RIDGEFIELD ACQUISITION CORP. Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains 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 (the "Exchange Act"). The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "intend," "could," "would," "project," "plan," "expect" and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning our future financial and operating results; our business strategy of pursuing the acquisition of an operating entity; future financing initiatives; our intentions, expectations and beliefs regarding a merger, acquisition or other business combination with a viable operating entity; and our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company andUnited States export regulations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to uncertainties, assumptions and business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements. Forward-looking statements should not be relied upon as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
Overview
Ridgefield Acquisition Corp. ("we", "us", "our", "Ridgefield" or the "Company") was originally incorporated as aColorado corporation onOctober 13, 1983 under the nameOzo Diversified, Inc. OnJune 23, 2006 , the Company filed Articles of Merger with the Secretary of State of theState of Nevada that effected the merger between the Company and a wholly-owned subsidiary formed under the laws of theState of Nevada ("RAC-NV "), pursuant to the Articles of Merger, wherebyRAC-NV was the surviving corporation. The merger changed the domicile of the Company from theState of Colorado to theState of Nevada . Furthermore, as a result of the Articles of Merger the Company is authorized to issue 35,000,000 shares of capital stock consisting of 30,000,000 shares of common stock,$.001 par value per share and 5,000,000 shares of preferred stock,$.01 par value per share. SinceJuly 2000 , the Company has suspended all operations, except for necessary administrative matters relating to the timely filing of periodic reports as required by the Securities Exchange Act of 1934. The Company is a "shell company" as defined in Rule 12b-2 of the Exchange Act. Accordingly, during the nine months endedSeptember 30, 2022 and 2021 we earned no revenues. Our principal executive office is located at3250 Retail Drive , Suite 120-518,Carson City, NV 89706-0686 and the telephone number is (805) 484-8855. Our website address is www.ridgefieldacquisition.com. None of the information on our website is part of this Form 10-Q. 8 Table of Contents Acquisition Strategy
Our plan of operation is to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. We have not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
We anticipate that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, we believe that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders, creating a means for providing incentive stock options or similar benefits to key employees, and other factors. In some cases, management of the Company will have the authority to undertake acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so. In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, our objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no assurance that we will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that we will be able to obtain such additional funds, if needed. Even if we are able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles ofthe United States ("U.S. GAAP") requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. TheSEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. A description of our critical accounting policies and judgments used in the preparation of our financial statements was provided in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year endedDecember 31, 2021 . There have been no material changes in these critical accounting policies sinceDecember 31, 2021 . Results of Operations Revenues
During the nine months endedSeptember 30, 2022 , and the nine months endedSeptember 30, 2021 , the Company earned no revenues from operations. Overall, the Company incurred a net loss of$16,209 during the three months endedSeptember 30, 2022 as compared to$12,031 during the three months endedSeptember 30, 2021 . During the nine months endedSeptember 30, 2022 and the nine months endedSeptember 30, 2021 , the Company incurred a net loss of$41,555 and$47,208 , respectively. Because the Company's operations are primarily administrative, the fluctuations in net loss relate to decreased interest expense and the timing of general and administrative (G&A) expenses during the period. 9
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General and Administrative Expenses
G&A expenses consist of professional fees, service charges, office expenses and similar items.
During the three months endedSeptember 30, 2022 , the Company incurred G&A expenses of$14,819 , an increase of$3,468 compared to G&A expenses of$11,351 during the three months endedSeptember 30, 2021 . During the nine months endedSeptember 30, 2022 , and the nine months endedSeptember 30, 2021 , the Company incurred G&A expenses of$37,474 and$39,023 , respectively. The increase in the quarter is largely due to timing of services provided, primarily professional fees related to compliance and expenses of maintaining our status as a public company and the reporting obligations thereunder. The reduction year-to-date in 2022 similarly reflects differences in the timing of services provided, but the nine months endingSeptember 30, 2021 also includes additional professional fees related to theMarch 2021 cancellation of the 2016 Loan and related issuance of new shares. Other Expense
Other expense primarily represents state licenses, filing fees, minimum tax expense and net interest expense.
Other expense increased to$1,390 during the three months endedSeptember 30, 2022 , as compared to$680 during the three months endedSeptember 30, 2021 . The increase relates to interest expense, which was$850 during the three months endedSeptember 30, 2022 compared to no interest expense in the three months endedSeptember 30, 2021 . During the nine months endedSeptember 30, 2022 , the Company incurred other expense of$4,081 , a decrease of$4,104 compared to other expense of$8,185 during the nine months endedSeptember 30, 2021 . The decrease also relates primarily to interest expense. The Company incurred net interest expense of$5,680 during the nine months endedSeptember 30, 2021 , and$1,716 during the nine months endedSeptember 30, 2022 , primarily as a result of a loan from the President of the Company. The 2016 Loan was cancelled onMarch 26, 2021 and the 2022 Loan was not initiated untilMarch 23, 2022 .
Liquidity and Capital Resources
Cash and cash equivalents consist of cash and money market funds. We did not have any short-term or long-term investments as ofSeptember 30, 2022 . Cash requirements for working capital and capital expenditures have been funded from cash balances on hand. As ofSeptember 30, 2022 , we had cash and cash equivalents of$20,361 and working capital of$12,039 , excluding the related party debt. With the related party debt, we had a working capital deficit of ($39,677 ). Historically, the Company satisfied its working capital needs from related party loans fromSteven N. Bronson , the Chairman, President, CEO, and majority shareholder. OnDecember 31, 2016 ,Mr. Bronson entered into a revolving loan agreement (the "2016 Bronson Note") wherebyMr.Bronson would loan the Company money from time-to-time to fund working capital needs to pay operating expenses. The 2016 Bronson Note was unsecured, repayable upon demand and accrued interest at the rate of 10% per annum. OnMarch 26, 2021 , the Company sold 1,600,000 shares of its Common Stock toMr. Bronson at a price of$0.25 per share, for an aggregate purchase price of$400,000 .Mr. Bronson paid the purchase price for the shares by cancelling$349,442 in principal and accrued interest outstanding under the 2016 Bronson Note and paying$50,558 in cash. OnMarch 23, 2022 , the Company executed a Revolving Promissory Note (the "2022Bronson Note "), in the principal amount of up to$200,000.00 payable toSteven N. Bronson , the Company's Chairman of the Board, President and Chief Executive Officer, pursuant to whichMr. Bronson may make loans to the Company from time to time. The 2022 Bronson Note has a maturity date ofMarch 23, 2027 , and provides for interest to accrue on the unpaid principal at a rate of eight percent (8)% per annum (calculated on the basis of a 360-day year), compounded quarterly and payable quarterly on the last business day of the calendar quarter. The 2022 Bronson Note may be prepaid by the Company at any time without penalty. OnSeptember 27, 2022 , the Company executed a Revolving Promissory Note (the "Qualstar Note"), payable to Qualstar Corporation ("Qualstar").Mr. Bronson , the Company's Chairman of the Board, President and Chief Executive Officer, is the President and CEO of Qualstar Corporation, as well as its largest shareholder. Under the terms of the Qualstar Note, Qualstar may (but is not required to) make loans to the Company from time to time upon request by the Company, up to a maximum principal amount of$200,000 outstanding at any time. The Note may be prepaid by the Company at any time without penalty and is repayable on demand 10 Table of Contents by Qualstar on or afterDecember 31, 2024 . The Note provides for interest to accrue on the outstanding principal balance at a rate of ten percent (10)% per annum (calculated on the basis of a 360-day year), compounded and payable quarterly. The Company borrowed an initial amount of$20,000 under the Note onSeptember 27, 2022 .
During the nine months ended
Note Payable to Note Payable to
Steven N. Bronson Qualstar Corporation
Principal Interest Principal InterestBalance January 1, 2021$ 251,161 $ 87,624 Additions 5,000 5,657 Cash Payments (-) (-) Conversion into Common Stock - March 26, 2021 (256,161) (93,281) Balance March 31, 2021 $ - $ - Additions - - Cash Payments (-) (-) Balance June 30, 2021 $ - $ - Additions - - Cash Payments (-) (-) Balance September 30, 2021 $ - $ - Balance January 1, 2022 $ - $ - Additions 20,000 40 Cash Payments (-) (-) Balance March 31, 2022$ 20,000 $ 40 Additions 10,000 826 Cash Payments (-) (-) Balance June 30, 2022$ 30,000 $ 866 $ - $ - Additions - 837 20,000 13 Cash Payments (-) (-) (-) (-) Balance September 30, 2021$ 30,000 $ 1,703 $ 20,000 $ 13 While the cash received from the related party loans will satisfy the Company's immediate financial needs, it will not by itself have the capacity to provide the Company with sufficient capital to finance a merger, acquisition or business combination between the Company and a viable operating entity. The Company may need additional funds in order to complete a merger, acquisition or business combination between the Company and a viable operating entity. There can be no assurances that the Company will be able to obtain additional funds if and
when
needed.
Economy and Inflation
Many leading economists predict high rates of inflation will continue through
2022 and potentially beyond. While we do not believe inflation has had a
material effect on our Company's results of operations, inflation generally
interferes with the provision of investment capital. A prolonged period of high
inflation may impact our ability to carry out our acquisition strategy. On the
other hand, when business conditions worsen and the stock market corrects, it
may be easier for us to identify an acquisition candidate.
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The new strain of coronavirus first identified inWuhan ,Hubei Province ,China , in 2019 ("COVID") has since spread globally, with more contagious variants, such as the Delta and Omicron variants, also emerging. While vaccines have proven effective at reducing the risk of serious health consequences from COVID, some governments have continued to implement various measures, or impose restrictions, in an effort to lessen the spread of the virus. We cannot make any predictions concerning the continuing severity, magnitude and duration of the pandemic, including impacts of virus variants and resurgences, and of government, business and individual responses. Although we do not expect COVID to impact our operations, it could impact our acquisition strategy, positively or negatively.
The extent to which new opportunities are presented to us will depend on future developments, which remain highly uncertain and cannot be predicted with confidence.
Off-Balance Sheet and Contractual Arrangements
Our liquidity is not dependent on the use of off-balance-sheet financing arrangements.
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