ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
·our future strategic plans
·our future operating results;
·our business prospects;
·our contractual arrangements and relationships with third parties;
·the dependence of our future success on the general economy;
·our possible future financing; and
·the adequacy of our cash resources and working capital.
·the Covid-19 Pandemic.
From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the Securities and Exchange Commission. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements". Such statements are qualified in their entirety by reference to and are accompanied by the above discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.
Covid-19 Pandemic
Management is currently aware of the global and domestic issues arising from the Covid-19 pandemic and the possible direct and indirect affects on the company's operations which could have a material adverse effect on the company's current financial position, future results of operations, or liquidity, because its current operations are limited. However, investors should also be aware of factors, which includes the possibility of Covid-19 affects on operational status, could have a negative impact on the Company's prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources, as the Company implements its business plan. These may include: (i) variations in revenue, (ii) possible inability to attract investors for the Company's equity securities or otherwise raise adequate funds from any source should the Company seek to do so, (iii) increased governmental regulation or significant changes in that regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving the Company or to which the Company may become a party in the future, and (vi) a very competitive and rapidly changing operating environment.
The risks identified here are not all inclusive. New risk factors emerge from time to time and it is not possible for management to predict all of such risk factors, nor can it assess the impact of all such risk factors on the company's business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.
The financial information set forth in the following discussion should be read in conjunction with the financial statements of Gold Rock Holdings, Inc. included elsewhere herein.
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Business
Gold Rock Holdings, Inc., (Gold Rock) a Nevada corporation, provides engineering and construction management services, produce site-plans, construction drawings, cost computations, fiber network designs, and other related construction services. In effect the Company will act as the general contractor to design the cable systems and it will hire subcontractors to implement those designs. These services will assist underground construction companies in laying fiber-optics and other underground cable in the United States to help solve the broadband infrastructure gap.
Gold Rock intends to grow and further establish itself through marketing campaigns to achieve awareness of its construction and engineering services, as well as drive business growth
by partnering with
the high-tech service providers, internet service providers, cable service providers, satellite service providers, mobile phone providers, communication providers, and local municipalities. In addition, the Company is actively considering acquisitions that would be accretive to its business. Currently, Gold Rock markets itself through third-parties that have existing relationships with these providers in their existing demographic service areas. The third parties are construction companies, or other engineering outfits who propose bids on pending or ongoing high-tech and fiber-optic underground projects in areas that are either lacking or upgrading high-tech broadband infrastructures. Gold Rock Holding's management evaluates each engineering and consulting job on a case by case bases with the intent to enter into a contract for its "UGnet" services. At this time, Gold Rock Holdings, Inc. has no contracts.
At this time, the Company expects to receive 100% of its revenues from the sale of the Company's "UGnet"construction management, engineering services and fiber network designs, as it pertains to underground fiber-optic high-speed broadband and cable infrastructures. Gold Rock services are offered through the "UGnet" service line, which stands for "Underground Networks."
The Company proactively seeks to expand its Gold Rock "UGnet" services throughout the U.S., and will continue to approach municipalities, utilities, and cable, phone, mobile phone and internet providers with competitive quotes on underground development of high-speed fiber optic broadband connectivity. The Company will continue to try to advance its social media platform with direct online and targeted marketing with the objective of expanding its demographics.
Gold Rock Holdings, Inc. maintains an executive office in Virginia Beach, Virginia where all marketing, sales, and customer supports activities are implemented.
Transfer Agent
Our transfer agent is Signature Stock Transfer, Inc. whose address is 14673 Midway Road, Suite 220, Addision, Texas, 75001 and its telephone number 972-612-4120.
Company Contact Information
Our principal executive and subsidiary offices are located at 2020 General Booth Blvd., Unit 230, Virginia Beach, VA 23454, telephone (757) 306-6090. The information to be contained in our Internet website, www.goldrockholdings.us, shall not constitute part of this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overall Operating Results:
Three Months – June 30, 2022 and 2021 Statements
The Sales Revenue for the three months ended June 30, 2022 and for the three months ended June 30, 2022 were $-0- and $-0-, respectively. During the three months ended June 30, 2022 the Company had no underground fiber contracts, and for the same period ending June 30, 2021 the Company had no underground fiber contracts.
The Cost of Goods Sold for the three months ended June 30, 2022 was $-0- and the Cost of Goods Sold for the three months ended June 30, 2021 was $-0-.
Gross Margins for the three months ended June 30, 2022 was 0% , and during the same period in 2021 was 0%; no contracts for the laying of underground fiber and copper cables.
Gross Profit for the three months ended June 30, 2022 was $-0- and for the three months ended June 30, 2021 was $-0-.
Operating expenses for three months ended June 30, 2022, totaled $10,249 from Consulting Expense and General and Administrative Expenses, compared to $27,604 for the three months ended June 30, 2021. This decrease in June 30, 2022 compared to the same period ended June 30, 2021 was attributed to
lower General and Administrative Expenses.
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Six Months – June 30, 2022 and 2021 Statements
The Sales Revenue from the Company for the six months ended June 30, 2022 and for the six months ended June 30, 2021 were $-0- both periods; no underground laying of fiber contracts.
The Cost of Sales for the six months ended June 30, 2022 was $-0- and for the six months ended June 30, 2021 was $-0- respectively.
Gross Margins for the six months ended June 30, 2022 was 0%, and for six months ended June 30, 2021 was 0%; no contracts for the laying of underground fiber and copper cables.
Gross Profit for the six months ended June 30, 2022 was $-0- and for the six months ended June 30, 2021 was $-0-.
Operating expenses for six months ended June 30, 2022, totaled $61,599 from Board of Director Compensation, Consulting Expense and General and Administrative Expenses, compared to $60,904 for the six months ended June 30, 2022. This increase during the same six month period ended June 30, 2022 was attributed to
higher expenses General and Administrative Expenses.
Net Loss:
Net loss for the three month ended June 30, 2022 and 2021 were $10,249 and $27,604 , respectively. Net loss for the six month ended June 30, 2020 and 2021 were $61,599 and $60,904, respectively.
Liquidity and Capital Resources:
As of June 30, 2022, the Company’s assets totaled $1,700, which consisted of cash. Our total liabilities were $46,100. As of June 30, 2022, the Company had an accumulated deficit of $261,143 and working capital deficit $44,400.
As indicated herein, we need capital for the implementation of our business plan, and we will need additional capital for continuing our operations. We do not have sufficient revenues to pay our operating expenses at this time. Unless the company is able to raise working capital, it is likely that the Company will either have to cease operations or substantially change its methods of operations or change its business plan (See Note 4 in Financial Statements). For the next 12 months the Company has a written commitment from its CEO in Mr. Merle Ferguson's employment contract to advance funds as necessary in meeting the Company's operating requirements.
Gold Rock Holdings, Inc . does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company, or any of its subsidiaries’ operating results, financial position, or cash flow.
Cash Provided by (Used in) Operating Activities
Net cash used in operating activities for the six months ended June 30, 2022 and 2021 were $24,784 and $17,850 respectively. The increase in the amount of cash used during the six months ended June 30, 2022 was due to the increases in operating expenses when compared to the six months ended June 30, 2021.
Net cash used in investing activities was $-0- for both the six month periods ended June 30, 2022 and 2021.
Cash Provided by (Used In) Financing Activities
Net cash provided by financing activities was $24,784 for six month ended June 30, 2022 from the Capital Contributions from Directors, and was $17,850 for six month ended June 30, 2021 from the amount of Capital Contributions from the Company's directors .
Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies include revenue recognition and stock-based compensation. The Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements, including revenue recognition. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), revenues are recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: (1) Identify the contract with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation.
We adopted this ASC on January 1, 2019. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them.
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Stock-Based Compensation
We account for employee and non-employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments, including grants of stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements, including revenue recognition. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Going Concern
We have incurred net losses since our inception. We anticipate incurring additional losses before realizing growth in revenue and we will depend on additional financing in order to meet our continuing obligations and ultimately to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain.
These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, 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. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on our evaluation, our Principal Executive Officer and Principal Financial Officer, after considering the existence of material weaknesses identified, determined that our internal control over financial reporting disclosure controls and procedures were not effective as of June 30, 2022.
Evaluation of 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 Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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, including our Principal Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting as of June 30, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – Integrated Framework (2013).
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We identified the following deficiencies which together constitute a material weakness in our assessment of the effectiveness of internal control over financial reporting as of June 30, 2022:
- The Company has inadequate segregation of duties within its cash disbursement control design.
- During the period ended June 30, 2022, the Company internally performed all aspects of its financial reporting process, including, but not limited to the underlying accounting records and the recording of journal entries and for the preparation of financial statements. This process was deficient, because these duties were performed often times by the same people, and therefore a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control system, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
This 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 rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
We regularly review our system of internal control over financial reporting to ensure that we maintain an effective internal control environment. If deficiencies appear in our internal controls, management will make changes that address those deficiencies.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the reporeting period ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Coronavirus Impact (COVID-19)
Due to the recent outbreak of the coronavirus reported in many countries worldwide, local and federal governments have issued travel advisories, canceled large scale public events and closed schools. In addition, companies have begun to cancel conferences and travel plans and require employees to work from home. Global financial markets have also experienced extreme volatility and disruptions to capital and credit markets.
We are unable to predict the impact of the coronavirus on our operations at this time. Adverse events such as health-related concerns about working in our offices, the inability to travel, potential impact on our business partners and customers, and other matters affecting the general work and business environment could harm our business and delay the implementation of our business strategy. The adverse events may also adversely impact our ability to raise capital or to continue as a going concern. We continue to monitor the recent outbreak of the coronavirus on our operations. The global economic slowdown and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company's business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties which the Company faces.
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