COMMUNITY REDEVELOPMENT INC. Special Note Regarding Forward-Looking Statements
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS QUARTERLY REPORT.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our actual results may differ materially from those anticipated in these forward-looking statements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.
Implications of Being an
We are an
As an emerging growth company, we are exempt from:
• Sections 14A(a) and (b) of the Exchange Act, which require companies to
hold stockholder advisory votes on executive compensation and golden
parachute compensation.
• The requirement to provide, in any registration statement, periodic report
or other reports to be filed with the Securities and Exchange Commission ,
or the "Commission" or "SEC", certain modified executive compensation
disclosure under Item 402 of Regulation S-K or selected financial data
under Item 301 of Regulation S-K for any period before the earliest audited
period presented in our initial registration statement.
• Compliance with new or revised accounting standards until those standards
are applicable to private companies;
• The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002, or
the Sarbanes-Oxley Act, to provide auditor attestation of our internal
controls and procedures; and
• Any Public Company Accounting Oversight Board , or "PCAOB", rules regarding
mandatory audit firm rotation or an expanded auditor report, and any other
PCAOB rules subsequently adopted unless the Commission determines the new
rules are necessary for protecting the public.
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We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act.
We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure under Item 402 of Regulation S-K.
Company Overview
Our focus is to invest primarily in real estate, technology and finance
opportunities in
On
Our Company is graciously endowed with an expert management team that has
extensive experience in acquiring, developing, constructing, and managing
high-quality multifamily, and retail properties in attractive markets throughout
the Mid-Atlantic and
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Properties Acquired by the
As of
Ownership The Company's Investment
Venture Interest March 31, 2022
Red Hills Capital Advisors :
Fort Washington Livingston Pace, LLC (1) 24.50% $ 5,066,359
Suitland Holdings Pace A and Pace B, LLC 24.50% 2,236,430
Velocity Ventures, LLC 49.00% 302,482
Marlow Heights Branch Pace, LLC 24.50% 671,576
Capheights Hill Pace, LLC 24.50% 134,750
Capheights Central Dev, LLC (2) 24.50% 5,320,331
Capheights Velocity Services, LLC 24.50% 465,872
COZ Manager,LLC (2) 12.25% 4,273,439
Total $ 18,471,239
We anticipate acquiring several properties and expanding into other markets.
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The Company is not a "shell company," since its filing of its Form 10 with the
The Company's current management believes the advantages of being a publicly held corporation will enable it to project further and faster growth during this market downturn. The Company's principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through community-private partnerships within different US jurisdictions.
During the remainder of the fiscal year and beyond such time, we anticipate incurring costs related to the filing of Exchange Act reports, and investigating, analyzing, and consummating further local partnerships. We believe we will be able to meet these costs through the use of funds to be loaned by or invested in us by our stockholders, management or other investors. Our management and stockholders have indicated their intent to advance funds on behalf of the Company as needed in order to accomplish its business plan and comply with its Exchange Act reporting requirements; however, there are no agreements in effect between the Company and our management and stockholders specifically requiring that they provide any funds to the Company. As a result, there are no assurances that such funds will be advanced or that the Company will be able to secure any additional funding as needed.
While the Company has limited assets and no revenues to date, the Company has an exceptionally experienced management in finance, politics, and business and has unrestricted flexibility in seeking, analyzing and participating in potential urban renewal opportunities in the area of community redevelopment. In its efforts to analyze potential ventures, the Company will consider the following kinds of factors:
(a) potential for growth, indicated by local need and assigned local, state or federal funding and incentives towards urban renewal in that given locale.
(b) competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole.
(c) strength and diversity of current management.
(d) capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through ventures or similar arrangements, sales of securities, or from other sources.
(e) the extent to which the business opportunity can be advanced; and
In applying the foregoing criteria, not one of which will be definitive, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available urban renewal opportunities may occur in many different locales, and at various stages of development, all of which will make the task of comparative investigation and analysis of such urban renewal opportunities extremely difficult and complex. Due to the Registrant's limited capital available for investigation, the Registrant may not discover or adequately evaluate adverse facts about the opportunity to be engaged. In addition, we will be competing against other entities that possess greater financial, technical, and managerial capabilities for identifying and completing new projects.
In evaluating a prospective new project, we will conduct as extensive a due
diligence review of potential targets as possible given our dependence upon the
ever-changing city, state, and federal funding initiatives for urban
redevelopment and our limited financial resources. We expect that our due
diligence will encompass, among other things, meetings with the local government
officials and inspection of its neighborhoods and infrastructure, as necessary,
as well as a review of financial, government statistical data and other
information which is made available to us. This due diligence review will be
conducted primarily by our management or by unaffiliated third parties we may
engage, including but not limited to attorneys, accountants, consultants or
other such professionals. The costs associated with hiring third parties as
required to complete a new project may be significant and are difficult to
determine as such costs may vary depending on a variety of factors, including
the locale, amount of time it takes to complete a new project, the location of
the project, and the size and complexity of the business of the project. As of
the date of this filing, the Company has identified several potential business
opportunities. The Company is currently in discussions with several but not
limited to developers, real estate owners, property management companies in
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Our limited funds will likely make it difficult to conduct a complete and
exhaustive investigation and analysis of a target project at this early stage
without bringing on strategic local partners, which is part of our business
plan, see infra. As a general rule, it normally requires approximately 3-6
months to carry out due diligence and meeting with local and state officials,
and approximately 9-12 months to follow through to completion. The estimated
costs for this period and need are anywhere from approximately
The time and costs required to select and evaluate a target project and to structure and complete a new project cannot presently be ascertained with any degree of certainty. The amount of time it takes to complete a new project, the location of the project, the size and complexity of the project neighborhood, the scope of city, state, and federal regulations, and whether funds may be raised contemporaneously with the transaction are all factors that determine the costs associated with completing a new project transaction. The time and costs required to complete a new project can be estimated once a new project target has been identified. Any costs incurred with respect to the evaluation of a prospective new project that is not ultimately completed will result in a loss to us.
Through information obtained from industry professionals including attorneys, architects, developers, appraisers, accountants, commercial and residential real estate brokers, builders, engineers as well as other consultants with experience in the urban redevelopment sphere, there are literally thousands of new potential projects, and the aim of the management is to filter through these for the most reasonably achievable urban renewal projects.
We are and will continue for the foreseeable future to be, an insignificant participant on the national level of public-private urban renewal.
Nearly all similar companies have significantly greater financial resources; consequently, we will be at a competitive disadvantage in identifying possible urban renewal opportunities and successfully completing a new project. These competitive factors may reduce the likelihood of our identifying and consummating a successful new project.
Some of our officers are engaged in outside business activities, and as such
will be dividing their time amongst these entities and anticipate that they will
devote less than full time to our business until the successful project has been
identified. The specific amount of time that management will devote to the
Company may vary from week to week or even day to day, and therefore the
specific amount of time that management will devote to the Company on a weekly
basis cannot be ascertained with any level of certainty. In all cases,
management intends to spend as much time as is necessary to exercise their
fiduciary duties as an officer and/or director of the Company and believes that
they will be able to devote the time required to consummate a new project
transaction as necessary. We expect no significant changes in the number of our
employees other than such changes, if any, incident to a new project. We are,
however, strengthening our corporate structure, and on
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in
These unaudited financial statements should be read in conjunction with our
23 Going Concern
Due to the uncertainty of our ability to meet our current operating and capital
expenses, our independent auditors included an explanatory paragraph in their
report on the audited financial statements for the year ended
Our unaudited condensed financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity. Our future growth is dependent upon achieving further development projects and execution of development projects, engaging other company related opportunities, management of operating expenses, and the ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations.
Stockholders' Equity
Since its inception on
The aggregated loss is related to the capital invested in advances real estate membership interest, which has future positive cash flow after completion and stabilization. See note 5.
Authorized Shares Common Stock
The Company is authorized to issue up to 500,000,000 shares of common stock, par
value
Preferred shares
The Company Authorizes and hereby creates 5,000,000 (Five Million) shares of
preferred stock, with conversion rights of 1:1 (one to one), but with 30:1
voting rights. As of
Commitments and Contingencies
On
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On
The Private Note has a 7.5% fixed rate that matures on
We will require additional financing to implement our business plan, which may include joint venture projects and debt or equity financings. The nature of this enterprise and constraint of positive cash flow places debt financing beyond the creditworthiness required by most banks or typical investors of corporate debt until such time as economically viable profits and losses can be demonstrated. Therefore, any debt financing of our activities may be costly and result in substantial dilution to our stockholders.
Future financing through equity investments is likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.
Our ability to obtain needed financing may be impaired by such factors as the capital markets, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms satisfactory to us, or at all. We do not have any arrangements in place for any future financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements, or contingencies in place in the event that we cease operations.
Results of Operations
For the Three Months Ended
Revenues
The Company has not brought in revenues to date.
Operating Expenses
For the three months ended
Net Operating loss
Net Operating loss was
25 Net loss
Net loss was
Other Income
Other Income/(Expense) increased to
Liquidity and Capital Resources
Overview
The Company's cash and cash equivalents balance were
Net cash used in the Company's operating activities during the three months
ended
Net cash used in investing activities for the quarter ended
Net cash used in financing activities for the quarter ended
Since its inception on
Historically, we have financed our cash flow and operations from contributions of our majority shareholder and by raising equity and convertible loans.
As of
It is our current policy that all transactions between the Company and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the existing directors, are approved by vote of the stockholders, or are fair to us as a corporation as approved or ratified by our Board of Directors or authorized officer. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we review the potential of conflicts of interest.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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Critical Accounting Policies and Estimates
Use of Estimates
In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in
Lease
On
Revenue Recognition
In
Under the new revenue standards, the Company recognizes revenues when its
customer obtains control of promised goods or services, in an amount that
reflects the consideration which it expects to receive in exchange for those
goods. The Company recognizes revenues following the five-step model prescribed
under ASU No. 2014-09: (i) identify the contract(s) with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenues when (or as) we satisfy
the performance obligation. The Company recognized revenue from providing
temporary and permanent staffing solutions and the sale of consumer products.
Service revenues are recognized as the services are performed in proportion to
the transfer of control to the customer and real estate revenues are recognized
at the time of sale when consideration has been exchanged and title has been
conveyed to the buyer. At this time, we have not identified specific planned
revenue streams. During the period from
Income Taxes
The Company accounts for income taxes using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax law. For deferred tax assets, management evaluates the probability of realizing the future benefits of such assets. The Company establishes valuation allowances for its deferred tax assets when evidence suggests it is unlikely that the assets will be fully realized.
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The Company recognizes the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and then only in an amount more likely than not to be sustained upon review by the tax authorities. Income tax positions that previously failed to meet the more likely than not threshold is recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not threshold is derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company classifies potential accrued interest and penalties related to unrecognized tax benefits within the accompanying consolidated statements of operations and comprehensive income (loss) as the income tax expense.
Stock-based Compensation
Stock-based compensation cost to employees is measured at the date of grant,
based on the calculated fair value of the stock-based award, and will be
recognized as expense over the employee's requisite service period (generally
the vesting period of the award). Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever is
more readily determinable. The company has no stock-based compensation plan
established as of
Derivative instruments
The fair value of derivative instruments is recorded and shown separately under liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement of operations under other (income) expenses.
Our Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the binomial option-pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Related Parties
The Company follows subtopic 850-10 of the FASB ASC for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 related parties include:
a. affiliates of the Company;
b. entities for which investments in their equity securities would be required, absent the election of the FV option under the FV Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity;
c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;
d. principal owners of the Company;
e. management of the Company; 28
f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and
g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements.
The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
New Accounting Pronouncements
In
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