This Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the operating results and financial condition of the
Company for the fiscal quarters ended December 31, 2021 and 2020. The
discussion and analysis set forth below is intended to assist you in
understanding the financial condition and results of our operations and should
be read in conjunction with our financial statements and the accompanying notes
included elsewhere in this quarterly report. Our results of operations and
financial condition, as reflected in the accompanying statements and related
notes, are subject to management's evaluation and interpretations of business
conditions, changing market conditions and other factors. Historical results and
trends which might appear should not be taken as indicative of future
operations. The following discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in the forward-looking statements as a result of various
factors, including those discussed in our Form 10-K for the fiscal year ended
September 30, 2021.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (including the exhibits hereto) contains
certain "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"), such as statements relating to our financial condition,
results of operations, plans, objectives, future performance or expectations,
and business operations. These statements relate to expectations concerning
matters that are not historical fact. Accordingly, statements that are based on
management's projections, estimates, assumptions, and judgments constitute
forward-looking statements. These forward-looking statements are typically
identified by words or phrases such as "believe," "expect," "anticipate,"
"plan," "estimate," "approximately," "intend," "objective," "goal," "project,"
and other similar words and expressions, or future or conditional verbs such as
"will," "should," "would," "could," and "may." These forward-looking statements
are based largely on information currently available to our management and on
our current expectations, assumptions, plans, estimates, judgments and
projections about our business and our industry, and such statements involve
inherent risks and uncertainties. Although we believe our expectations are
based on reasonable estimates and assumptions, they are not guarantees of
performance and there are a number of known and unknown risks, uncertainties,
contingencies, and other factors (many of which are outside our control) which
may cause actual results, performance, or achievements to differ materially from
those expressed or implied by such forward-looking statements. Accordingly,
there is no assurance that our expectations will in fact occur or that our
estimates or assumptions will be correct, and we caution investors and all
others not to place undue reliance on such forward-looking statements.
These potential risks and uncertainties include, but are not limited to, our
ability to identify, secure and obtain suitable and sufficient financing to
continue as a going concern; our ability to identify, enter into and close an
appropriate merger, acquisition, or other combination transaction with a
business prospect; economic, political and market conditions; the general
scrutiny and limitations placed on "blank check" and "shell" companies under
applicable governmental regulatory oversight; interest rate risk; government and
industry regulation that might affect future operations; potential change of
control transactions resulting from merger, acquisition, or combination with a
business prospect; the potential dilution in our equity (both economically and
in voting power) that might result from future financing or from merger,
acquisition, or combination activities; and other factors.
All written or oral forward-looking statements that are made or attributable to
us are expressly qualified in their entirety by this cautionary notice. The
forward-looking statements included herein are only made as of the date of this
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2021
(this "Form 10-Q"). We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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Overview
Operations. Following the reactivation of our reporting obligations under
Section 15(d) of the Exchange Act on December 17, 2014 ("Reporting
Reactivation") which had been suspended since 2011, we attempted to seek to
maximize shareholder value by searching for and identifying suitable potential
target private companies or business partners for a business combination that
met the Company's strategic objectives. Although the Company had held
preliminary discussions regarding potential business combination transactions,
the Company ultimately was unable to successfully identify a suitable candidate
or negotiate the terms of any such business combination and, as of the fiscal
year ended September 30, 2016, the Company had expended substantially all of its
available cash and had not been able to secure any additional funds to finance
its continued operations. As a result, the Company was unable to prepare and
timely file its periodic reports under the Exchange Act, commencing with its
Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and,
other than maintaining its corporate status, was dormant from such date through
May 2020.
In May 2020, the Company determined that the business environment had
sufficiently changed so that identifying a target and completing a business
combination may be more likely than was previously the case. As part of this
strategy, the Company determined to attempt to seek the financing necessary to
prepare and file all of its delinquent Forms 10-K under the Exchange Act and to
again aggressively pursue an acquisition target. In order for the Company to
finance the preparation and filing of the Company's delinquent periodic report
filings with the Commission, Mr. Toomey, a principal shareholder, director and
secretary of the Company, loaned the Company approximately $130,000 during the
fiscal year ended 2021.
Our plan is to seek a business venture in which to participate. The selection of
a business opportunity in which to participate is complex and extremely risky
and will be made by management in the exercise of its business judgment. No
assurance can be given that we will be able to identify a suitable target or, if
identified, that we will be able to successfully negotiate and agree upon terms
acceptable to the Company or to successfully complete and close the proposed
acquisition or business combination. No specific assets or businesses have yet
been identified. Further, there is no certainty that any such assets or
business will be identified or any transactions will be consummated.
We expect to pursue our search for a business opportunity primarily through our
officers and directors, although other sources, such as professional advisors,
securities broker-dealers, venture capitalists, members of the financial
community, and others, may present unsolicited proposals. Our activities are
subject to several significant risks that arise primarily as a result of the
fact that we have no specific target company or business and may acquire or
participate in a business opportunity based on the decision of management which
will, in all probability, act without the consent, vote, or approval of our
shareholders. A description of the manner in which we will pursue the search for
and participation in a business venture is described in "-- Recent Business
Activities" below.
Financial Condition. We did not record revenues from operations during the
fiscal quarter covered by our financial statements included in this Form 10-Q
and are not currently engaged in any business activities that provide cash
flows. We do not expect to generate any revenues during the current fiscal year
unless we are able to secure additional financing to continue operations. Our
ability to continue as a going concern is dependent upon our ability to develop
additional sources of capital, locate and complete a merger with another
company, and ultimately, achieve profitable operations.
We have no specific plans, understandings or agreements with respect to the
raising of such funds, and we may seek to raise the required capital by the
issuance of equity or debt securities or by other means. Since we have no such
arrangements or plans currently in effect, our inability to raise funds for the
consummation of an acquisition may have a severe negative impact on our ability
to become a viable company.
We have negative working capital, negative shareholders' equity and have not
earned any revenues from operations since the fiscal year ended September 30,
2011. Because we have had no revenues from operations and do not own any
significant assets against which we can borrow funds, we historically had relied
on funds furnished by Mr. Toomey, a principal shareholder, director and
secretary of the Company, in exchange for issuances of our convertible debt
securities in order to finance our operations following our Reporting
Reactivation. However, Mr. Toomey previously advised the Company that he did not
intend to provide the Company with any further loans or equity financing after
September 30, 2016 if the Company was unable to enter into a letter of intent or
receive a formal offer to engage in a bona fide business combination with a
target company or business operation on or before such date. As a result of our
inability to satisfy these requirements, Mr. Toomey ceased financing our
operations.
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However, following our determination that the business environment was more
favorable to pursue our strategy, Mr. Toomey again provided us with
nonconvertible loans in 2020 and 2021 to recommence our operations.
In order to fund our operations and proposed business activities through such
time as we may consummate a merger or other business combination with a target
company or business operation, we will need to continue to raise the required
capital through the issuance of equity or debt securities or by other means.
Although Mr. Toomey has provided us with additional debt financing since May
2020, we have no formal commitment that Mr. Toomey will continue to provide the
Company with working capital sufficient until we consummate a merger or other
business combination with a target company or business operation, and we
anticipate that his willingness to provide additional financing will be
dependent on our ability to demonstrate meaningful progress with our business
strategy.
Our ability to continue as a going concern is dependent upon our ability to
develop additional sources of capital, locate and complete a merger with another
company, and ultimately, achieve profitable operations. Except as described in
"-- Recent Business Activities" below, we have no specific plans,
understandings or agreements with respect to the raising of any additional
financings, and we may seek to raise the required capital by the issuance of
equity or debt securities or by other means. Since we have no such arrangements
or plans currently in effect (other than as described in "-- Recent Business
Activities" below), our limited ability to raise funds to continue operations
and to seek an acquisition may have a severely negative impact on our ability to
become a viable company. Our historical operating results disclosed in this
Form 10-Q are not meaningful to our future results.
Results of Operations
Comparison of Three Months Ended December 31, 2021 and 2020
Revenues. Because we currently do not have any business operations, we have not
had any revenues during the three months ended December 31, 2021 and December
31, 2020.
Operating Expenses. We had operating expenses of $24,893 and $19,463 for the
three months ended December 31, 2021 and 2020 respectively. The increase in
expenses for the three months ended December 31, 2021 as compared to the three
months year ended December 31, 2020 were related to an effort to bring the
company back to reporting status. These expenses were incurred in effort to
maintain our corporate status, audit our financial statements and other matters
related to maintaining our SEC filing requirements.
Net Income (Loss). We recognized a net loss of $24,893 and $19,463 for
the three months ended December 31, 2021 and December 31, 2020, respectively,
because our operations were dormant and expenses were initiated to reinstate our
corporation's standing and update our filing requirements during the current
fiscal quarter.
Liquidity and Capital Resources
As of December 31, 2021, the Company had limited cash resources and we had a
working capital deficit of $206,957. Our current liabilities were 221,797 at
December 31, 2021 and $220,341 at September 30, 2021. Our total assets decreased
to $14,840 as of December 31, 2021 from $38,277 at September 30, 2021 due to an
increase in professional fees incurred in connection with matters related to
maintaining our SEC filing requirements.
We had no material commitments for capital expenditures as of December 31,
2021. However, if we are able to execute our business plan as anticipated in
the future, we would likely incur substantial capital expenditures and require
additional financing to fund such expenditures.
Because we do not have any revenues from operations, absent a merger or other
business combination with an operating company or a public or private sale of
our equity or debt securities, the occurrence of either of which cannot be
assured, we will continue to be dependent upon future loans or equity
investments from our present shareholders or management to fund operating
shortfall and do not foresee a change in this situation in the immediate future.
We will attempt to raise capital for our current operational needs through loans
from related parties, debt financing, equity financing, or a combination of
financing options. However, there are no existing undertakings, commitments, or
agreements for any debt or equity financings and there is no assurance to that
effect. Further, our need for capital may change dramatically if unknown claims
or debts surface or if we acquire a business opportunity. There can be no
assurances that any additional financings will be available to us on
satisfactory terms and conditions, if at all. Unless we can obtain additional
financing, our ability to continue as a going concern is doubtful.
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Although Mr. Toomey has provided the necessary funds for the Company from time
to time in the past, there is no existing commitment to provide additional
capital and he is unlikely to fund the Company to pay for any claims made
against the Company for substantial debts or other obligations. In such
situation, there can be no assurance that we shall be able to receive additional
financing, and if we are unable to receive sufficient additional financing upon
acceptable terms, it is likely that our business would cease operations or, at
the very least, cease to be a reporting Company under the Exchange Act.
Subsequent Developments
In order for the Company to finance the completion of the preparation and filing
of all of the Company's delinquent Forms 10-K and Form 10-Qs for the fiscal year
ended September 30, 2021 with the Commission and to commence its proposed
business activities described herein, Mr. Toomey made an additional loan to the
Company in aggregate amount of $50,000 on February 7, 2022 (referred to as the
"Toomey Loan").
The Toomey Loan is evidenced by a promissory note, dated February 7, 2022,
issued by the Company to Mr. Toomey (the "2022 Promissory Note"). The 2022
Promissory Note bears interest, commencing on the date of the loan, at an
initial rate of 2% per annum and the note matures on December 31, 2023. The
maturity date of the 2022 Promissory Notes will accelerate and be due and
payable immediately upon any change of control, merger, or other business
combination (as defined in the 2022 Promissory Note). If the maturity date is
extended for any reason whatsoever (including in connection with an acceleration
event), the 2022 Promissory Note will bear interest at a rate of 5% per annum,
commencing on the date of any such extension. The 2022 Promissory Note is not
convertible into our common shares.
Recent Business Activities
As of the date of filing of this Form 10-Q, the Company has entered into
preliminary discussions regarding a potential business combination and equity
financing transaction with Renovo Resource Solutions, Inc. ("Renovo"), a Florida
corporation located in Manatee County, Florida, and 6, LLC, a Florida limited
liability real estate holding company controlled by Renovo which owns the land
on which Renovo conducts its business (Renovo and 6 LLC, collectively the
"Renovo Group"). Renovo is engaged in an environmentally friendly scrap yard
operation. Renovo's operations are located on a site specifically engineered for
its business and includes a new constructed facility for its operations. Renovo
is a privately held company in which Mr. Toomey and his family have a one-third
ownership interest. The Company has only commenced preliminary discussions with
the Renovo Group and has not entered into a letter of intent or other
undertaking with Renovo. It is anticipated that when the Company is analyzing
the available alternatives, it will consider and evaluate, among other things, a
potential business combination with Renovo in combination with a simultaneous
equity financing transaction.
The Renovo Group has incurred indebtedness of approximately $6.1 million in
connection with its business operations and land holdings, consisting primarily
of the construction costs incurred in connection with its newly constructed
facilities. In order for a business combination with the Renovo Group to be
feasible, the Company and Renovo would need to simultaneously raise
approximately $12,500,000 in equity financing ("Equity Financing") at the time
of any such potential business combination in order (a) to repay the Company's
outstanding indebtedness owed to Mr. Toomey, (b) to pay the costs associated
with any business combination transaction and Equity Financing, and (c) for the
Renovo Group to repay its outstanding debt obligations, to pay its operating
expenses until such expenses can be paid from operating income, to finance the
completion of the permitting and improvements needed on its operational site,
and to permit it to take advantage of operational opportunities in its local
community. Accordingly, if the Company were to pursue a business combination
with the Renovo Group under such circumstances, it would likely require as a
condition to any such business combination that the necessary Equity Financing
be firmly committed and made available at the time of the consummation of such
business combination. In the event that the Renovo Group is unable to commit to
timely raising such Equity Financing, the Company would have no interest in
pursuing a business combination transaction with the Renovo Group. Although we
have commenced negotiations with the Renovo Group, we have not entered into a
letter of intent or other undertaking with the Renovo Group for a business
combination and no source of Equity Financing has been secured or is in the
process of negotiations at this time. In view of the number of significant
uncertainties surrounding a possible transaction, there is no assurance that the
Company and the Renovo Group will reach any agreement with respect to a business
combination and, if so, that they will be able to secure the Equity Financing
necessary to consummation of such a transaction.
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