SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-K
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30,
2015
OR
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________
to ____________
Commission file number: 000-54379
MAGNOLIA
LANE INCOME FUND
(Exact name of registrant as specified
in its charter)
Delaware |
|
|
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S Employer
Identification No.) |
7 Grove Street
Topsfield,
MA 01983
(Address of principal executive offices
and Zip Code)
(978)
887-5981
(Registrant’s
telephone number, including area code)
Securities registered under Section 12(b)
of the Exchange Act: None
Securities registered under Section 12(g)
of the Exchange Act:
Common Stock,
$0.0001 par value per share
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
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 ☐ (Do not check if a smaller reporting company) |
|
Smaller
reporting company ☒ |
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
State the aggregate market value of the voting
and non-voting common equity held by non-affiliates. None.
As of July 28, 2015, 1,796,875 shares of common
stock of the registrant were issued and outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
PART I |
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Page |
Item 1. |
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Business |
2 |
Item 1A. |
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Risk Factors |
4 |
Item 1B. |
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Unresolved Staff Comments |
4 |
Item 2. |
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Properties |
4 |
Item 3. |
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Legal Proceedings |
4 |
Item 4. |
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Mining Safety Disclosures |
4 |
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PART II |
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Item 5. |
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
4 |
Item 6. |
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Selected Financial Data |
5 |
Item 7. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
5 |
Item 7A. |
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Quantitative and Qualitative Disclosures About Market Risk |
7 |
Item 8. |
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Financial Statements And Supplementary Data |
F-1 |
Item 9. |
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
8 |
Item 9A. |
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Controls and Procedures |
8 |
Item 9B. |
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Other Information |
8 |
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PART III |
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Item 10. |
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Directors, Executive Officers and Corporate Governance |
9 |
Item 11. |
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Executive Compensation |
10 |
Item 12. |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
11 |
Item 13. |
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Certain Relationships and Related Transactions, and Director Independence |
11 |
Item 14. |
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Principal Accountant Fees and Services |
11 |
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PART IV |
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Item 15. |
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Exhibits, Financial Statement Schedules |
12 |
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SIGNATURES |
13 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
This Annual Report on Form 10-K (this “Report”)
contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section
27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts.
Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,”
“believe,” “estimate,” “intend,” “could,” “should,” “would,”
“may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,”
“project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions.
Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations
about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations
or plans expressed or implied by such forward-looking statements.
We cannot predict all of the risks and uncertainties. Accordingly,
such information should not be regarded as representations that the results or conditions described in such statements or that
our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these
forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information
concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets;
business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future
acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that
are not historical facts.
These forward-looking statements represent our intentions,
plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many
of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied
by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent
written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person
acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
Except to the extent required
by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
CERTAIN TERMS USED IN THIS REPORT
When this report uses the words “we,” “us,”
“our,” and the “Company,” they refer to Magnolia Lane Income Fund (formerly, Palmerston Stock Agency, Inc.). “SEC”
refers to the Securities and Exchange Commission.
PART I
Overview
Magnolia Lane Income Fund was incorporated
in the state of Delaware on May 12, 2009. We were formed to commence business as a stock agent in the wool trade.
On
May 13, 2013, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Ian Raleigh and Michael
Raleigh (the “Sellers”) and Magnolia Lane Financial, Inc. (the “Purchaser”), whereby the Purchaser purchased
from the Sellers, 10,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing
approximately 69.57% of the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder
of the Company.
In
connection with the Stock Purchase Agreement, we have ceased pursuing our prior business plan and have begun focusing on our
new business which is to manage and invest in real property. Our current Chief Executive Officer and sole director,
Brian Woodland, has numerous years in the real estate acquisition, syndication and asset management business. We intend to
acquire real estate in small markets with high degrees of safety to provide income streams to our shareholders. In addition,
we will develop, syndicate, manage and acquire property for capital appreciation.
In connection with this change of control
and change of business, we have conducted a name change and reverse stock split. On August 1, 2013, we filed a Certificate of Amendment
to our Articles of Incorporation (the “Amendment”) to change its name from “Palmerston Stock Agency, Inc.”
to “Magnolia Lane Income Fund” (the “Name Change”) and to memorialize a 1:8 reverse stock split (the “Stock
Split”). The Amendment was effective as of August 1, 2013.
On August 12, 2013, the Company received
approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Name Change and Stock Split. FINRA
also confirmed that the new stock symbol is MIFC.
Our Operating Strategy
Our business plan is focused on managing
real property. Specifically, we intend to acquire real estate in small markets with high degrees of safety to provide income streams
to our shareholders. In addition, we will develop, syndicate, manage and acquire property for capital appreciation.
On December 23, 2013, a shareholder
of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase and Sale Agreements for the acquisition
of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC (the “Acquisition Agreements”).
Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100% of the equity interests in Grove Realty Partners,
LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia Lane Financial transferred 134,574 shares of our Common
Stock to WS Advantage and Phalanx Wealth Management (the “Consideration Shares”). For purposes of the Acquisition
Agreements, the parties valued the shares at $16.60 per share for a total purchase price of $2,233,928. Prior to this transaction,
Magnolia Lane Financial owned 1,250,000 shares of our common stock and now owns 1,115,426 shares of our common stock. WS Advantage,
LP owns 115,347 shares of our common stock and Phalanx Partners, LLC owns 19,227 shares of our common stock.
Subsequently, on January 16, 2014, we
entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the “Agreement”).
Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia Lane Financial, including the assets
acquired in the Acquisition Agreements, for a total purchase price of $3,000.
As of April 30, 2015, real estate that
we own through our subsidiaries consisted of two properties:
7 Grove Street,
Topsfield, Ma 01983.
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● |
Description: 12,000 Square foot, Business Office, Retail and Professional Space |
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Status: Rented at 100% occupancy. Lease term: 3-Year |
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● |
Owner: Grove Realty Partners, LLC |
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● |
Purchase
Price: $2.025 million |
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● |
Mortgage Debt as of April 30, 2015: $1,425,982 |
58 Main Street,
Topsfield, Ma 01983
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● |
Description: 4,000
Square foot, Commercial Building |
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● |
Status: Rented
100% occupancy. Lease term: 3-Year |
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● |
Owner:
Walker Partners, LLC |
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● |
Purchase
Price: $503,000 |
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● |
Mortgage Debt as of April 30, 2015: $542,694
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Competition
We
believe that we face a lot of competition for properties that meet our investment objectives. Many of our competitors have greater
resources than we do. We compete with similarly situated entities engaged in real estate investment activities, including individuals,
corporations, banks and insurance company investment accounts, REITs, real estate limited partnerships, the U.S. Government and
other entities, to acquire, manage and rent real estate properties. Our competitors may demonstrate significant competitive advantages
that result from, among other things, a lower cost of capital, additional access to capital and enhanced operating efficiencies.
In addition, the number of entities and the amount of funds competing for suitable investments may increase which would cause
our competition to increase.
Government
Regulation
We
do not expect any governmental regulations to have an impact on our planned business operations. Existing laws with which we must
comply cover issues that include:
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Corporate
Taxes |
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Environmental |
New
laws may impact our ability to market our products in the future. However, we are not aware of any pending laws or regulations
that would have an impact on our business.
Employees
As of July
28, 2015, we have no full time employees. Our President, Chief Executive Officer and Chief Financial Officer,
Brian Woodland, spends approximately 30 hours per week on the Company’s matters. We believe this is sufficient
time to successfully implement our business plan and further commence our operations. We plan to employ qualified employees in
the near future.
Smaller reporting companies are not required to provide the
information required by this item.
Item
1B. |
Unresolved
Staff Comments. |
Smaller reporting companies are not required to provide the
information required by this item.
Our principal office is located at 7 Grove Street, Topsfield,
MA 01983. Our primary telephone number is (978) 887-5981.
Item
3. |
Legal
Proceedings. |
We are currently not involved in any
litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or
affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors
in their capacities as such, in which an adverse decision could have a material adverse effect.
Item
4. |
Mine Safety Disclosures. |
Not Applicable.
PART II
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities. |
Price Range of Common Stock
Our common stock is quoted on the OTC
Pink under the symbol “MIFC.” The OTC Pink is a quotation service that displays real-time quotes, last-sale prices,
and volume information in over-the-counter equity securities. Although the stock is quoted on OTC Pink, there has been no active
trading activity.
Holders
As of July
28, 2015 we had eight (8) record holders of our common stock, holding 1,796,875 shares of common stock.
Holders of
our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock
do not have cumulative voting rights.
Therefore, holders of a majority of the shares of common stock voting
for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute
a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate
certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.
Although there are no provisions in our charter or by-laws that
may delay, defer or prevent a change in control, we are authorized, without shareholder approval, to issue shares of preferred
stock that may contain rights or restrictions that could have this effect.
Holders of common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding
up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and
after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive
rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Dividends
We have never declared or paid dividends on our common stock. We
do not intend to declare dividends in the foreseeable future because we anticipate that we will reinvest any future earnings into
the development and growth of our business. Any decision as to the future payment of dividends will depend on our results of operations
and financial position and such other factors as our Board of Directors in its discretion deems relevant.
Item
6. |
Selected Financial Data. |
Smaller reporting companies are not required to provide the
information required by this item.
Item
7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following plan of operation provides
information which management believes is relevant to an assessment and understanding of our results of operations and financial
condition. The discussion should be read along with our financial statements and notes thereto. The following discussion and analysis
contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the
results, expectations and plans discussed in these forward-looking statements.
Plan of Operations
Magnolia Lane Income Fund was incorporated
in the state of Delaware on May 12, 2009. We were formed to commence business as a stock agent in the wool trade.
We did not commence
business operations and on May 13, 2013, upon the change of control, we changed our business to a business plan that is
focused on managing real property. Specifically, we intend to acquire real estate in small markets with high degrees of
safety to provide income streams to our shareholders. In addition, we will develop property, syndicate, manage and acquire
property for capital appreciation.
In connection with this change of control
and change of business, we have conducted a name change and reverse stock split. On August 1, 2013 we filed a Certificate of Amendment
to our Articles of Incorporation (the “Amendment”) to change its name from “Palmerston Stock Agency, Inc.”
to “Magnolia Lane Income Fund” (the “Name Change”) and to memorialize a 1:8 reverse stock split (the
“Stock Split”). The Amendment was effective as of August 1, 2013.
On August 12, 2013, the Company received
approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Name Change and Stock Split. FINRA
also confirmed that the new stock symbol is MIFC.
On December 23, 2013, a shareholder
of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase and Sale Agreements for the acquisition
of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC (the “Acquisition Agreements”).
Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100% of the equity interests in Grove Realty Partners,
LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia Lane Financial transferred 134,574 shares of our Common
Stock to WS Advantage and Phalanx Wealth Management (the “Consideration Shares”). For purposes of the Acquisition
Agreements, the parties valued the shares at $16.60 per share for a total purchase price of $2,233,928. Prior to this transaction,
Magnolia Lane Financial owned 1,250,000 shares of our common stock and now owns 1,115,426 shares of our common stock. WS Advantage,
LP owns 115,347 shares of our common stock and Phalanx Partners, LLC owns 19,227 shares of our common stock.
Subsequently, on January 16, 2014, we
entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the “Agreement”).
Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia Lane Financial, including the assets
acquired in the Acquisition Agreements, for a total purchase price of $3,000.
As of April 30, 2015, real estate that
we, through our subsidiaries, owned consisted of two properties:
7 Grove Street,
Topsfield, Ma 01983
|
● |
Description: 12,000 Square foot, Business Office, Retail and Professional Space |
|
● |
Status: Rented at 100% occupancy. Lease term: 3-Year |
|
● |
Owner: Grove Realty Partners, LLC |
|
● |
Purchase Price: $2.025 million |
|
● |
Mortgage Debt as of April 30, 2015: $1,425,982 |
58 Main Street,
Topsfield, Ma 01983
|
● |
Description: 4,000 Square foot, Commercial Building |
|
● |
Status: Rented 100% occupancy. Lease term: 3-Year |
|
● |
Owner: Walker Partners, LLC |
|
● |
Purchase Price: $503,000 |
|
● |
Mortgage Debt as of April 30, 2015: $542,694 |
Limited Operating History
We have only begun generating modest
revenue, have a limited financial history and have limited capital. Our business is subject to risks inherent in growing an enterprise,
including limited capital resources and possible rejection of our business model and/or sales methods.
Going Concern
The ability of the Company to continue
as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient
revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate
revenues provide the opportunity for the Company to continue as a going concern.
Results of Operations
For
the years ended April 30, 2015 and 2014
Our rental revenue for the fiscal year
ended April 30, 2015 reflects the contribution of rental properties to the Company on January 16, 2014. Revenues were $248,351
as compared to $214,235 in revenue for the fiscal year ended April 30, 2014. The increase in rental revenue of $34,116 is primarily
the result of an increase in revenue to new leasing activity (TASR and Competitive Energy) and partial annual contribution
for the rents last January as the buildings were contributed in January, 2015. Operating expenses for the fiscal year ended
April 30, 2015 totaled $435,645, resulting in a loss of $187,294 as compared with operating expenses of $413,335 for the fiscal
year ended April 30, 2014. The increase of $22,310 in our operation expenses was primarily due to an increase in repairs, maintenance
and utilities.
Capital Resources and Liquidity
As of April 30, 2015 we had $17,286
cash on hand.
As of April 30, 2015, the Company had
a stockholders’ deficit of $203,694. For the fiscal years ended April 30, 2015 and 2014, the Company had a net loss of $187,294
and $199,100, respectively. The Company’s stockholders’ deficiency is primarily due to, among other reasons, interest
expenses and general administrative expenses.
Net cash provided by operating activities was $13,985
for the fiscal year ended April 30, 2015 as compared to cash used in operating activities of $119,280 for the fiscal year ended
April 30, 2014.
Net cash used in investing activities was $9,493 for
the fiscal year ended April 30, 2015 as compared to cash used in investing activities of $50,298 for the fiscal year ended April
30, 2014.
Net cash used by financing activities amounted to $6,585
for the fiscal year ended April 30, 2015 as compared to cash used by financing activities of $186,727 for the fiscal year ended
April 30, 2014.
Liquidity is the ability of a company to generate funds
to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Our principal
sources of liquidity include cash from rental revenue and loans from a related party to cover mortgage obligations.
Mortgage Obligations
58 Main Street
On January 16, 2014, the Company assumed a mortgage note payable to a third-party,
unrelated to the seller, on a property located at 58 Main Street, Topsfield, Massachusetts. The note bears interest
at 6.75% per annum and is due August 26, 2019. Monthly principal and interest payments totaling $4,320 started on September
26, 2009 and will continue through the maturity date. The mortgage note is secured by the property. At maturity, the
balloon payment will be due in full. The remaining principal balance as of April 30, 2015 was $542,694.
7 Grove Street
On January 16, 2014, the Company assumed a mortgage note payable to a third-party,
unrelated to the seller, on a property located at 7 Grove Street, Topsfield, Massachusetts. The note bore interest
at 7.9 % per annum and was scheduled to mature on September 5, 2032. Monthly payments of $17,775 started on October
5, 2008. The mortgage note was secured by the property. At maturity, the balloon payment was to be due in full.
On April 12, 2014, the mortgage note payable on the property at 7 Grove Street was paid in full by its majority shareholder.
On that same date, a new mortgage payable was established between the Company and its majority shareholder for an amount equal
to the balance that was remaining on the original mortgage. The new related party mortgage payable began on April 12, 2014 and
is a 5-year fixed loan at 5.5% interest, with a balloon payment on May 15, 2019 for the outstanding balance. Interest only payments
until maturity began on May 15, 2014 in the amount of $6,536.
Related Party Transactions
From time to time, the Company receives loans and advances from
Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage LP formerly held
equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently controlled by the Company’s president
and are shareholders.
An aggregate of $454,581 has been received from related parties for working capital purposes
and debt and expenses paid on the Company’s behalf. These advances are interest-free and payable upon demand. During the
fiscal years ended April 30, 2015 and 2014, the Company has imputed interest expense of $27,991 and $0, respectively.
During the fiscal years ended
April 30, 2015 and 2014, the Company received $36,000 in rental income from Phalanx Partners, who occupies an office in one of
the Company’s properties.
We believe that our currently available working capital and availability
of loans from related parties referred to above should be adequate to sustain our operations at the current level for the next
twelve months. Should we not be able to meet our current financial needs, the Company will seek alternative methods of financing,
such as issuing convertible debt or introducing additional shares of its common stock into the market.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. |
Smaller reporting companies are not
required to provide the information required by this item.
Item 8.
Financial Statements and Supplementary Data.
MAGNOLIA
LANE INCOME FUND
(fka
PALMERSTON STOCK AGENCY, INC.)
April
30, 2015
Index
to the Consolidated Financial Statements
Contents |
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Page(s) |
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Report of Independent
Registered Public Accounting Firm |
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F-1 |
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Consolidated Balance
Sheets at April 30, 2015 and April 30, 2014 |
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F-2 |
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Consolidated Statements
of Operations for the years ended April 30, 2015 and 2014 |
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F-3 |
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Consolidated Statement
of Stockholders’ Equity (Deficit) for the years ended April 30, 2015 and April 30, 2014 |
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F-4 |
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Consolidated Statements
of Cash Flows for the years ended April 30, 2015 and 2014 |
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F-5 |
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Notes to the Consolidated
Financial Statements |
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F-6 |
REPORT
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To
the Shareholders of Magnolia
Lane Income Fund Topsfield,
Massachusetts
We
have audited the
accompanying
consolidated balance sheets
of Magnolia
Lane Income Fund
(the "Company")
as of
April 30, 2015
and 2014, and
the related consolidated
statements of
operations stockholders' deficit
and cash flows for the
years then
ended. These consolidated financial
statements are the responsibility of
the Company's management. Our
responsibility is to express
an opinion on
these consolidated financial
statements based on our
audits.
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 consolidated
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
its 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
consolidated financial statements. An
audit also includes
assessing the accounting
principles used and
significant estimates made
by management as
well as evaluating
the overall consolidated
financial statement presentation.
We believe that
our audits provide
a reasonable basis
for our opinion.
In
our opinion, the
consolidated financial statements
referred to above
present fairly,
in all
material respects,
the financial position of
Magnolia Lane Income
Fund as of
April 30, 2015
and 2014 and
the results of
their operations and cash
flows for the
years then
ended, in conformity
with accounting principles
generally accepted in
the
United
States of America.
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company
has an accumulated deficit of $507,846 and stockholders'
deficit of $203,694.
These factors raise substantial doubt
about its ability to continue as a going concern.
Management's plans in regard to these matters are also described
in Note 3. The consolidated financial statements
do not include any adjustments that might result from the
outcome of this uncertainty.
/s/
BAKER TILLY VIRCHOW KRAUSE,
LLP
New
York, New York
July
29, 2015
MAGNOLIA
LANE INCOME FUND
Consolidated
Balance Sheets
| |
April
30,
2015 | | |
April
30,
2014 | |
| |
| | |
As Revised | |
| |
| | |
(See
Note 2) | |
| |
| | |
| |
ASSETS
| |
| | |
| |
| |
| | |
| |
Rental
property, net | |
$ | 2,289,618 | | |
$ | 2,373,763 | |
Cash | |
| 17,286 | | |
| 19,379 | |
Restricted
cash | |
| 13,799 | | |
| 15,559 | |
Accounts
receivable | |
| 1,225 | | |
| 1,750 | |
| |
| | | |
| | |
Total
Assets | |
$ | 2,321,928 | | |
$ | 2,410,451 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
Mortgage
payable | |
$ | 542,694 | | |
$ | 558,176 | |
Related
party mortgage payable | |
| 1,425,982 | | |
| 1,425,982 | |
Accounts
payable and accrued expenses | |
| 103,465 | | |
| 22,500 | |
Deferred
revenue | |
| - | | |
| 4,800 | |
Security
deposits | |
| 2,900 | | |
| 1,700 | |
Loans
payable – related parties
| |
| 450,581 | | |
| 441,684 | |
| |
| | | |
| | |
Total
Liabilities | |
| 2,525,622 | | |
| 2,454,842 | |
| |
| | | |
| | |
STOCKHOLDERS'
DEFICIT: | |
| | | |
| | |
Preferred
stock: par value $0.0001; 100,000,000 shares authorized; None issued or outstanding | |
| - | | |
| - | |
Common
stock: par value $0.0001; 200,000,000 shares authorized; 1,796,875 and 1,796,875 shares issued and outstanding, respectively | |
| 180 | | |
| 180 | |
Additional
paid-in capital | |
| 303,972 | | |
| 275,981 | |
Accumulated
deficit | |
| (507,846 | ) | |
| (320,552 | ) |
| |
| | | |
| | |
Total
Stockholders' Deficit | |
| (203,694 | ) | |
| (44,391 | ) |
| |
| | | |
| | |
Total
Liabilities and Stockholders' Deficit | |
$ | 2,321,928 | | |
$ | 2,410,451 | |
See
accompanying notes to the consolidated financial statements.
MAGNOLIA LANE INCOME FUND
Consolidated Statements of
Operations
| |
For the year | | |
For the year | |
| |
ended | | |
ended | |
| |
April 30,
2015 | | |
April 30,
2014 | |
| |
| | |
As Revised | |
| |
| | |
(See Note 2) | |
| |
| | |
| |
RENTAL REVENUE | |
$ | 248,351 | | |
$ | 214,235 | |
| |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | |
Operating costs | |
| 91,813 | | |
| 72,443 | |
Professional fees | |
| 91,764 | | |
| 62,275 | |
Repairs and maintenance | |
| 20,519 | | |
| 18,161 | |
Depreciation | |
| 93,638 | | |
| 90,228 | |
Interest expense | |
| 137,911 | | |
| 170,228 | |
| |
| | | |
| | |
Total operating expenses | |
| 435,645 | | |
| 413,335 | |
| |
| | | |
| | |
NET LOSS | |
$ | (187,294 | ) | |
$ | (199,100 | ) |
| |
| | | |
| | |
NET LOSS PER COMMON SHARE | |
| | | |
| | |
- BASIC AND DILUTED: | |
$ | (0.10 | ) | |
$ | (0.11 | ) |
| |
| | | |
| | |
Weighted average common shares outstanding | |
| | | |
| | |
- basic and diluted | |
| 1,796,875 | | |
| 1,796,875 | |
See accompanying notes
to the consolidated financial statements.
MAGNOLIA LANE INCOME FUND
Consolidated Statements of
Cash Flows
| |
For the year | | |
For the year | |
| |
ended | | |
ended | |
| |
April 30, 2015 | | |
April 30, 2014 | |
| |
| | |
As Revised | |
| |
| | |
(See Note 2) | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| |
Net loss | |
$ | (187,294 | ) | |
$ | (199,100 | ) |
Adjustments to reconcile net loss to net cash used in/(provided by) operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 93,638 | | |
| 90,228 | |
Imputed interest | |
| 27,991 | | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 525 | | |
| 13,300 | |
Accounts payable and accrued expenses | |
| 80,965 | | |
| (17,144 | ) |
Deferred revenue | |
| (4,800 | ) | |
| 4,800 | |
Security deposits | |
| 1,200 | | |
| (1,828 | ) |
Restricted cash | |
| 1,760 | | |
| (9,536 | ) |
| |
| | | |
| | |
Net cash provided by / (used in) operating activities | |
| 13,985 | | |
| (119,280 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Building Improvements | |
| (9,493 | ) | |
| (47,298 | ) |
Purchase of LLC interests | |
| - | | |
| (3,000 | ) |
| |
| | | |
| | |
Net cash used in investing activities | |
| (9,493 | ) | |
| (50,298 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Advances from shareholders | |
| 8,897 | | |
| 441,684 | |
Proceeds from mortgage payable - related party | |
| - | | |
| 1,425,982 | |
Repayments of mortgages payable | |
| (15,482 | ) | |
| (1,728,353 | ) |
Capital contribution | |
| - | | |
| 47,414 | |
| |
| | | |
| | |
Net cash (used in)/provided by financing activities | |
| (6,585 | ) | |
| 186,727 | |
| |
| | | |
| | |
NET CHANGE IN CASH | |
| (2,093 | ) | |
| 17,149 | |
| |
| | | |
| | |
Cash at beginning of year | |
| 19,379 | | |
| 2,230 | |
| |
| | | |
| | |
Cash at end of year | |
$ | 17,286 | | |
$ | 19,379 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | |
| | | |
| | |
Cash paid for interest | |
$ | 106,921 | | |
$ | 127,860 | |
| |
| | | |
| | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
Assets contributed by stockholder | |
$ | - | | |
$ | 2,492,306 | |
Liabilities contributed by stockholder | |
$ | - | | |
$ | 2,317,469 | |
Imputed interest on stockholder loans | |
$ | 27,991 | | |
$ | - | |
See accompanying notes
to the consolidated financial statements.
MAGNOLIA LANE INCOME FUND
Consolidated Statement of
Stockholders' Deficit
| |
| | |
| | |
ADDITIONAL | | |
| | |
TOTAL | |
| |
| | |
COMMON | | |
PAID-IN | | |
ACCUMULATED | | |
STOCKHOLDERS' | |
| |
SHARES | | |
STOCK | | |
CAPITAL | | |
DEFICIT | | |
DEFICIENCY | |
| |
| | |
| | |
| | |
| | |
| |
Total, April 30, 2013 | |
| 1,796,875 | | |
$ | 180 | | |
$ | 73,858 | | |
$ | (121,452 | ) | |
$ | (47,414 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Capital Contribution | |
| | | |
| | | |
| 47,414 | | |
| | | |
| 47,414 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net assets contributed from entity under common control | |
| | | |
| | | |
| 154,709 | * | |
| | | |
| 154,709 | * |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net Loss | |
| | | |
| | | |
| | * | |
| (199,100
| )* | |
| (199,100 | )* |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total, April 30, 2014 | |
| 1,796,875 | | |
$ | 180 | | |
$ | 275,981 | * | |
$ | (320,552
| )* | |
$ | (44,391 | )* |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Imputed interest on related party debt | |
| - | | |
| - | | |
| 27,991 | | |
| | | |
| 27,991 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net Loss | |
| | | |
| | | |
| | | |
| (187,294 | ) | |
| (187,294 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total, April 30, 2015 | |
| 1,796,875 | | |
$ | 180 | | |
$ | 303,972 | | |
$ | (507,846 | ) | |
$ | (203,694 | ) |
* Prior-period amounts have been revised to reflect
an immaterial adjustment of additional paid-in capital and depreciation expense. Summary of Significant Accounting Policies Note
2, Revisions of previous issued financial statements.
See accompanying notes
to the consolidated financial statements.
MAGNOLIA
LANE INCOME FUND
(fka
PALMERSTON STOCK AGENCY, INC.)
As
of and for the Years Ended April 30, 2015 and 2014
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -
ORGANIZATION
Magnolia
Lane Income Fund, formerly known as Palmerston Stock Agency, Inc. (the “Company,” ”We,” “Ours,”
“Us”), was incorporated on May 12, 2009 under the laws of the State of Delaware. The Company was originally formed
to commence business as a stock agent in the wool trade.
On
May 13, 2013, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Ian Raleigh and Michael
Raleigh (the “Sellers”) and Magnolia Lane Financial, Inc. (the “Purchaser”), whereby the Purchaser purchased
from the Sellers, 10,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing
approximately 69.57% of the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder
of the Company.
In
connection with the Stock Purchase Agreement, we have ceased pursuing our prior business plan and have begun focusing on our
new business which is to manage and invest in real property. Our current Chief Executive Officer, Chief Financial
Officer and sole director, Brian Woodland, has numerous years in the real estate acquisition, syndication and
asset management business. We intend to acquire real estate in small markets with high degrees of safety to provide income
streams to our shareholders. In addition, we will develop property, syndicate, manage and acquire property for capital
appreciation.
On
January 16, 2014, the Company entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial,
Inc. (a shareholder). Pursuant to the Agreement, all rights, title and interest of two commercial real estate properties in Massachusetts
were contributed to the Company. (See Note 4)
NOTE
2 – SUMMARY OF ACCOUNTING POLICIES
Basis
of presentation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America, the rules and regulations of the United States Securities and Exchange Commission.
Revisions
of Previously Issued Financial Statements
In connection with the
preparation of the consolidated financial statements of the Company for the year ended April 30, 2015, the Company identified
certain errors in its previously issued consolidated financial statements for the year ended April 30, 2014. The errors related
to the understatement of depreciation expense due to an incorrect allocation of cost between the building and land on one of its
properties.
In
accordance with SEC Staff Accounting Bulletin No. 99, Materiality, codified in ASC 250 (“ASC 250”), Presentation
of Financial Statements, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Consolidated Statements of Income, Balance Sheets, Shareholders Equity and Cash Flows, also codified in ASC 250,
management assessed the materiality of the errors from a qualitative and quantitative basis and concluded that these errors
were immaterial to its previously issued consolidated financial statements. Management concluded that the errors were
material if not corrected in the current years’ consolidated financial statements. Therefore, in accordance with ASC
250, the consolidated financial statements as of April 30, 2014, which are presented herein, have been revised in this 2015
Annual Report on Form 10-K.
| |
April
30, 2014 | | |
| |
| |
As | | |
As Previously | | |
| |
Balance
Sheet | |
revised | | |
presented | | |
Difference | |
Rental
property, net | |
$ | 2,373,763 | | |
$ | 2,399,022 | | |
$ | (25,259 | ) |
Additional
paid-in capital | |
| 275,981 | | |
| 296,109
| | |
| (20,128 | ) |
Accumulated
deficit | |
$ | (320,552 | ) | |
$ | (315,421 | ) | |
$ | (5,131 | ) |
| |
| | | |
| | | |
| | |
Income
Statement | |
| | | |
| | | |
| | |
Depreciation
expense | |
$ | 90,228 | | |
$ | 85,097 | | |
$ | 5,131 | |
Net
Loss | |
$ | (199,100 | ) | |
$ | (193,969 | ) | |
$ | (5,131 | ) |
| |
| | | |
| | | |
| | |
Cash
flows | |
| | | |
| | | |
| | |
Net
Loss | |
$ | (199,100 | ) | |
$ | (193,969 | ) | |
$ | (5,131 | ) |
Depreciation
expense | |
$ | 90,228 | | |
$ | 85,097 | | |
$ | 5,131 | |
| |
| | | |
| | | |
| | |
NET
LOSS PER COMMON SHARE | |
| | | |
| | | |
| | |
-
BASIC AND DILUTED: | |
$ | (0.11 | ) | |
$ | (0.11 | ) | |
$ | - | |
Principles
of consolidation
The
accompanying consolidated financial statements represent the consolidated financial position and results of operations of the
Company and include the accounts and results of operations of the Company and its subsidiaries. The accompanying financial statements
include the active entity of Magnolia Lane Income Fund and its wholly owned subsidiaries, Walker Partners, LLC and Grove Realty
Partners, LLC.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted
Cash
Restricted cash consists
of cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements. The
Company’s restricted cash is reserved for real estate taxes on both of its properties.
Concentrations
Concentration
in a geographic area
The
Company operates in the real estate industry and the operations are concentrated in the State of Massachusetts.
Rental
Property, Net
Rental
property assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated
useful lives of the asset.
We
capitalize replacements and improvements, such as HVAC equipment, structural replacements, windows, appliances, flooring, carpeting
and renovations. Ordinary repairs and maintenance, such as unit cleaning, painting and appliance repairs, are expensed when incurred.
Asset | |
Useful
Life (in years) |
Building | |
30
years |
Land | |
Indefinite |
Building
Improvements | |
30
years |
Net
loss per common share
Net
loss per common share is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board Accounting Standards
Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock and potentially dilutive outstanding shares of common stock during the period.
There
were no potentially dilutive shares outstanding for any periods presented.
Income
Taxes
The
Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax
assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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.
The
Company follows the provisions of Income Taxes Topic of the FASB Accounting Standards Codification,
which provides clarification on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.
The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification,
interest and penalties, disclosure and transition. At April 30, 2015, no significant income tax uncertainties have been included
in the Company’s Balance Sheets. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits
in income tax expense in the Statements of Operations. No interest and penalties are present for periods open.
The
Company is subject to the United States federal and state income tax examinations by the tax authorities for the 2015, 2014, and
2013 tax years.
Property
Revenue Recognition
Our
commercial property leases are for varied terms ranging from month-to-month to 3 years. Rental income is recognized on a straight-line
basis over the term of the lease.
Rent
concessions, including free rent incurred in connection with commercial property leases, are amortized on a straight-line basis
over the terms of the related leases and are charged as a reduction of rental revenue.
Impairment
of Real Estate Investments
The
Company assesses on a regular basis whether there are any indicators that the carrying value of rental property assets may be
impaired. Potential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property,
tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired
if the asset’s carrying value is in excess of its estimated fair value.
Deferred
Revenue
From
time to time, rental payments may be paid by tenants, but not earned yet by the Company. Such revenue is initially recorded
as a deferred liability and is recognized as revenue once earned. As of April 30, 2015 and 2014, the Company had $0 and $4,800
in deferred revenue, respectively.
NOTE
3 – GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern,
which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As
reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $507,846 and a stockholders’
deficit of $203,694. These conditions raise substantial doubt about its ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business
plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further
implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
The
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
in existence.
NOTE
4 – ASSETS CONTRIBUTED
On
December 23, 2013, a shareholder of the Company, Magnolia Lane Financial, Inc. entered into three separate LLC Membership Interest
Purchase and Sale Agreements for the acquisition of two limited liability companies; Grove Realty Partners, LLC and Walker Partners,
LLC. Pursuant to the Membership Interest Purchase and Sale Agreements, Magnolia Lane Financial, Inc. acquired 100% of the equity
interests in Grove Realty Partners, LLC and Walker Partners, LLC.
Each
of the entities acquired hold commercial real estate properties. More specifically,
|
● |
Grove
Realty Partners, LLC holds a single commercial property located at 7
Grove St., Topsfield, Massachusetts. |
|
● |
Walker
Partners, LLC holds a single commercial property located at 58 Main St., Topsfield, Massachusetts. |
Subsequent
to the Membership Interest Purchase described above, on January 16, 2014, the Company entered into an LLC Membership Interest
Purchase and Sale Agreement with Magnolia Lane Financial, Inc. Pursuant to the Agreement, Magnolia Lane Financial, Inc. contributed
all rights, title and interest of Magnolia Lane Financial to the Company for total consideration of $3,000.
Because
of the related party nature of this transaction, the Company recorded this as a contribution of capital. Assets and liabilities
contributed were recorded at their carrying amounts at the date of the transfer. The results of operations included in the financial
statements are reported as though the contribution had occurred on May 12, 2013, which is the date that common control was first
established among the related parties.
The Company recorded the
contribution at carrying value. The net of $2,472,178 in assets contributed and $2,317,469 in liabilities assumed was recorded
as a contribution of capital to the Company in the amount of $154,709.
Cash | |
$ | 13,730 | |
Cash – escrow | |
| 6,023 | |
Accounts receivable | |
| 15,050 | |
Related Party note receivable | |
| 10,000 | |
Real property, net | |
| 2,427,375 | |
Deferred tax asset | |
| 458,324 | |
Valuation allowance on deferred tax asset | |
| (458,324 | ) |
Assets
contributed | |
$ | 2,472,178 | |
Security deposits | |
| (3,528 | ) |
Mortgage notes payable | |
| (2,313,941 | ) |
Liabilities
assumed | |
$ | (2,317,469 | ) |
| |
| | |
Net assets contributed | |
$ | 154,709 | |
NOTE 5 –
RENTAL PROPERTY, NET
Rental
Property, Net consisted of the following at April 30, 2015 and April 30, 2014:
| |
April 30, 2015 | | |
April 30, 2014 As Revised See Note 2 | |
Land | |
| 120,733 | | |
| 120,733 | |
Buildings | |
| 2,695,016 | | |
| 2,695,016 | |
Leasehold Improvements | |
| 130,731 | | |
| 121,238 | |
Accumulated Depreciation | |
| (656,862 | ) | |
| (563,224 | ) |
Net,
Real Estate Investments | |
| 2,289,618 | | |
| 2,373,763 | |
As
of April 30, 2014, real estate investments consisted of two properties:
58
Main St. Topsfield, Ma 01983
|
● |
Description:
4,000 Square foot, Commercial Building |
|
● |
Status: Rented
100% occupancy. Lease term: 3-Year |
|
● |
Owner: Walker
Partners, LLC |
|
● |
Purchase Price:
$503,000 |
|
● |
Mortgage Debt as of April 30, 2015: $542,694 |
7
Grove St., Topsfield, Ma 01983
|
● |
Description:
12,000 Square foot, Business Office, Retail and Professional Space |
|
● |
Status: Rented
at 100% occupancy. Lease term: 3-Year |
|
● |
Owner: Grove
Realty Partners, LLC |
|
● |
Purchase Price:
$2.025 million |
|
● |
Mortgage Debt as of April 30, 2015: $1,425,982
|
For
the years ended April 30, 2015 and 2014, the Company recognized revenues of $248,351 and $214,235, respectively. Rent for
the year ended April 30, 2015 and 2014 included $36,000 from a related party who occupies an office in one of the
Company’s properties.
Depreciation expense for
the years ended April 30, 2015 and 2014 totaled $93,638 and $90,228, respectively.
NOTE
6 – MORTGAGE AND RELATED PARTY NOTES PAYABLE
58
Main Street
On
January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property
located at 58 Main Street, Topsfield, Massachusetts. The note bears interest at 6.75% per annum and is due
August 26, 2019. Monthly principle and interest payments totaling $4,320 started on September 26, 2009 and will
continue through the maturity date. The mortgage note is secured by the underlying property. At maturity, the
balloon payment of $481,454
will be due in full. The remaining principal balance as of April 30, 2015 and 2014 is $542,694 and $558,177,
respectively.
7
Grove Street
On
January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property located
at 7 Grove Street, Topsfield, Massachusetts. The note bore interest at 7.9 % per annum and was scheduled to mature
on September 5, 2032. Monthly payments of $17,775 started on October 5, 2008. The mortgage note was secured
by a mortgage on the property. At maturity, the balloon payment was to be due in full.
On
April 12, 2014, the mortgage note payable on the property at 7 Grove Street was paid in full by a shareholder. On that same date,
a new mortgage payable was established between the Company and the shareholder for an amount equal to the balance that was remaining
on the original mortgage. The new related party mortgage payable began on April 12, 2014 and is a 5-year fixed loan
at 5.5% interest, with a balloon payment on May 15, 2019 for the outstanding balance. Interest only payments began
on May 15, 2014 in the amount of $6,536.
Future
principle requirements on long-term debt for fiscal years ending after April 30, 2015 are as follows:
Mortgage Payable - Related Party | |
Mortgage Payable |
For fiscal year ending | |
Future Payout | | |
For fiscal year ending | |
Future Payout | |
2016 | |
$ | - | | |
2016 | |
$ | 12,051 | |
2017 | |
| - | | |
2017 | |
| 15,291 | |
2018 | |
| | | |
2018 | |
| 16,371 | |
2019 | |
| - | | |
2019 | |
| 17,527 | |
2020 and thereafter | |
| 1,425,982 | | |
2020 and thereafter | |
| 481,454 | |
Total | |
$ | 1,425,982 | | |
Total | |
$ | 542,694 | |
NOTE
7 – FUTURE RENTS AND TENANT CONCENTRATION
The
Company’s revenue is derived from property leases with varied lease terms. The following table represents future minimum
rents to be received under non-cancelable leases with terms of twelve months or more as of April 30, 2015:
Future Rents |
2015 | |
$ | 88,236 | |
2016 | |
| 93,457 | |
2017 | |
| 11,172 | |
Thereafter | |
| - | |
| |
$ | 192,865 | |
For
the year ended April 30, 2015, two tenants represented approximately 17% and 14% of the Company’s revenue. For the year
ended April 30, 2014, two tenants represented approximately 19% and 15% of the Company’s revenue.
NOTE
8 – RELATED PARTY TRANSACTIONS
Related
parties to the Company include, but are not limited to, officers, directors, and shareholders. From time to time, the Company
receives loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage
LP formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently shareholders and controlled
by the Company’s president.
An
aggregate of $454,581 has been received from related parties for working capital purposes and debt and expenses paid on the Company’s
behalf. These advances are interest-free and payable upon demand. During the year ended April 30, 2015 and 2014 the Company imputed
interest expense of $27,991 and $0, respectively.
During
the years ended April 30, 2015 and 2014, the Company received $36,000 in rental income from Phalanx Partners, who occupies an
office in one of the Company’s properties.
NOTE
9 - STOCKHOLDERS’ EQUITY
Preferred
stock
Preferred
stock includes 100,000,000 shares authorized at a par value of $0.0001, of which none are issued or outstanding.
Common
stock
Common
Stock includes 200,000,000 shares authorized at a par value of $0.0001, of which 10,000,000 have been issued for the amount of
$1,000 on May 12, 2009 to the Company’s officers as founders’ shares.
On
May 13, 2013, we entered into a stock purchase agreement with Ian Raleigh and Michael Raleigh (the “Sellers”) and
Magnolia Lane Financial, Inc. (the “Purchaser”), whereby the Purchaser purchased from the Sellers, 10,000,000 shares
of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing approximately 69.57% of
the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder of the Company.
On
July 22, 2013, the Company authorized a 1:8 reverse split of its common shares. Prior to the split, the Company had 14,375,000
shares and post-split shares outstanding are 1,796,875.
Capital
Contribution
As a result of the contribution
of member interests of Grove Realty Partners, LLC and Walker Partners, LLC on January 16, 2014, the Company recorded $154,709
as contributed capital, representing the net of assets acquired and liabilities assumed.
NOTE
10 – INCOME TAXES
FASB
ASC 740-10 provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements.
Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination
with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant
information.
Pursuant
to FASB ASC 740-10-10, an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have
been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets
and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated.
At April 30, 2015, the
Company has net operating loss (“NOL”) carry–forwards for Federal income
tax purposes of approximately $389,317 that may be offset against future taxable income through 2035. Due to
changes in ownership, approximately $121,000 of the NOL carry-forward may be subject to certain annual limitations imposed under
Section 382 of the Internal Revenue Code. At this time, the amount of the limitation has not been determined, since the Company
has not completed its Section 382 study. Deferred tax assets would arise from the recognition of anticipated utilization of these
net operating losses to offset future taxable income. No tax benefit has been reported with respect to these deferred tax assets
in the accompanying financial statements because of Management’s assertion that it is more likely than not that the Company’s
deferred tax assets of $596,111 will not be realized and accordingly, the deferred tax assets are offset by a full valuation
allowance.
Deferred Tax Assets | |
April 30, 2015 | | |
April 30, 2014 | |
Net Operating Loss | |
$ | 155,727 | | |
$ | 68,631 | |
Book to tax basis difference on depreciable assets | |
| 440,384 | | |
| 480,016 | |
Total Deferred Tax Asset | |
| 596,111 | | |
| 548,647 | |
Valuation allowance | |
| (596,111 | ) | |
| (548,647 | ) |
Net Deferred Tax Asset | |
$ | - | | |
$ | - | |
NOTE
11 – SUBSEQUENT EVENTS
The
Company has evaluated all events that occur after the balance sheet date through the date when the consolidated financial statements
were issued to determine if they must be reported.
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. |
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls
and Procedures
Under the supervision and
with the participation of our management, including our principal executive officer and the principal financial officer, we
are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the
fiscal year covered by this report. Disclosure controls and procedures means that the material information
required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any
consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when
this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer
concluded as of the evaluation date that our disclosure controls and procedures were ineffective as of April 30, 2015 due to
the material weaknesses identified below.
Management's Annual Report on
Internal Control Over Financial Reporting.
As of April 30, 2015, management assessed
the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing
and maintaining adequate internal control over financial reporting for the Company. 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 amended, as a process
designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer 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 GAAP 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 our transactions and dispositions of our assets;
☐ Provide reasonable
assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP,
and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
☐ Provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial statement.
In evaluating the effectiveness of our internal control over financial reporting,
our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control – Integrated Framework (2013). Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer who also serves as our principal accounting officer concluded that, during the period covered by this report, such internal
controls and procedures were ineffective 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.
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: (i) 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; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective
controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified
by our President in connection with the review of our financial statements as of April 30, 2015.
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.
Our management has begun evaluating
remedies to reduce these deficiencies. However, we will not be able to implement any remedial measures, such as appointing independent
members on our board of directors, until we have sufficient fund to do so.
Changes in Internal Control over
Financial Reporting
No change in our system of internal
control over financial reporting occurred during the period covered by this report (the fourth quarter of the fiscal year ended
April 30, 2015) that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. |
Other Information. |
None.
PART III
Item 10. |
Directors, Executive Officers and Corporate Governance. |
The following table sets forth
the name and age of our officer and director as of July 28, 2015. Our executive officer and director is elected annually by our
Board of Directors. Our executive officer hold their offices until they resign, are removed by the Board, or his or her successor
is elected and qualified.
Name |
|
Age |
|
Position |
Brian Woodland |
|
43 |
|
President, Chief Executive Officer, Chief Financial Officer and Director |
Set forth below is a brief description of the background
and business experience of our executive officer and director for the past five years.
Brian Woodland, age 43, Brian has 20 years
of investment management experience. He has specialized in managing portfolios for individuals and small institutions during his
career. He has also worked closely with trading desks, research analysts, and buy-side portfolio managers at different firms during
his career. Brian began his career with Winthrop Securities in 1992. In 1993 joined Olde Financial and became an assistant Branch
Manager. Brian joined Cowen & Company in 1996, as a Vice President in the Private Client Group, working with small institutions
and private clients. Cowen was widely recognized for its research excellence, specifically in the areas of Technology and Healthcare.
Brian joined Salomon Smith Barney as a Senior Vice President
of Investments in Boston, MA in 2000. Mr. Woodland managed portfolios for individuals, small institutions, and advised small institutional
clients of the firm. Brian was certified as a Financial Planning Specialist for the firm in 2003. Brian left Smith Barney to start
Woodland Asset Management in 2006, where he managed portfolios for private clients and small institutions. In 2008, Brian founded
and became President of Phalanx Trading, LLC. In 2009, Brian also rebranded WAM into Phalanx Wealth Management in 2009.
Brian holds the Series 7, 8, 22, 24, 63, and 65 individual
securities industry qualifying examinations.
Term of Office
Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers
are appointed by our board of directors and hold office until removed by the board.
Employment Agreements
We currently do not have an employment agreement with Mr.
Brian Woodland.
Family Relationships
Because Mr. Woodland serves as our sole executive officer
and director, there are no family relationships between our director and executive officer.
Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive
officers has, during the past ten years:
|
● |
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
|
● |
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
|
● |
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
|
● |
been found by a court of competent jurisdiction in a civil action or by the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
|
● |
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
● |
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as set forth in our discussion below in “Certain
Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions
with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the SEC.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors
and executive officers and persons who beneficially own more than 10% of our common stock to file initial reports of ownership
and changes in ownership with the SEC. To the Company’s knowledge based our review of copies of such reports furnished
to us, all of the Company’s current directors, executive officers and beneficial owners of more than 10% of our common stock
have complied with all Section 16(a) filing requirements with respect to the fiscal year ended April 30, 2015.
Code of Ethics
We have not adopted a code of ethics that applies to our
principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions,
because of the small number of persons involved in the management of the Company.
Board Committees
Our Board of Directors has no separate committees and our
Board of Directors acts as the audit committee and the compensation committee. We do not have an audit committee financial
expert serving on our Board of Directors.
Item 11. |
Executive Compensation. |
The following summary compensation table sets forth all compensation
awarded to, earned by, or paid to the named executive officers paid by us during the year ended April 30, 2015.
SUMMARY COMPENSATION TABLE
Name
and Principal Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards
($) | | |
Option
Awards
($) | | |
Non-Equity
Incentive Plan Compensation
($) | | |
Non-Qualified
Deferred Compensation Earnings
($) | | |
All
Other Compensation
($) | | |
Totals
($) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Brian
Woodland, President, | |
| 2015 | | |
$ | 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | | |
$ | 0 | |
Chief
Executive Officer, Chief Financial Officer | |
| 2014 | | |
$ | 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | | |
$ | 0 | |
Outstanding Equity Awards at Fiscal Year-End Table
There were no outstanding equity awards at April 30, 2015.
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation
for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have
been paid to, or accrued to, directors in such capacity.
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters. |
The following table shows the
number of our securities beneficially owned by our named executive officers, our director, our executive officers and directors
as a group, and each person known to us to own more than 5% of our outstanding shares of common stock as of July 28, 2015. Except
as otherwise indicated, all shares are owned directly and the shareholders possess sole voting and investment power with respect
to the shares listed below. As of July 28, 2015, 1,796,875 shares of our common stock were issued and outstanding.
Name | |
Number of Shares Beneficially Owned | | |
Percent of Class | |
Director and Officer | |
| | |
| |
Brian Woodland, President and Chief Executive Officer 7 Grove Street Topsfield, MA 01983 | |
| 1,581,251 | (1) | |
| 87.99 | % |
(1) |
Owned indirectly through Magnolia Lane Financial, Inc, Phalanx Partners,
LLC and WS Advantage LP. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence. |
Related Party Transactions
Related parties
to the Company include, but are not limited to, officers, directors, and shareholders. From time to time, the Company receives
loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage LP
formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently shareholders and controlled
by the Company’s president.
An aggregate of $8,897 was received
by related parties during the twelve-months for working capital purposes and debt and expenses paid on the Company’s behalf.
These advances are interest-free and payable upon demand.
During
the twelve months ended April 30, 2015, the Company received $36,000 in rental income from Phalanx Partners, who occupies an
office in one of the Company’s properties.
Item 14. |
Principal Accounting Fees and Services. |
Audit Fees
For the Company’s fiscal
years ended April 30, 2015 and 2014, we were billed approximately $68,300 and 26,500 by Baker Tilly Virchow Krause, LLP (formerly,
Holtz Rubenstein Reminick, LLP) for professional services rendered for the audit and interim review of our financial statements
filed with the Securities and Exchange Commission.
Audit-Related Fees
There were no other fees for audit related services for the
years ended April 30, 2015 and 2014.
Tax Fees and Other Fees
For the Company’s fiscal year
ended April 30, 2015 and 2014, there were no fees billed for professional services rendered for tax compliance, tax advice, and
tax planning or other services .
Effective May 6, 2003, the Securities
and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:
|
● |
approved by our audit committee; or |
|
● |
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. |
We do not have an audit committee. Our
entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been
implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above
fees was pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of
directors either before or after the respective services were rendered.
PART IV
ITEM 15. |
Exhibits, Financial Statement Schedules. |
(a) The following documents are filed
as part of this report:
Financial Statements:
See Part II, Item 8 of this Report.
Exhibits: The exhibits
listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.
(b) The following are exhibits to this
Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was
included.
Certain of the agreements filed as exhibits
to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit
of the parties to the agreement. These representations and warranties:
|
● |
may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements; |
|
● |
may apply standards of materiality that differ from those of a reasonable investor; and |
|
● |
were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances. |
Accordingly, these representations and
warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at
any other time. Investors should not rely on them as statements of fact.
Exhibit Number |
|
Description |
3.1 |
|
Articles of Incorporation (1) |
|
|
|
3.2 |
|
By-Laws (1) |
|
|
|
3.3 |
|
Certificate of Amendment of Certificate of Incorporation (2) |
|
|
|
31.1* |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1+ |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101* |
|
Interactive Data File (to the Form 10-K for the fiscal year ended April 30, 2015 furnished in XBRL). |
(1) | Incorporated by reference to the registration statement on Form S-1 filed with Securities and Exchange Commission on November
12, 2010. |
(2) | Incorporated by reference to the registration statement on Form 10-Q filed with Securities and Exchange Commission on July
30, 2014. |
(*) Filed herewith
+ In accordance with SEC Release 33-8238, Exhibit 32.1 is
being furnished and not filed.
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
Dated: July 31, 2015 |
MAGNOLIA LANE INCOME FUND |
|
|
|
By: |
/s/ Brian Woodland |
|
|
Brian Woodland |
|
|
President, Chief
Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Financial and Accounting
Officer) |
13
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE
OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE
SARBANES-OXLEY ACT OF 2002
I, Brian Woodland, certify that:
1. I
have reviewed this annual report on Form 10-K of Magnolia Lane Income Fund;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The
registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent function):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: July 31, 2015 |
By: |
/s/ Brian Woodland |
|
|
|
Brian Woodland
President, Chief Executive Officer,
and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |
|
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE
OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report
of Magnolia Lane Income Fund., (the “Company”) on Form 10-K for the year ended April 30, 2015 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), Brian Woodland, Chief Executive Officer and Chief Financial
Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 31, 2015 |
By: |
/s/ Brian Woodland |
|
|
|
Brian Woodland
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |
|
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement has been provided to the Company and will be retained by the Company
and furnished to the Securities and Exchange Commission or its staff upon request.
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