Item 1. Description of Business.
This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our", “Company” and "Palmdale" mean Palmdale Executive Homes, Corp., unless otherwise indicated.
Our Business - General
We were incorporated on January 14, 2000 under the laws of the state of Nevada. We are an exploration stage company with no revenues to date. As of the date hereof, we can be defined as a "shell" company, an entity which is generally described as having no or nominal operations and with no or nominal assets or assets consisting solely of cash and cash equivalents.
Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
History
We initially intended to purchase either so-called "troubled" property in the area of Palmdale, California or acquire deeds of trust in default held by lenders in the area. As an alternative, we contemplated constructing modular-prefabricated homes in the area. We believed that for little or no money applicable to a down payment, we could acquire the ownership of one or more homes and, in addition, acquire deeds of trust in default on properties.
Given the weak outlook for the real estate market, management decided it was in the best interest of the Company and its shareholders to consider, and pursue, other lines of business.
Current Business
In the wake of record high gold prices, management decided to lease a gold mining property located in Tuolumne County, California. On August 11, 2011, we entered into a Mining Lease and Option to Purchase Agreement (the “Providence Agreement”) with the Ellers Family Revocable Trust of March 24, 2000 (“Ellers”). The property consists of 65 acres of real property interests with 13 unpatented mining claims and 260 acres of Bureau of Land Management (“BLM”) mining claims situated on a hillside in Tuolumne County, California (collectively the “Providence Mines”). The lease has a term of three years. We must pay annual advance royalty amounts of $50,000 for the first year which was paid in 2011, $50,000 in the second year which was paid in 2012 and $60,000 in the final year. We must also pay a net smelter return royalty of 10% during the term of the lease until expiry of the Providence Agreement or the exercise of the option to purchase. The advance royalty payments are credited against any net smelter returns royalties payable during the term year in question. The option to purchase is exercisable for a 75% interest in the property with the Ellers retaining a 25% interest as tenants in common. The purchase price of the 75% interest is $2,000,000 in cash plus the ongoing payment of a net smelter return royalty of 2.5% to Ellers. If the property option is exercised all lease terms and related obligations expire upon the closing of such sale. In addition, pursuant to the Providence Agreement, we are obligated to expend $150,000 per year of the lease developing the property. The Company and Ellers amended the agreement whereby the 2012 exploration obligation is considered met with the Company’s actual expenditures of $21,194 and the 2013 exploration obligation is increased to $200,000. As of the date of this report, the Providence Agreement is in good standing.
Presently we do not have adequate cash or working capital. Our operations have relied on proceeds from equity and debt issuances and advances from related parties. We have not developed the property and carried out limited exploration work. Sufficient exploration will be carried out after we receive adequate funding.
In December 2012, the Company conducted its initial on-site inspection of the Providence group of mines.
From December 4 to December 8, Mr. Joseph Calpito, the Company’s Vice President of Geology, the vendor of the property, a mining consultant with several years of exploration experiences with the Providence Mines and three workers conducted the Company’s initial exploration activities on site and discussed future plans.
The Providence Mines has the following four mines on site:
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the Consuelo Quartz Mine and Mill Site;
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the Bonita Quartz Mine and Mill Site;
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the Fair Play Consolidated Quartz Mine; and
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the Good Enough Quartz Mine.
The exploration included the inspections of the following:
(1)
closed mining shafts on all four mine sites;
(2)
the large tailings dump on the Fair Play Mine located approximately half way to the bottom of the property;
(3)
the cross-cut tunnel close to the bottom that connects all four mines; and
(4)
the Consuelo stamp mill site at the bottom of the property by the creek and the adjacent open area that was used for the mining camp.
Due to the narrow roads and the significant distance to be travelled, a mining consultant joined the team to provide additional guidance as well as a four wheel quad vehicle to transport people and equipment on the property. Based upon his previous exploration and surveying experiences on the property, he led Mr. Calpito to review several quartz outcrops, approximately 1/3 of the distance down the 1300 foot hillside, which had been documented as a “new discovery” approximately a year and half earlier when the property was staked for the thirteen surrounding BLM mining claims.
As part of the exploration, rock chip samples were taken at the new discovery outcrops and inside the cross-cut tunnel. Several grab/soil samples were taken from the top and the slopes of the Fair Play tailings dump, as historical reports indicate that the dump is heavily mineralized with as much as half an ounce of gold per ton but was previously considered not economically viable before modern technologies.
The samples were sent to ALS Minerals in Reno, Nevada. The results are currently being analyzed and interpreted by Mr. Calpito and will form our next course of actions.
Employees
Currently there are no full time or part-time employees of our company. However, our President, Santiago Medina, our Chief Operating Officer, Mr. Defensor and our Vice President-Geology, Mr. Calpito are consultants of our company. We may engage one or more consultants to assist with manegement of our company and to oversee operations at the Providence Mines site. If we are successful at obtaining funds required for exploration and administration and we experience rapid growth, our current officers and directors may be required to hire new personnel to improve, implement and administer our operational, management, financial and accounting systems.
Purchase or Sale of Equipment
We do not intend to purchase any significant equipment over the next twelve months ending December 31, 2013.
Competition
The gold mining industry is fragmented. We compete with other exploration companies looking for gold. We are one of the smallest exploration companies. We are an infinitely small participant in the gold mining market. While we compete with other exploration companies, there is no competition for the exploration or removal of minerals from our property.
We may not have access to all of the supplies and materials we need to begin exploration, which could cause us to delay or suspend operations. Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials in the near future. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.
Government Regulations and Supervision
Our future mineral exploration program will be subject to applicable rules and regulations of the jurisdiction in which we hold properties. Our future operations will likely be subject to rules that may govern:
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Locating claims
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Posting claims
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Working claims
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Reporting work performed
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Geological and geochemical surveying
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Airborne geophysical surveying
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Hand-trenching without the use of explosives
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The establishment of gridlines that do not require the felling of trees
Also, prior to proceeding with any exploration work subject we must apply for required permits. In this notice we will be required to set out the location, nature, extent and duration of the proposed exploration activities. The notice is submitted to the regional office of the Mines Branch, Energy Division.
We currently do not have any pending applications for government approval of our exploration program.
Environmental Law
We are also subject to local and state environmental laws and regulations governing the exploration and development of mining properties. We are responsible to provide a safe working environment, to not disrupt archaeological sites, and to conduct our activities to prevent unnecessary damage to the property.
We anticipate no discharge of water into active stream, creek, river, lake or any other body of water regulated by environmental law or regulation. No endangered species will be disturbed. Restoration of the disturbed land will be completed according to law. All holes, pits and shafts will be sealed upon abandonment of the property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and we know what that will involve from an environmental standpoint.
RISK FACTORS
Much of the information included in this annual report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements".
Our common shares are considered speculative during the development of our new business operations. Prospective investors should consider carefully the risk factors set out below.
Risks Relating to Our Business
Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
As of December 31, 2012, our net loss since inception is $322,142. There can be no assurance that we will generate significant revenues or achieve profitable operations. At December 31, 2012 we had working capital deficit of $311,272.
These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors' report on our financial statements for the year ended December 31, 2012, which are included in this annual report on Form 10-K. Such factors identified in the report are our accumulated deficit since inception, our failure to attain profitable operations and our dependence upon adequate financing to pay our liabilities. If we are not able to continue as a going concern, it is likely investors will lose their investments.
We are in the early stages of our growth and we have not yet generated revenue, which makes it difficult to evaluate whether we will operate profitably.
We are in the early stages of the growth of our company. As a result, we do not have a meaningful historical record of sales and revenues nor an established business track record.
We require substantial funds to determine if mineral reserves exist on our mineral properties.
Any potential development and production of our exploration properties depends upon the results of exploration programs and/or feasibility studies and the recommendations of duly qualified engineers and geologists. Such programs require substantial additional funds. Any decision to further expand our plans on these exploration properties will involve the consideration and evaluation of several significant factors including, but not limited to:
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Costs of bringing the property into production including exploration work, preparation of production feasibility studies and construction of production facilities;
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Availability and costs of financing;
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On-going costs of production;
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Market prices for the products to be produced;
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Environmental compliance regulations and restraints; and
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Political climate and/or governmental regulation and control.
Because of the speculative nature of exploration of mineral properties, we may never discover a commercially exploitable quantity of minerals, our business may fail and investors may lose their entire investment.
We can provide investors with no assurance that exploration on our recently leased mining property will establish that commercially exploitable reserves of minerals exist on our property. Additional potential problems that may prevent us from discovering any reserves of minerals on our property include, but are not limited to, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on our property our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such companies. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claims. If this happens, our business will likely fail.
Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial position.
We have no known mineral reserves and we may not find any gold or silver if we find gold or silver it may not be in economic quantities. If we fail to find any gold or silver or if we are unable to find gold or silver in economic quantities, we will have to suspend operations.
We have no known mineral reserves. Even if we find gold or other valuable minerals, it may not be of sufficient quantity so as to warrant recovery. Additionally, even if we find minerals in sufficient quantity to warrant recovery it ultimately may not be recoverable. Finally, even if any minerals are recoverable, we do not know that this can be done at a profit. Failure to locate minerals in economically recoverable quantities will cause us to suspend operations.
The potential profitability of mineral ventures depends in part upon factors beyond the control of our company and even if we discover and exploit mineral deposits, we may never become commercially viable and we may be forced to cease operations.
The commercial feasibility of mineral properties is dependent upon many factors beyond our control, including the existence and size of mineral deposits in the properties we explore, the proximity and capacity of processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental regulation. These factors cannot be accurately predicted and any one or a combination of these factors may result in our company not receiving an adequate return on invested capital. These factors may have material and negative effects on our financial performance and our ability to continue operations.
We may be adversely affected by fluctuations in ore and precious metal prices.
The value and price of our shares of common stock, our financial results, and our exploration, development and mining activities, if any, may be significantly adversely affected by declines in the price of precious metals and ore. Mineral prices fluctuate widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions of mineral producing countries throughout the world.
The prices used in making resource estimates for mineral projects are disclosed, and generally use significantly lower metal prices than daily metals prices quoted in the news media. The percentage change in the price of a metal cannot be directly related to the estimated resource quantities, which are affected by a number of additional factors. For example, a 10% change in price may have little impact on the estimated resource quantities, or it may result in a significant change in the amount of resources.
Supplies needed for exploration may not always be available.
Competition and unforeseen limited sources of supplies needed for our proposed exploration work could result in occasional spot shortages of supplies of certain products, equipment or materials. There is no guarantee we will be able to obtain certain products, equipment and/or materials as and when needed, without interruption, or on favorable terms. Such delays could affect our proposed business plans.
The loss of Mr. Medina or other key management personnel would have an adverse impact on our future development and could impair our ability to succeed.
Our performance is substantially dependent upon the expertise of our President, Mr. Santiago Medina, Chief Operating Officer, Mr. Defensor, and our Vice President-Geology, Mr. Calpito, and other key management personnel, and our ability to continue to hire and retain personnel. It may be difficult to find sufficiently qualified individuals to replace Messrs. Medina, Defensor or Calpito or other key management personnel if we were to lose any one or more of them. The loss of our current officers or any of our key management personnel could have a material adverse effect on our business, development, financial condition, and operating results.
We do not maintain “key person” life insurance on any of our directors or senior executive officers.
Risks Relating to our Common Stock
We are subject to the 15(d) reporting requirements under the Securities Exchange Act of 1934 which does not require a company to file all the same reports and information as a fully reporting company.
Until our common stock is registered under the Exchange Act, we will not be a fully reporting company, but only subject to the reporting obligations imposed by Section 15(d) of the Securities Exchange Act of 1934.
There is limited public (trading) market for our common stock; therefore, our investors may not be able to sell their shares.
Our common stock is quoted on the OTC Bulletin Board under the symbol “PMDX”. We can provide no assurance that any market for our common stock will ever develop. As a result, stockholders may be unable to liquidate their investments, or may encounter considerable delay in selling shares of our common stock.
A trading market may not develop in the future, and if one does develop, it may not be sustained. If an active trading market does develop, the market price of our common stock is likely to be highly volatile due to, among other things, the nature of our business and because we are a new public company with a limited operating history. Further, even if a public market develops, the volume of trading in our common stock will presumably be limited and likely be dominated by a few individual stockholders. The limited volume, if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit the number of shares that one can purchase or sell in a short period of time.
The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies' securities and that have often been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.
We expect the market price for our common shares will be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our share price. The price at which you purchase our common shares may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you.
We expect the market for our common shares will be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price will be attributable to a number of factors.
First, as noted above, our common shares will be sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price.
Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.
Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behaviour of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.
We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.
You could be diluted from our future issuance of capital stock and derivative securities.
As of December 31, 2012 and the date of this report, we had 3,561,000 shares of common stock outstanding. We are authorized to issue up to 25,000,000 shares of common stock. To the extent of such authorization, our Board of Directors will have the ability, without seeking stockholder approval, to issue additional shares of common stock in the future for such consideration as the Board of Directors may consider sufficient. The issuance of additional common stock in the future may reduce your proportionate ownership and voting power.
You may face significant restrictions on the resale of your shares due to state “blue sky” laws.
Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state.
We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.
Our common stock is subject to the “Penny Stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
Our common stock is considered a “Penny Stock”. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder's ability to buy and sell our stock. In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit investors’ ability to buy and sell our stock and have an adverse effect on the market for our shares.
Item 2.
Item 2. Description of Property.
We currently lease the Providence Mines located in Tuolumne County, California. The property consists of 65 acres of real property interests with 13 unpatented mining claims and 260 acres of Bureau of Land Management (“BLM”) mining claims situated on a hillside. As of the date of this report, the lease agreement is in good standing and we are required to expend $200,000 on exploration in the next 12 months.
Item 3.
Item 3. Legal Proceedings.
We are not currently a party to any legal proceedings.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters.
There is currently no market for our common stock.
We have been assigned the trading symbol of “PMDX”. The shares of common stock currently have a quote published in the OTC Bulletin Board System.
As of April 16, 2013 there were 17 registered shareholders and 3,561,000 shares outstanding.
There are no outstanding options or warrants to purchase, or securities convertible into, our common shares.
We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Although there are no restrictions that limit the ability to pay dividends on our common shares, our intention is to retain future earnings for use in our operations and the expansion of our business.
Recent Sales of Unregistered Securities
On May 16, 2012, we issued we issued 50,000 shares of our common stock for gross proceeds of $25,000 at $0.50 per share. The shares were sold to non-U.S. persons pursuant to the provisions of Regulation S of the Securities Act of 1933.
Equity Compensation Plan Information
We currently do not have any stock option or equity plans.
Item 6.
Item 6. Selected Financial Data.
Not required for smaller reporting companies.
Item 7.
Item 7. Management's Discussion and Analysis or Plan of Operation.
Overview
You should read the following discussion of our financial condition and results of operations together with the consolidated audited financial statements and the notes to consolidated audited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.
Results of Operations
We have not generated since inception.
We posted losses of $192,639 for the year ended December 31, 2012, losses of $63,431 for the year ended December 31, 2011, and losses of $322,142 since inception to December 31, 2012.
Operating expenses for the year ended December 31, 2012 were $181,929 compared to $60,861 in 2011.
Consulting fees for two officers increased by $83,334 from $36,666 in 2011 to $120,000 in 2012 because they started to provide services in September, 2011.
During 2012 we incurred mining exploration expenses of $21,194. During 2011 we did not carry out any exploration work or incur any such costs.
General and administrative expenses related to costs incurred to maintain our good standing as a public company increased from $24,195 to $40,735 due to our increased level of operations and the additional requirement for the filings in 2012.
In 2012 we recorded interest expense of $10,710 on total interest bearing loans of $207,569. In 2011 we recorded interest expense of $2,570 on total interest bearing loan of $82,569.
Financial Condition, Liquidity and Capital Resources
Our principal capital resources have been acquired through notes payable, shareholder advances and the issuance of common stock.
At December 31, 2012, we had a working capital deficit of $311,272 compared to a working capital deficit of $93,633 at December 31, 2011.
At December 31, 2012, our total assets of $142,920 consist of cash balance of $42,920 and mineral property acquisition cost of $100,000; At December 31, 2011, our total assets of $58,753 consist of cash balance of $8,753 and mineral property acquisition cost of $50,000.
At December 31, 2012, our current and total liabilities were $354,192 compared to our current and liabilities of $102,386 as at December 31, 2011.
We have had no revenues from inception. We currently do not have sufficient funds to commence explorations and will have to raise additional capital to meet our obligations under the terms of our current mineral property lease.
During 2012 we used $65,833 in operations, invested $50,000 in acquisition of our mining property, and financed our operations by issuing 50,000 common shares for gross proceeds of $25,000 and two promissory notes for total proceeds of $125,000 at interest rate of 8%.
Cash Requirements
Over the twelve months ending December 31, 2013, we plan to expend a total of approximately $260,000 for lease payment and exploration of the leased mineral property. We estimate that we will also require working capital of approximately $40,000 over the twelve months ending December 31, 2013.
We do not expect to generate no revenue in the near future. We are an exploration stage company.
We intend to develop a mining property we have leased in Tuolumne County, California known as the Providence Mines property.
Over the next twelve months we intend to raise funds through sales of our common stock in private placements to qualified investors, sales of our debt instruments or we may consider alternative methods of funding. These funds will be used to develop our leased mining property. We have no agreements in place to do this at this time. If we fail to raise sufficient funds, we may modify our operations plan accordingly. Even if we do raise funds for operations, there is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. In such event that we do not raise sufficient additional funds by secondary offering or private placement, we will consider alternative financing options, if any, or be forced to scale down or perhaps even cease our operations.
Product Research and Development
Our business plan is focused on the long-term exploration and development of our mineral properties.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the twelve months ending December 31, 2013.
Employees
Currently there are no full time or part-time employees of our company. However, our President, Santiago Medina, our Chief Operating Officer, Mr. Defensor and our Vice President-Geology, Mr. Calpito are consultants of our company. We may engage one or more consultants to assist with manegement of our company and to oversee operations at the Providence Mines site. If business is successful and we experience rapid growth, our current officers and directors may be required to hire new personnel to improve, implement and administer our operational, management, financial and accounting systems.
Going Concern
Due to our being an exploration stage company and not having generated revenues, in their report on the audited financial statements for the year ended December 31, 2012, our auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Recently Issued Accounting Standards and Application of Critical Accounting Policies
Please see Note 1 to the audited financial statements.
Item 8.
Item 8. Financial Statements.
Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
The following financial statements are filed as part of this annual report:
LBB & ASSOCIATES LTD., LLP
10260 Westheimer Road, Suite 310
Houston, TX 77042
Phone: (713) 800-4343 Fax: (713) 456-2408
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Palmdale Executive Homes, Corp.
(An Exploration Stage Company)
Las Vegas, Nevada
We have audited the accompanying balance sheets of Palmdale Executive Homes, Corp. (the “Company”) as of December 31, 2012 and 2011, and the related statements of operations, stockholders' deficit, and cash flows for each of the years then ended and for the period from January 14, 2000 (inception) through December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the statements of operations, stockholders’ deficit and cash flows for the period from January 14, 2000 (inception) to December 31, 2009, which totals reflected a deficit of $50,607 accumulated during the exploration stage. Those financial statements and cumulative totals were audited by other auditors whose report dated February 17, 2010, expressed an unqualified opinion on those statements and cumulative totals, and included an explanatory paragraph regarding the Company’s ability to continue as a going concern. Our opinion, insofar as it relates to amounts included for that period is based on the report of other independent auditors, mentioned above.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Palmdale Executive Homes, Corp. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years then ended and for the period from January 14, 2000 (inception) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2013 raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP
Houston, Texas
April 12, 2013
Report of Independent Registered Public Accounting Firm
To the Board of Directors
Palmdale Executive Homes, Corp.
We have audited the accompanying balance sheet of Palmdale Executive Homes, Corp. (A Development Stage Enterprise) as of December 31, 2009 and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended and the period January 14, 2000 (inception) through December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our auditsin accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Palmdale Executive Homes, Corp. (A Development Stage Enterprise) as of December 31, 2009 and the results of its operations and cash flows for the year then ended and the period January 14, 2000 (inception) through December 31, 2009, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has limited operations and has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Kyle L. Tingle, CPA, LLC
February 17, 2010
Las Vegas, Nevada
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATION
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the financial statements.
PALMDALE EXECUTIVE HOMES, CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Nature of Business and Significant Accounting Policies
Palmdale Executive Homes, Corp. (“Company”) was organized January 14, 2000 under the laws of the State of Nevada. The Company is a gold and mineral exploration company which engages in acquiring, exploring and evaluating mineral properties and is currently focused on its mineral property interests located in the state of California. The company is in the exploration stage and has not earned revenues from its mining properties or claims.
Exploration Stage Company
The Company complies with Accounting Standard Codification (“ASC”) 915 for its characterization of the Company as an Exploration Stage Company.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect 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 and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Mineral Properties
Mineral properties include the cost of advance minimum royalty payments, the cost of capitalized mineral property leases, and mineral property acquisition costs. Expenditures for exploration and development on specific mineral properties with no proven reserves are expensed as incurred. Once a mineral reserve has been established, all future development costs will be capitalized and charged to operations on a unit-of-production method based on estimated recoverable reserves. Mineral property costs will be amortized against future revenues or charged to operations at the time the related mineral property is determined to have impairment in value.
Carrying Value of Mineral Property Interests
The cost of acquiring mineral property interests is capitalized. Capitalized acquisition costs are expensed in the period in which it is determined that the mineral property has no future economic value. Capitalized amounts may also be written down if future cash flows, including potential sales proceeds related to the property, are estimated to be less than the carrying value of the property. The Company reviews the carrying value of mineral property interests periodically, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment exceeds the property’s estimated fair value.
Income taxes
The Company accounts for income taxes under FASB ASC 740 “INCOME TAXES.” Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change inn tax rates is recognized in come in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not the Company will not realize tax assets through future operations.
Fair Value of Financial Instruments
The Company’s financial instruments as defined by FASB ASC 825-10-50 include accounts payable and officer advances. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2012.
The Company does not have any assets or liabilities measured at fair market value on a recurring basis at December 31, 2012 and at December 31, 2011. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the years ended December 31, 2012 and December 31, 2011.
Share Based Compensation
FASB ASC 718 “COMPENSATION - STOCK COMPENSATION” prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock option, restricted stock, employee stock purchase planes and stock appreciation rights, may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (A) the option to settle by existing equity instruments lacks commercial substance or (B) the present obligation is implied because of an entity’s past practice or stated policies. If a present obligation exists, the transaction should be recognized as a liability, otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “EQUITY - BASED PAYMENTS TO NON-EMPLOYEES.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable; (A) the goods or services received, or (B) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Financial Instruments
As of December 31, 2012, the Company's financial instruments consist primarily of cash. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Net Earnings (Loss) per Share
Net loss per share is calculated in accordance with FASB ASC 260, “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.
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 sufficient cash to meet its current commitments nor does it have assets 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 which raises substantial doubt about the Company’s ability to continue as a going concern.
Newly Adopted Accounting Pronouncements
Management does not expect the future adoption of any recently issued accounting pronouncement to have a significant impact on its financial position, results of operations, or cash flows.
Note 2 - Mining Lease and Option to Purchase Agreement
Effective August 11, 2011, the Company entered into a Mining Lease and Option to Purchase Agreement (the “Property Agreement”) with the Ellers Family Revocable Trust of March 24, 2000 (the “Owner”). Under the terms of the Agreement, the Company leased a mining property consisting of 65 acres of real property interests and 13 unpatented mining claims situated in Tuolumne County, California for a term of three years.
In accordance with the Agreement the Company is obligated to expend $150,000 per year of the lease developing the property, and pay annual advance royalty amounts of $50,000 for the first year (paid by an officer of the Company on behalf of the Company as of December 31, 2011), $50,000 in the second year (paid) and $60,000 in the final year.
In addition, the Company must pay a net smelter return royalty of 10% during the term of the lease until expiry of the Agreement or the exercise of the option to purchase. The option to purchase may be exercised by the Company, in its sole discretion, at any time during the three year term of the Agreement. The option to purchase is exercisable for a 75% interest in the property with the Owner retaining a 25% interest as tenants in common. The purchase price of the 75% interest is $2,000,000 in cash plus the ongoing payment of a net smelter return royalty of 2.5% to the Owner.
In connection with the Property Agreement, the Company entered into a Finder’s Fee Agreement with Tosca Capital Corp. (“Tosca”), a private British Columbia company, to formalize Tosca’s role in identifying a suitable mining property for the Company to lease or purchase, whereby the Company issued 11,000 shares of the Company’s common stock to Tosca on August 11, 2011. The grant date fair value of the common stock was $1,870 and was expensed during the period.
Effective August 9, 2012 the Company and the Owner amended the Property Agreement whereby the Company’s obligation for the annual exploration expenditures of $150,000 are to be met by December 31, 2012, December 31, 2013 and August 11, 2014.
Effective December 31, 2012, the Company and the Owner further amended the Property Agreement whereby the Company’s obligation for the annual exploration expenditures were met with its actual expenditures of $21,194 by December 31, 2012, and $200,000 and $150,000 are to be met by December 31, 2013 and December 31, 2014 respectively.
Note 3 - Promissory Notes
On August 25, 2012, the Company issued an unsecured promissory note for cash proceeds of $75,000 with a term of one year and simple annual interest rate of 8% repayable on August 25, 2013. As at December 31, 2012, interest expense of $2,100 incurred during the year was accrued on the promissory note and is included in accounts payable.
On November 26, 2012, the Company issued an unsecured promissory note for cash proceeds of $50,000 with a term of one year and simple annual interest rate of 8% repayable on November 26, 2013. As at December 31, 2012, interest expense of $383 incurred during the year was accrued on the promissory note and is included in accounts payable.
Note 4 - Related Party Advance and Promissory Note
On April 22, 2011, Tricia A. Nickson, our former Chief Financial officer, sold 2,360,000 shares of the Company’s common stock to Santiago Medina, our current President and Chief Executive Officer. As part of the transaction, Ms. Nickson assigned her total balance of $32,569 owed by the Company at April 22, 2011 to Mr. Medina. 
During the year ended December 31, 2011, Mr. Santiago Medina paid $50,000 on behalf of the Company in accordance with the Property Agreement executed on August 11, 2011.
On August 11, 2011, the Company issued an unsecured promissory note for the full balance of $82,569 owed to Mr. Medina. The promissory note of $82,569 has a term of one year and bears simple annual interest rate of 8%. On August 11, 2012, the Company defaulted on the promissory note with the interest rate increased to 13% under the term of the promissory note. As at December 31, 2012, interest expense of $8,227 was incurred during the year and a total of $10,797 was accrued on the promissory note and is included in accounts payable and accrued expenses - related party. No demand has been made on this note through the date of filing.
During the year ended December 31, 2011, Mr. Medina advanced an additional $1,860 to the Company, which was outstanding on December 31, 2012. The advance is non-interest bearing, unsecured and due on demand.
Note 5 - Related Party Transactions
On September 7, 2011 the Company entered into a consulting agreement with the Chief Operating Officer (“COO”) of the Company at consulting fee of $5,000 per month. During the year ended December 31, 2012, consulting fees of $60,000 were recorded and $58,333 was owed to the COO at December 31, 2012.
On September 7, 2011 the Company entered into a consulting agreement with the Vice President of Geology (the “VP”) of the Company at consulting fee of $5,000 per month. During the year ended December 31, 2012, consulting fees of $60,000 were recorded and $58,333 was owed to the VP at December 31, 2012.
Note 6 - Stockholders’ Equity
Common Stock
The authorized stock of the Company consists of 25,000,000 common shares with par value of $0.001.
On February 20, 2000, the Company issued 3,400,000 shares of its common stock for gross cash proceeds of $34,000.
On August 11, 2011, the Company issued 11,000 shares of its common stock for services valued at $1,870.
On November 24, 2011, the Company received gross cash proceeds of $50,000 for 100,000 shares of its common stock, subscribed for at $0.50 per share.
On May 16, 2012 the Company issued 50,000 shares of its common stock for gross cash proceeds of $25,000 at $0.50 per share.
Note 7 - Income Taxes
Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.
The provision for refundable Federal income tax consists of the following:
The cumulative tax effect at the expected rate of 34% of significant items comprising the Company’s net deferred tax amount is as follows:
At December 31, 2012, the Company had an unused net operating loss carryover approximating $322,000 that is available to offset future taxable income, expiring beginning in 2020.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.
Item 9A.
Item 9A. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate, to allow for timely decisions regarding required disclosure. As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer Santiago Medina who is also our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
As of December 31, 2012 we carried out an evaluation, under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, Mr. Medina concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report. There have been no changes in our internal controls over financial reporting that occurred during the fiscal year ended December 31, 2012 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management has employed a framework consistent with Exchange Act Rule 13a-15(c), to evaluate internal control over financial reporting described below. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principals.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2012. As a result of this assessment, Mr. Medina concluded that, as of December 31, 2012, our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
During the year ended December 31, 2012 there were no changes in our internal controls that have materially affected or are reasonably likely to have materially affected our internal control over financial reporting.
Our management, including the Chief Executive Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officer, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
DIRECTORS AND EXECUTIVE OFFICER, PROMOTERS AND CONTROL PERSONS
Our directors and executive officer, their ages, positions held, and duration of such, are as follows:
Business Experiences
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Santiago Medina
Mr. Medina became our President, Chief Executive Officer, Treasurer, Chief Financial Officer and Director on May 18, 2011.
From 2002 to 2003, Mr. Medina was an assistant geologist at Comisión de Fomento Minero (COFOMI) in Mexico. Since 2003 Mr. Medina has worked as a mining consultant and exploration manager for numerous mining companies on advanced exploration projects. Mr. Medina received his Master in Science, Geology from the Instituto Tecnológico y de Estudios Superiores de Monterrey in Monterrey, Mexico in 2002. Because of Mr. Medina’s geologist’s credential and his substantial mining business experience, we have concluded that he should serve as a director of the Company.
Matias Jon Tan Defensor
Effective September 7, 2011, Matias Defensor was elected as a director and was appointed Chief Operating Officer of the Company. Mr. Defensor has been the CEO/President for AMD Starlight Mining Corp from 2009 to the present and Director for Pecanto Mining Corp. from 2008 until the present. His responsibilities include overall management and the oversight of various projects in both roles. From 2004 to 2010, Mr. Defensor served as a consultant for the House of Representatives in Bastion Hills, Philippines. From 2001 to 2004, Mr. Defensor served as Vice-President for Marketing at Asia Concept Development Corp. Mr. Defensor brings extensive experience in a variety of areas, including coordinating and implementing various projects throughout the world. Mr. Defensor also serves as President of the Rotary Club of Sta. Mesa and Director for the Capital Hills Club in the Philippines. Mr. Defensor graduated with a Bachelor of Science in Business Administration from the National College of Business and Arts, Quezon City, Philippines in 1990. Because of Mr. Defensor’s substantial business experiences and especially his experiences with mining companies, we have concluded that he should serve as a director of the Company.
Joseph Calpito
On September 7, 2011, Joseph Calpito was appointed Vice President-Geology of the Company. Mr. Calpito is qualified as a Senior Geologist. From 2009 to the present, he has been serving as an Exploration Manager for a Papua New Guinea Gold Project on behalf of Mining Asia, Ltd. His responsibilities include strategic and overall systematic planning for this project. From 2006 to 2008 Mr. Caplito served as Senior Exploration Geologist for Sacre-Coeur Minerals, Ltd. Mr. Calpito has also served as Chief Mine Geologist / Executive Assistant to the President & CEO, Quarry Superintendent and several other leading roles within the discipline of Geology. Mr. Calpito has accumulated extensive experience in the area of Geology, including coordinating and implementing various projects throughout the world. Mr. Calpito has over 30 years of field experience and Bachelor of Science degree in Mining Engineering. Because of Mr. Calpito’s geologist’s credential and his substantial mining business experiences, we have concluded that he should serve as a director of the Company.
Family Relationships
There are no family relationships between any of our directors or executive officer.
Involvement in Certain Legal Proceedings
None of our officers and directors was involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None of our directors, executive officer, future directors, 5% shareholders, or any members of the immediate families of the foregoing persons have been indebted to us during the last fiscal year or the current fiscal year in an amount exceeding $60,000.
None of the current directors or officer of our company are related by blood or marriage.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act requires our executive officer and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2012, all filing requirements applicable to its officer, directors and greater than ten percent beneficial owners were complied with.
Item 11.
Item 11. Executive Compensation.
Employment/Consulting Agreements
On September 7, 2011 the Company entered into a consulting agreement with Matias Defensor. Under the terms of the agreement, Mr. Defensor is providing management services to the Company and acting as the Company’s Chief Operating Officer. Mr. Defensor is entitled to consulting fee of $5,000 per month plus approved expenses. At December 31, 2012 the Company had a balance of $58,333 owed to Mr. Defensor.
On September 7, 2011 the Company entered into a consulting agreement with Joseph Calpito. Under the terms of the agreement, Mr. Calpito is providing geological oversight services to the Company and acting as the Company’s Vice President-Geology. Mr. Calpito is entitled to a consulting fee of $5,000 per month plus approved expenses. At December 31, 2012 the Company had a balance of $58,333 owed to Mr. Calpito.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officer, except that our directors and executive officer may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officer, except that stock options may be granted at the discretion of our board of directors.
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officer to compensate such officer in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Stock Options/SAR Grants
There were no grants of stock options or stock appreciation rights to any officer, directors, consultants or employees of ours during the fiscal year ended December 31, 2012.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Values
There were no stock options outstanding as at December 31, 2012.
Directors Compensation
We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended December 31, 2012.
We have no present formal plan for compensating our directors for their service in their capacity as directors, although in the future, such directors are expected to receive compensation and options to purchase shares of common stock as awarded by our board of directors or (as to future options) a compensation committee which may be established in the future. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. The board of directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. Other than indicated in this annual report, no director received and/or accrued any compensation for his or her services as a director, including committee participation and/or special assignments.
Report on Executive Compensation
Our compensation program for our executive officer is administered and reviewed by our board of directors. Historically, executive compensation consists of a combination of base salary and bonuses. Individual compensation levels are designed to reflect individual responsibilities, performance and experience, as well as the performance of our company. The determination of discretionary bonuses is based on various factors, including implementation of our business plan, acquisition of assets, development of corporate opportunities and completion of financing.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as at April 16, 2012, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock, and by each of our current directors and executive officer. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
(1)
Based on 3,561,000 shares of common stock issued and outstanding as April 16, 2012. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person
Future Changes in Control
We are unaware of any contract or other arrangement, the operation of which may, at a subsequent date, result in a change in control of our company.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Other than as described under the heading "Executive Compensation", or as set forth below, there are no material transactions with any of our directors, officer or control person that have occurred during the last fiscal year.
On April 22, 2011, Tricia A. Nickson sold 2,360,000 shares of the Company’s common stock to Santiago Medina. As part of the transaction, Ms. Nickson assigned her total balance of $32,569 owed by the Company at April 22, 2011 to Mr. Medina. In addition, Mr. Santiago Medina paid $50,000 on behalf of the Company in accordance with the Property Agreement executed on August 11, 2011. On August 11, 2011, the Company issued an unsecured promissory note for the full balance of $82,569 owed to Mr. Medina. The promissory note of $82,569 has a term of one year and bears simple annual interest rate of 8% which was increased to 13% upon the promissory note becoming default on August 11, 2012.
During the year ended December 31, 2011, Mr. Medina advanced an additional $1,860 to the Company, which was outstanding on December 31, 2012. The advance is non-interest bearing, unsecured and due on demand.
Item 14.
Item 14. Principal Accountant Fees and Services
Audit Fees
The aggregate fees billed by LBB & Associates Ltd., LLP for professional services rendered for the audit of our annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 were estimated to be $6,500.
Audit Related Fees
For the fiscal year ended December 31, 2012, the aggregate fees billed for assurance and related services by LBB & Associates Ltd., LLP relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above, was $0.
Tax Fees
For the fiscal year ended December 31, 2012, the aggregate fees billed by LBB & Associates Ltd., LLP for other non-audit professional services, other than those services listed above, totalled $0.
We do not use LBB & Associates Ltd., LLP for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage LBB & Associates Ltd., LLP to provide compliance outsourcing services.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before LBB & Associates Ltd., LLP is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
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approved by our audit committee (which consists of entire Board of Directors); or
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entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
The audit committee pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules, and therefore, the audit committee does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the audit committee either before or after the respective services were rendered.
The audit committee has considered the nature and amount of fees billed by LBB & Associates Ltd., LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining LBB & Associates Ltd., LLP's independence.
Item 15.
Item 15. Exhibits.
Exhibit Number and Exhibit Title
(3) Charter and By-laws
(10) Material Contracts
(31) Section 302 Certification
(32) Section 906 Certification
___________
*Filed herewith
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PALMDALE EXECUTIVE HOMES, CORP.
Date: April 16, 2013
By:
/s/ Santiago Medina
Santiago Medina
Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
(Principal Executive and Principal Financial and Accounting Officer and Director)