available cash is $209, our principal stockholder has made a commitment to continue providing the company with needed capital contributions until the foreseeable future.
-8-
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable
Item 4. Controls and Procedures.
Our management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded; that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the period covered by this report.
-9-
Part II
Item 1. Legal Proceedings
None
Item 1.a.
Not Applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
-10-
Item 6. Exhibits
31. |
|
Certification of the Principal Executive Officer and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act |
|
||
32. |
|
Certification of the Principal Executive Officer and Chief Financial Officer, pursuant to section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act |
101.
|
Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended January 31, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the Statement of Operations, (ii) the Balance Sheet, (iii) the Statement of Cash Flows (iv) the Notes to Financial Statements tagged as blocks of text. |
-11-
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 11, 2013 |
M STREET GALLERY, Inc. |
|
|
|
|
|
By: |
/s/ Reinhold Mackenroth |
|
Reinhold Mackenroth, Chief Executive Officer, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer |
-12-