UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED August 31, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER: 333-165685
Hidden Ladder, Inc.
-----------------
(Exact name of registrant as specified in its charter)
Florida 27-1933597
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
David Johnson
2803 Isle Street, Rocklin CA 95765
530-409-0453
---------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a 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]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. 9,000,000 shares of
common stock are issued and outstanding as of.
TABLE OF CONTENTS
Page
No.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at August 31, 2010 (unaudited) and
February 28, 2010 ............................................... 4
Statements of Operations .......................................... 5
Statements of Stockholders' Equity ................................ 6
Statements of Cash Flows .......................................... 7
Notes to Financial Statements (unaudited) ......................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. .......................................... 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk. ....... 11
Item 4T. Controls and Procedures. .......................................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. ................................................ 14
Item 1A. Risk Factors. ..................................................... 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. ...... 14
Item 3. Defaults Upon Senior Securities. .................................. 14
Item 4. Submission of Matters to a Vote of Security Holders. .............. 14
Item 5. Other Information. ................................................ 14
Item 6. Exhibits. ......................................................... 14
2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking
statements. These statements, identified by words such as "plan", "anticipate",
"believe", "estimate", "should", "expect" and similar expressions include our
expectations and objectives regarding our future financial position, operating
results and business strategy. These statements are subject to known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward - looking
statements. These forward-looking statements were based on various factors and
were derived utilizing numerous assumptions and other factors that could cause
our actual results to differ materially from those in the forward-looking
statements. These factors include, but are not limited to, our ability to secure
suitable financing to continue with our existing business or change our business
and conclude a merger, acquisition or combination with a business prospect,
economic, political and market conditions and fluctuations, government and
industry regulation, interest rate risk, U.S. and global competition, and other
factors. Most of these factors are difficult to predict accurately and are
generally beyond our control. You should consider the areas of risk described in
connection with any forward-looking statements that may be made herein. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. Readers should carefully review
this report in its entirety, including but not limited to our financial
statements and the notes thereto and the risks described in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2009. We advise you to carefully
review the reports and documents we file from time to time with the Securities
and Exchange Commission (the "SEC"), particularly our quarterly reports on Form
10-Q and our current reports on Form 8-K. Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events.
OTHER PERTINENT INFORMATION
When used in this report, the terms, "we," the "Company," "our," and "us" refers
to Hidden Ladder, Inc. a Florida corporation.
3
Hidden Ladder, Inc.
(A Development Stage Company)
Balance Sheets
August 31, 2010
ASSETS
------
AUGUST 31, FEBRUARY 28,
2010 2010
UNAUDITED AUDITED
---------- -----------
CURRENT ASSETS
Cash and cash equivalents ......................... $ 3,110 $ 9,000
---------- -----------
Total current assets ............................ $ 3,110 $ 9,000
---------- -----------
---------- -----------
TOTAL ASSETS ...................................... $ 3,110 $ 9,000
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
CURRENT LIABILITIES
Accounts payable & Accrued liabilities ............ $ 650 $ 3,600
---------- -----------
Total liabilities ............................... 650 3,600
========== ===========
STOCKHOLDERS' EQUITY
Capital Stock
Authorized:
250,000,000 common shares, $0.0001 par value
Issued and outstanding shares as of August 31,
2010 and February 28, 2010, 9,000,000 .......... $ 900 $ 900
Additional paid-in capital ...................... 8,100 8,100
Deficit accumulated during the development stage (6,540) (3,600)
---------- -----------
Total Stockholders' Equity ........................ 2,460 5,400
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...... $ 3,110 $ 9,000
========== ===========
The accompanying notes are an integral part of these financial statements.
4
Hidden Ladder, Inc.
(A Development Stage Company)
Statements of Operations
For the period February 23, 2010 to August 31, 2010
FOR THE PERIOD
FROM INCEPTION
THREE MONTHS SIX MONTHS FEBRUARY 23,
ENDED ENDED 2010 TO
AUGUST 31, AUGUST 31, AUGUST 31,
2010 2010 2010
------------ ------------ --------------
REVENUES ...................... $ -- $ -- $ --
------------ ------------ --------------
EXPENSES
General & Administrative .... $ 124 $ 161 $ 261
Professional Fees ........... 1,879 2,779 6,279
------------ ------------ --------------
2,003 2,940 6,540
Loss Before Income Taxes ...... $ (2,003) $ (2,940) $ (6,540)
------------ ------------ --------------
Provision for Income Taxes .... -- -- --
------------ ------------ --------------
Net Loss ...................... $ (2,003) $ (2,940) $ (6,540)
============ ============ ==============
PER SHARE DATA:
Basic and diluted loss per
common share ............... $ -- $ -- $ --
============ ============ ==============
Basic and diluted weighted
average common shares
outstanding ................ 9,000,000 9,000,000 9,000,000
============ ============ ==============
The accompanying notes are an integral part of these financial statements.
5
Hidden Ladder, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity/(Deficit)
Deficit
Accumulated
Common Stock Additional During the
------------------ Paid-in Development
Shares Amount Capital Stage Total
---------- ------ ---------- ----------- -------
Inception - February 23, 2010 . -- $ -- $ -- $ -- $ --
Common shares issued to
Founder for cash at
$0.001 per share (par
value $0.0001) on
February 23, 2010 .......... 9,000,000 900 8,100 -- 9,000
Loss for the period from
inception on February 23,
2010 to February 28, 2010 .. -- -- -- (3,600) (3,600)
---------- ------ ---------- ---------- -------
Balance - February 28, 2010 ... 9,000,000 900 8,100 (3,600) 5,400
Loss for the quarter ended
May 31, 2010 ................. -- -- -- (937) (937)
---------- ------ ---------- ---------- -------
Balance May 31, 2010 .......... 9,000,000 900 8,100 (4,537) 4,463
Loss for the quarter ended
August 31, 2010 .............. -- -- -- (2,003) (2,003)
---------- ------ ---------- ---------- -------
Balance August 31, 2010 ....... 9,000,000 $ 900 $ 8,100 $ (6,540) $ 2,460
========== ====== ========== ========== =======
The accompanying notes are an integral part of these financial statements.
6
Hidden Ladder, Inc.
(A Development Stage Company)
Statements of Cash Flow
For the period February 23, 2010 to August 31, 2010
FOR THE PERIOD
FROM INCEPTION
SIX MONTHS FEBRUARY 23,
ENDED 2010 TO
AUGUST 31, AUGUST 31,
2010 2010
------------ --------------
OPERATING ACTIVITIES
Net Loss ..................................... $ (2,940) $ (6,540)
Changes in Operating Assets and Liabilities:
Increase (decrease) in accounts payable
and accrued liabilities .................... (2,950) 650
------------ -------------
Net cash used in operating activities ........ (5,890) (5,890)
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FINANCING ACTIVITIES
Common stock issued for cash ................. -- 9,000
------------ -------------
Net cash provided by financing activities .... -- 9,000
------------ -------------
INCREASE IN CASH AND CASH EQUIVALENTS .......... (5,890) 3,110
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,000 --
------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..... $ 3,110 $ 3,110
============ =============
Supplemental Cash Flow Disclosures:
Cash paid for:
Interest expense ........................... $ -- $ --
============ =============
Income taxes ............................... $ -- $ --
============ =============
The accompanying notes are an integral part of these financial statements.
7
Hidden Ladder, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(AUGUST 31, 2010)
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Hidden Ladder, Inc. is a development stage company, incorporated in the State of
Florida on, February 23, 2010, to design a safety product for homeowners. The
Hidden Ladder will provide a hidden escape ladder for homeowners. The intent is
to provide the homeowner comfort knowing that if there is a fire in their home
they will be able to escape safely from the 2nd story. It will neatly fold up
and hang under the window and it will not be an eyesore in the home, but at the
same time it will be easily accessible.
Hidden Ladder's plan is to sell wholesale only, targeting select retailers. The
Company has identified four segments in the retail industry: Chain-retailers,
single retailers, homebuilders, and mail order & Internet catalogs The Company
believes that based on the ability of chain-retailers to buy in bulk, this
segment has the greatest opportunity. In this segment, the Company identified
two categories of interest: home-improvement and safety.
Through August 31, 2010 the Company was in the development stage and has not
carried on any significant operations and has generated minimal revenues. The
Company has incurred losses since inception aggregating $6,540. The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern. These matters, among others, raise substantial doubt about
the ability of the Company to continue as a going concern. These financial
statements do not include any adjustments to the amounts and classification of
assets and liabilities that may be necessary should the Company be unable to
continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
Accounting Basis
----------------
The Company is currently a development stage enterprise reporting under the
provisions of Accounting Standards Codification ("ASC") 915 "Development Stage
Enties", which was previously Statement of Financial Accounting Standards
("SFAS") No. 7.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and such
adjustments are of a normal recurring nature. These financial statements should
be read in conjunction with the financial statements for the year ended February
28, 2010 and notes thereto and other pertinent information contained in our Form
S-1/A the Company has filed with the Securities and Exchange Commission (the
"SEC").
The results of operations for the three-month period ending August 31, 2010 are
not necessarily indicative of the results for the full fiscal year ending
February 28, 2011.
8
Hidden Ladder, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(AUGUST 31, 2010)
Cash and Cash Equivalents
-------------------------
For the purpose of the financial statements cash equivalents include all highly
liquid investments with maturity of three months or less.
Earnings (Loss) per Share
-------------------------
The basic earnings (loss) per share are calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares outstanding during the year. The diluted earnings (loss) per share are
calculated by dividing the Company's net income (loss) 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 as of the first of the year for any
potentially dilutive debt or equity. There are no diluted shares outstanding for
any periods reported.
Dividends
---------
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown, and none are contemplated in
the near future.
Income Taxes
------------
The Company adopted FASB ASC 740, Income Taxes, at its inception deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets, including tax loss and credit carryforwards, 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. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Deferred income tax expense represents the change during the period in the
deferred tax assets and deferred tax liabilities. The components of the deferred
tax assets and liabilities are individually classified as current and
non-current based on their characteristics. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized. No
deferred tax assets or liabilities were recognized as of August 31, 2010.
Advertising
-----------
The Company will expense advertising as incurred. The advertising since
inception has been $0.00.
9
Hidden Ladder, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(AUGUST 31, 2010)
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue and Cost Recognition
----------------------------
The Company has no current source of revenue; therefore the Company has not yet
adopted any policy regarding the recognition of revenue or cost.
Property
--------
The company does not own any real estate or other properties. The company's
office is located 2803 Isle Street, Rocklin CA 95765. Our contact number is
530-409-0453. The business office is located at the home of David Johnson, the
CEO of the company at no charge to the company.
Recently Issued Accounting Pronouncements
-----------------------------------------
The Company has adopted all recently issued accounting pronouncements. The
adoption of the accounting pronouncements, including those not yet effective, is
not anticipated to have a material effect on the financial position or results
of operations of the Company.
NOTE 3. SUBSEQUENT EVENTS
We have evaluated events and transactions that occurred subsequent to August 31,
2010 through September 9, 2010, the date the financial statements were
issued, for potential recognition or disclosure in the accompanying financial
statements. Other than the disclosures above, we did not identify any events or
transactions that should be recognized or disclosed in the accompanying
financial statements.
10
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Overview
Hidden Ladder, Inc. is a development stage company and was incorporated in
Florida on February 23, 2010, to design a hidden escape ladder for homeowners.
It has no operations and in accordance with ASC 915 is considered to be in the
development stage.
Results of Operations
---------------------
The following discussion should be read in conjunction with the condensed
financial statements and segment data and in conjunction with the Company's S-1
and amended S-1/A's. Results or interim periods may not be indicative of results
for the full year.
During the first three months of the fiscal year 2010 the Company was focused on
preparing the documentation required to be filed with the Securities and
Exchange Commission (SEC) and with the Financial Industry Regulatory Authority
(FINRA). On March 25, 2010 the Company filed a Registration Form S-1 and also
filed S-1/A Amendments with the SEC. The Registration Form S-1 and S-1/A
Amendments were deemed effective as of August 19, 2010. Results of Operations
The Company did not generate any revenue during the quarter ended August 31,
2010.
Total expenses the three (3) months ending August 31, 2010 were $2,003 resulting
in an operating loss for the period of $2,003. Basic net loss per share
amounting to $.001 for the three (3) months ending August 31, 2010.
General and Administrative expenses consisted primarily of filing and bank fees
were $124 and professional fees for legal and accounting services were $1,879
for the three (3) months ending August 31, 2010 respectively ..
Liquidity and Capital Resources
-------------------------------
At August 31, 2010 we had working capital of $2,460 consisting of cash on hand
of $3,110 net of accounts payable as compared to working capital of $5,400 at
February 28, 2010 and cash of $9,000.
Net cash used in operating activities for the six months ended August 31, 2010
was $5,890 and $5,890 for the period from inception on February 23, 2010 through
August 31, 2010.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to a smaller reporting company.
11
ITEM 4T. CONTROLS AND PROCEDURES
Management's Report On Internal Control Over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company;
and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.
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. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of August 31, 2010 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
12
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of August 31, 2010.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
Management's Remediation Initiatives
------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by August 31, 2011. Additionally, we plan to test our updated
controls and remediate our deficiencies by December 31, 2010.
Changes in internal controls over financial reporting
-----------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Not applicable to a smaller reporting company.
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.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive
officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and
accounting officer
32.1 Section 1350 Certification of principal executive officer and principal
financial and accounting officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hidden Ladder, Inc.
BY: /s/ David Johnson
-------------------
David Johnson
President, Secretary, Treasurer,
Principal Executive Officer,
Principal Financial and Accounting
Officer and Sole Director
Dated: September 9, 2010
14