The following discussion and analysis of financial condition and results of
operations relates to the operations and financial condition reported in the
unaudited condensed financial statements of the Company for the three and six
months ended October 31, 2019 and 2018 and should be read in conjunction with
such financial statements and related notes included in this report. Except for
the historical information contained herein, the following discussion, as well
as other information in this report, contain "forward-looking statements,"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and are subject
to the "safe harbor" created by those sections. Actual results and the timing
of the events may differ materially from those contained in these
forward-looking statements due to a number of factors, including those discussed
in the "Forward-Looking Statements" set forth elsewhere in this Quarterly Report
on Form 10-Q.
Overview
Evergreen International Corp. ("Evergreen", "we", "our" or "the Company")
started as a wood products company that had been in business since 1980. Our
business fluctuated over the years. We were almost wholly dependent on sales to
The Home Depot, Inc. On September 2, 2003, we terminated our business
relationship with Home Depot due to increased difficulties in transacting
business with such company on a profitable basis. These difficulties included
Home Depot's prohibition against price increases, despite increases in our costs
of production, a diminution in the Home Depot territories to which we were
allowed to sell our products, and Home Depot's demands regarding returns of
ordered products that we were unwilling to accede to for economic reasons.
On June 22, 2018, the Company entered into a Stock Purchase Agreement (the
"SPA") with a third party (the "Purchaser") and certain selling stockholders,
including the Company's controlling stockholders (all of the selling
stockholders, collectively, the "Sellers"). Pursuant to the SPA, the Purchaser
agreed to acquire approximately 98.75% of the Company's issued and outstanding
common stock (the "Shares"). The transaction contemplated by the SPA was subject
to various conditions, including payment of a cash dividend to the Company's
stockholders and the Company's changing its name and ticker symbol as per the
direction of the Purchaser.
On July 6, 2018, the Board of Directors of the Company (i) declared a cash
dividend in an aggregate amount of $181,996, or an average of $0.024760 per
share, payable to stockholders of record on July 16, 2018, and (ii) approved an
amendment to the Company's Certificate of Incorporation to change the Company's
name to Evergreen International, Corp., which amendment was filed with the
Secretary of State of the State of Delaware on July 13, 2018 and became
effective on July 20, 2018.
On July 27, 2018, the transaction contemplated by the SPA closed and the
Purchaser acquired the Shares for a cash consideration of $325,000. The
consummation of the transactions contemplated by the SPA resulted in a change of
control of the Company.
Currently, the Company only possesses minimal assets and liabilities with no
substantial business operations. There were no significant revenues or positive
cash flows for the six months ended October 31, 2019. The Company's management
efforts are focused on seeking out a new and profitable operating business with
strong growth potential. Unless and until the Company's successful acquisition
of an operating business, we expect our expenses to consist of legal fees,
accounting fees, and administrative costs related to maintaining a public
company.
Critical Accounting Policies and Significant Judgments and Estimates
The Securities and Exchange Commission ("SEC") issued disclosure guidance for
"critical accounting policies." The SEC defines "critical accounting policies"
as those that require the application of management's most difficult, subjective
or complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain and may change in subsequent
periods.
Our significant accounting policies are described in the Notes to these
unaudited condensed financial statements. Currently, based on the Company's
limited activity, we do not believe that there are any accounting policies that
require the application of difficult, subjective or complex judgments.
9
Results of Operations
Since we discontinued our wood products business in 2003, we have had no sales
revenue, including during the three and six months periods ended October 31,
2019 and 2018.
Three Months Ended October 31, 2019 Compared to the Three Months Ended October
31, 2018
Selling, general and administrative expenses ("operating expenses") were $5,625
for the three months ended October 31, 2019, as compared to $6,070 for the same
period in 2018. These expenses are primarily composed of professional fees and
public filing expenses.
Six Months Ended October 31, 2019 Compared to the Six Months Ended October 31,
2018
Selling, general and administrative expenses ("operating expenses") were $29,596
for the six months ended October 31, 2019, as compared to $28,247 for the same
period in 2018. These expenses are primarily composed of professional fees and
public filing expenses.
For the six months ended October 31, 2019, we had a net loss of $29,596, as
compared to a net loss of $28,114 for the same period in 2018. The increase
during the six months ended October 31, 2019 is primarily due to increased
professional fees and public filing expenses offset partially by a decrease in
interest income.
Liquidity and Capital Resources
As of October 31, 2019, we had a working capital deficit of $60,382, compared to
a working capital deficit of $30,786 as of April 30, 2019. As of October 31,
2019 and April 30, 2019, we had $785 of cash.
The Company's operating activities did not use any cash for the six months ended
October 31, 2019, as compared to $23,144 for the same period in 2018. The
decrease during the current period is primarily due to the Company's operating
expenses being accrued but not paid or paid by a related party on behalf of the
Company.
The Company's financing activities did not use any cash for the six months ended
October 31, 2019, as compared $181,996 during the same period in 2018. as the
company paid a special dividend of substantially all remaining cash as a
provision of the 2018 stock purchase agreement discussed in Note 2 of the
unaudited condensed financial statements.
We do not expect to incur any capital expenditures during the remaining fiscal
year of 2020.
We anticipate that our operating activities will generate negative net cash flow
during the remaining fiscal year of 2020. We believe that our cash on hand will
be insufficient for meeting our liquidity and capital resource needs. In order
to remedy this liquidity deficiency, management is actively seeking additional
capital to fund operations.
Off-Balance Sheet Arrangements
We do not have any transactions, agreements or other contractual arrangements
that constitute off-balance sheet arrangements.
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