Overview
On December 20, 2017, our former Chief Executive Officer and majority
stockholder, Mr. Egan entered into the Purchase Agreement with Delfin for the
purchase by Delfin of shares owned by Mr. Egan representing approximately 70.9%
of our Common Stock. On the Closing Date, the former officers and directors,
including Mr. Egan, resigned from their respective positions with the Company.
Mr. Nichols was appointed the sole member of our Board and our sole executive
officer. In 2018, our Board appointed Mr. Frederick Jones as President, Chief
Executive Officer, Chief Financial Officer, and Director of the Company, and Mr.
Nichols resigned from his positions of President, Chief Executive Officer, Chief
Financial Officer, Director, and any other directorships, offices or other
positions with the Company.
We currently have no material operations or assets.
Basis of Presentation of Financial Statements; Going Concern
We received a report from our independent registered public accountants,
relating to our December 31, 2019 audited financial statements, containing an
explanatory paragraph regarding our ability to continue as a going concern. As a
shell company, our management believes that we will not be able to generate
operating cash flows sufficient to fund our operations and pay our existing
current liabilities in the foreseeable future. Based upon our current limited
cash resources and without the infusion of additional capital and/or the
continued forbearance of our creditors, our management does not believe we can
operate as a going concern beyond the next twelve months. See "Future and
Critical Need for Capital" section of this Management's Discussion and Analysis
of Financial Condition and Results of Operations for further details.
Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Accordingly, our condensed
financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should we be unable to continue as a going concern.
All Note references relate to accompanying Notes to Financial Statements.
Results of Operations
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net Revenue
Commensurate with the sale of our Tralliance business on September 29, 2008, we
became a shell company, and have not had any material operations since then. As
a result, net revenue was $0 for both of the years ended December 31, 2019 and
2018.
General and Administrative
General and administrative expenses include only those customary public company
expenses, including outside legal and audit fees, insurance and other related
public company costs. General and administrative expenses totaled approximately
$178,000 for the year ended December 31, 2019 and $237,000 for the year ended
December 31, 2018. The decrease was due to a decrease in legal fees related to
additional filings and securities work in 2018.
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Related Party Transactions
Related party transaction expense was $0 for the year ended December 31, 2019
and $60,000 for the year ended 2018 and consisted of payment to a former officer
in 2018.
Related Party Interest Expense
Related party interest expense for the years ended December 31, 2019 and 2018
was approximately $34,000 and $9,000, respectively, and consisted of interest
due and payable to Delfin under the Bridge Note. The increase is due to an
increase in the amount of money borrowed from Delfin.
Net Loss
Net loss for the year ended December 31, 2019 was approximately $211,000 as
compared to a net loss of approximately $307,000 for the year ended December 31,
2018.
Liquidity and Capital Resources
Future and Critical Need for Capital
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the U.S. on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. Accordingly, the financial statements do not
include any adjustments relating to the recoverability of assets and
classification of liabilities that might be necessary should we be unable to
continue as a going concern. However, for the reasons described below, our
management does not believe that cash on hand and cash flow generated internally
by us will be adequate to fund our limited overhead and other cash requirements
beyond the next twelve months. These reasons raise significant doubt about our
ability to continue as a going concern.
In March 2018, the Company executed a Promissory Note with Delfin, which was
amended and restated in May 2018 to $150,000, in November 2018 to $350,000, in
June 2019 to $465,000 and then again in November 2019 to increase the principal
amount to up to $554,100 to pay certain accrued expenses, accounts payable and
to allow the Company to have working capital. Interest accrues on the unpaid
principal balance at a rate of 8% per annum, calculated on a 365/66 day year, as
applicable. The Promissory Note is due upon demand. It may be prepaid in whole
or in any part at any time prior to demand. Management anticipates continued
funding from Delfin over the next twelve months as it determines the direction
of the Company.
At December 31, 2019, we had a net working capital deficit of approximately
$543,000. This deficit included accrued expenses of approximately $24,000,
accounts payable of approximately $9,000 and approximately $597,000 in principal
and accrued interest owed under the Promissory Note with Delfin, the Company's
majority stockholder.
Cash Flow Items
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
As of December 31, 2019, we had $86,961 in cash as compared to $5,895 as of
December 31, 2018. Net cash flows used in operating activities totaled
approximately $173,000 for the year ended December 31, 2019 compared to cash
flows used in operating activities of approximately $295,000 for the year ended
December 31, 2018.
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Net cash flows provided by financing activities totaled approximately $254,000
for the year ended December 31, 2019 compared to $300,000 for the year ended
December 31, 2018.
Contractual Obligations
As a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act,
we have elected scaled disclosure reporting and therefore are not required to
provide the table required by (a)(5) of this Item.
Off-Balance Sheet Arrangements
As of December 31, 2019, we did not have any material off-balance sheet
arrangements that have or are reasonably likely to have a material effect on our
current or future financial condition, revenues or expenses, results of
operations, liquidity, or capital resources.
Effects of Inflation
Management believes that inflation has not had a significant effect on our
results of operations during 2019 and 2018.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with accounting
principles generally accepted in the U.S. requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Our estimates, judgments and assumptions are continually evaluated based
on available information and experience. Because of the use of estimates
inherent in the financial reporting process, actual results could differ from
those estimates. Certain of our accounting policies require higher degrees of
judgment than others in their application. These include valuations of accounts
payable and accrued expenses.
Impact of Recently Issued Accounting Standards
Management has determined that all recently issued accounting pronouncements
will not have a material impact on our financial statements or do not apply to
our operations.
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