COMMUNITY REDEVELOPMENT INC. Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this annual
report, including, without limitation, statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. When used in
this annual report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors detailed in our filings with the
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this annual report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
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The Company is not a "shell company," as it has formal operations, emplaced
Board, and several executed Memorandums of Understanding with current projects,
in spite of having no significant cash on hand since the change in control of
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 down-turn. 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.
As of the date of this filing, the Company has entered into preliminary discussions with several potential parties, though no definitive agreements have been executed to date.
While the Company has limited assets and no revenues, the Company has an exceptionally experienced management in finance, politics and business and have 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 joint ventures or similar arrangements, sales of securities, or from other sources;
(e) the extent to which the business opportunity can be advanced; and
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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 company in
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, and 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.
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We presently have no employees. Our officers and directors are engaged in outside business activities and are employed on a full-time basis by other companies. Our officers and directors 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.
It is likely that the Registrant will engage its participation in a business opportunity through the issuance of its Common Stock or other securities of the Registrant, which could result in substantial dilution to the equity of stockholders of the Registrant immediately prior to the consummation of a transaction. Although the terms of any such transaction have not been identified and cannot be predicted, it is expected that any new project transaction the Company may enter into would be structured as a "tax free" reorganization. It should be noted that the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code") depends upon the transaction meeting certain statutory and non-statutory requirements. There are different types of statutory requirements for each type of tax-free reorganization and thus each transaction must be reviewed carefully to determine its eligibility for a tax-free reorganization. One of the statutory requirements in a tax-free reorganization is that at least a certain percentage of the total consideration in the transaction must be voting stock of the engager corporation. This could result in substantial dilution to the equity of those who were stockholders of the Registrant prior to such reorganization. In addition, post-transaction dispositions of Registrant's stock received as consideration could have implications for the tax-free nature of the transaction in question.
Acquisition by
The present stockholders of the Registrant representing management control approximately 57% of the company and are the largest shareholders of the voting securities of the Registrant. As part of said merger, the past Director resigned and the majority shareholders elected our current Board.
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It is anticipated that the investigation of specific urban renewal opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial cost for accountants, attorneys and others. The costs
that will be incurred are difficult to determine with any degree of specificity
at this time as such costs are expected to be dependent on factors such as the
amount of time it takes to identify and complete a new project transaction, the
location, size and complexity of the business of the project, the local, state
and federal laws and/or matching funds, the scope of the due diligence
investigation required, possible changes in the Company's capital structure in
connection with the transaction, and whether funds may be raised
contemporaneously with the transaction. If a decision is made not to participate
in a specific business opportunity, the costs theretofore incurred in the
related investigation might not be recoverable. Furthermore, even if an
agreement is reached for the participation in a specific project opportunity,
the failure to consummate that transaction may result in the loss to the
Registrant of the related costs incurred. The Company is currently in
discussions with several qualified developers, real estate owners, and property
management companies in
RESULTS OF OPERATIONS
Year ended
Net loss for the year ended
Operating Expenses
Operating expenses for the year ended
Net Loss
Net loss for the year ended
LIQUIDITY AND CAPITAL RESOURCES
We adopted the
The accompanying financial statements have been prepared assuming that we will continue as a going concern. While the Company is attempting to generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management intends to raise additional funds by way of a public or private offering. 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. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. 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 revenues. We will require additional cash funding to fund operations. Therefore, we concluded there was substantial doubt about the Company's ability to continue as a going concern.
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To fund further operations, we will need to raise additional capital. We may obtain additional financing in the future through the issuance of its common stock, or through other equity or debt financings. Our ability to continue as a going concern or meet the minimum liquidity requirements in the future is dependent on its ability to raise significant additional capital, of which there can be no assurance. If the necessary financing is not obtained or achieved, we will likely be required to reduce its planned expenditures, which could have an adverse impact on the results of operations, financial condition and our ability to achieve its strategic objective. There can be no assurance that financing will be available on acceptable terms, or at all. The financial statements contain no adjustments for the outcome of these uncertainties. These factors raise substantial doubt about our ability to continue as a going concern and have a material adverse effect on our future financial results, financial position and cash flows.
Operating Activities
Net cash used in operating activities for the year ended
Net cash used in operating activities for the year ended
Investment Activities
Net cash used in investing activities for the years ended
Financing Activities
Net cash provided by financing activities for the year ended
Critical Accounting Policies and Estimates
Use of Estimates
In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in
Lease
On
8 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 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 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.
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 are 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 are 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 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.
9 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) expense.
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 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;
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.
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New Accounting Pronouncements
In
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