ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of financial condition and results of operations relates to the operations and financial condition
reported in the unaudited condensed consolidated financial statements of the Company for the three and nine months ended January
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.
Forward-Looking
Statements
This
report may contain “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (including any statements regarding the Company’s
outlook for fiscal 2019 and beyond). Any forward-looking statements are subject to a number of risks and uncertainties. These
include, among other risks and uncertainties, without limitation, the lack of any current business operation, the possible failure
to identify a suitable acquisition candidate, and specific risks which may be associated with any new business or acquisition
that we may acquire.
In
some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,”
“could,” “would,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “projects,” “predicts,” “potential” and similar expressions intended
to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties,
and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different
from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking
statements represent our estimates and assumptions only as of the date of this report. Except as otherwise required by law, we
expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement
contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which
any of our forward-looking statements are based. We qualify all of our forward-looking statements by these cautionary statements.
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 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.
Historical
Background
Historically,
we were 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. As discussed below in “Discontinued Operations,” on September 2, 2003,
we discontinued our wood products business.
Discontinued
Operations
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 product, and
Home Depot’s demands regarding returns of ordered products that we were unwilling to accede to for economic reasons.
Results
of Operations
Since
we discontinued our wood products business in 2003, we have had no sales revenue, including during the three and nine months ended
January 31, 2019 and 2018.
Three
Months Ended January 31, 2019 Compared to the Three Months Ended January 31, 2018
Selling,
general and administrative expenses (“operating expenses”) were $9,875 for the three months ended January 31, 2019,
as compared to $4,080 for the comparable prior period. The increase during the current quarter is primarily due to increased professional
fees related to company filings.
For
the three months ended January 31, 2019, we had a net loss of $9,875 compared to a net loss of $4,029 for the comparable prior
period. The increase during the current quarter is primarily due to increased professional fees.
Nine
Months Ended January 31, 2019 Compared to the Nine Months Ended January 31, 2018
Operating
expenses were $38,122 for the nine months ended January 31, 2019, as compared to $16,740 for the comparable prior period. The
increase during the current period is primarily to increased legal and professional fees related to the stock purchase agreement
discussed in Note 2 of the financial statements.
For
the nine months ended January 31, 2019, we had a net loss of $37,989 compared to a net loss of $16,579 for the comparable prior
period. The increase during the current period is primarily due to increased legal and professional fees related to the stock
purchase agreement discussed in Note 2 of the financial statements.
Liquidity
and Capital Resources
At
January 31, 2019, we had working capital deficit of $15,849, compared to working capital of $204,136 at April 30, 2018. As of
January 31, 2019, we had no cash and cash equivalents and receivables of $785, a decrease of $205,636 and an increase of $785,
respectively, compared with our cash on hand at April 30, 2018.
Operating
activities used cash of $23,640 for the nine months ended January 31, 2019, as compared to cash used in operating activities of
$18,704 during the comparable prior period. The increase during the current period is primarily due to increased legal and professional
fees related to the stock purchase agreement discussed in Note 2 of the financial statements, partially offset by an increase
in accounts payable.
Financing
activities used cash of $181,996 for the nine months ended January 31, 2019, as compared none during the comparable prior period,
as the company paid a special dividend of substantially all remaining cash as a provision of the stock purchase agreement discussed
in Note 2 of the financial statements.
During
the remainder of fiscal 2019, we do not anticipate that we will incur any capital expenditures.
We
anticipate that our operating activities will generate negative net cash flow during the remainder of fiscal 2019. We believe
that the cash on hand will not be sufficient for meeting our liquidity and capital resource needs for the next year. In order
to remedy this liquidity deficiency, management is actively seeking to raise 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.
ITEM
4. CONTROLS AND PROCEDURES
Management’s
Report on Disclosure Controls and Procedures
.
We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities
Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and communicated to our management, including our President/Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls
and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our
judgment in evaluating the cost-benefit relationship of possible changes or additions to our controls and procedures.
As
of January 31, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including
our President/Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our President/Chief
Financial Officer concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, provide a reasonable level of assurance that they are effective in enabling us to record, process,
summarize and report information required to be included in our periodic SEC filings within the required time period.
Changes
in Internal Control Over Financial Reporting
.
There
have been no changes in our internal control over financial reporting that occurred during the period covered by this report that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.