Item 1. Unaudited Financial Statements
CONECTISYS CORPORATION
UNAUDITED BALANCE SHEET AS OF MARCH 31, 2021
ASSETS
Current assets
Cash & cash equivalent $___________
Total current assets
Property and equipment, net $___________
Total assets $___________
LIABILITIES AND EQUITY
Current liabilities
Accrued expense 10,321
Advances from former officer 20,073
------------
Total current liabilities $ 30,394
------------
TOTAL LIABILITIES $ 30,394
============
Commitments and contingency -
Stockholders' Equity
Preferred stock
Common stock * - no par value; 250,000,000
shares authorized 888,579 shares issued and
outstanding 32,246,441
(Accumulated deficit) (32,276,835)
--------------
Total equity (30,394)
--------------
Total liabilities and equity $ (30,394)
==============
* On March 10, 2021, the Company implemented a 10,000 to 1 reverse
split of the issued and outstanding shares of its common stock.
Except shares authorized, all references to number of shares and
per share information in these financial statements have been
retroactively adjusted to reflect such split.
See notes to the unaudited financial statements.
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CONECTISYS CORPORATION
UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Six Months Ended March 31,
2021 2020
------------------ --------------
REVENUE $ - $ -
COST OF REVENUE - -
------------------ --------------
GROSS PROFIT (LOSS) $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES $ 3,128 $ 889
------------------- --------------
NET(LOSS) $ (3,128) $ (889)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES *
Basic and diluted 888,579 88,579
================== =============
(LOSS) PER SHARE
Basic and diluted $ (0.00) $ (0.01)
================== =============
* On March 10, 2021, the Company implemented a 10,000 to 1 reverse split of the
issued and outstanding shares of its common stock. Except shares authorized, all
references to number of shares and per share information in these financial
statements have been retroactively adjusted to reflect such split.
See notes to the unaudited financial statements.
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CONECTISYS CORPORATION
UNAUDITED STATEMENTS OF CHANGES IN EQUITY
Common Stock * Subscription
Shares Amount Receivable Accumulated Deficit Total
------------------------------------------------------------------------
Balance, September 30, 2020 88,579 $ 32,246,441 $ (100) $ (32,273,707) $(27,366)
Sale of Shares 800,000 $ 100
Net Loss $ (3,128) $ (3,128)
-------------------------------------------------------------------------
Balance, March 31, 2021 888,579 $ 32,246,441 $ 0 $ (32,276,835) $(30,394)
=========================================================================
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* On March 10, 2021, the Company implemented a 10,000 to 1 reverse split of
the issued and outstanding shares of its common stock. Except shares
authorized, all references to number of shares and per share information
in these financial statements have been retroactively adjusted to reflect
such split.
See notes to the unaudited financial statements.
CONECTISYS CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31,
2021 2020
------------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (loss) $ (3,128) $ (1,889)
Adjustment to reconcile net (loss) to
cash provided by (used in) operating activities:
Change in operating assets and liabilities 400 300
Advances from former officer $ 2,628 889
Net cash used in operating activities (100) -
CASH FLOWS FROM INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 100 -
CASH AND CASH EQUIVALENT, beginning of year - -
------------------ ----------------
CASH AND CASH EQUIVALENT, end of year $ - $ -
================== ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income tax $ $
------------------ ----------------
Cash paid for interest $ $
------------------ ----------------
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See notes to the unaudited financial statements.
Conectisys Corporation
Notes to Unaudited Financial Statements
March 31, 2021
Note 1 - Nature of business and organization
ConectiSys Corporation (the "Company") was incorporated in Colorado on
February 2, 1986 under the name Coastal Financial Corp. On December 5,
1994, Coastal Financial Corp. changed its name to BDR Industries, Inc.
which changed its name on October 16, 1995, to Conectisys Corporation.
The Company was engaged in the development of a low-cost automatic meter
reading, or AMR, solution until it ceased all business activity in 2008.
Conectisys was an SEC reporting company until 2008. Its last Form 10-K,
for the fiscal year 2007, was filed on Jan 4, 2008; its last Form 10-Q,
for the three and nine months ended June 30, 2008, was filed on Sep. 15,
2008.
As of June 30, 2008, Conectisys had notes payable aggregating
$6,633,312.
Of this total, several five-year notes aggregating $3,082,655
were payable to NIR & Affiliates. NIR was a mutual fund run by Corey
Ribotsky. NIR provided Conectisys with significant funding from 2002
through 2008 in the form of convertible notes with stock conversion at a
significant discount to the market (up to 80% at times) commonly known as
a "pipe". In March 2008 NIR provided the last of its funding to Conectisys.
In the 3rd quarter of 2008 Conectisys was in default on its obligations to
NIR by (1) failure to pay interest and (2) failure to maintain an active
SB-2 filing for issuance of the convertible shares. In 2009, Conectisys
failed to timely file its 2008 10-K Report. Conectisys was removed from
trading on the OTC and began trading on the Pink Sheets.
The balance of the convertible notes, aggregating $3.550,657, were payable
to AJW, New Millennium Capital Partners and Laurus Master Fund.
All the notes were due at various times from 2002 to 2008. There were no
repayments and, after the six-year statute of limitations, all the notes
and the related accrued interest,$498,132 as of June 30, 2008, became
null and void at various times through April 2017.
Conectisys was a victim of predatory lending by Corey Ribotsky and his NIR
Group, as evidenced by a civil complaint filed by the U.S, Securities &
Exchange Commission ("SEC") against Mr. Ribotsky, NIR and others
on September 28, 2011 in Federal Court in the Eastern District of New York.
To settle the SEC's related administrative proceedings, Ribotsky consented
to be barred from any future association with any broker, dealer, investment
adviser, municipal securities dealer, municipal advisor, transfer agent, or
nationally recognized statistical rating organization.
The statute of limitations to sue in contract matters or debt collection is
6 years in the State of New York which was the agreed upon jurisdiction by
both Conectisys and NIR. Further, NIR and all its affiliates ceased to
operate as a result of the SEC enforcement actions.
As of April 2017, all obligations, notes, debt, warrants, and options are
past their due dates and barred from any collection efforts since the time
frame allowed by the statute of limitations for a legal action has expired.
From November 2002 to March 2008, Conectisys issued an aggregate of 67,620,000
five-year and seven-year Common Stock warrants to accredited investors in
connection with several convertible debenture financing arrangements.
All such warrants and all stock options expired unexercised.
All assets as of June 30, 2008, $172,581, were fully amortized or realized
by the end of fiscal 2008.
As of June 30, 2008, the Company had $2,418,148 in accrued compensation and
$40,174 due to officers. None of these obligations were paid and became null
and void after the six-year statute of limitations.
Accounts payable and other current liabilities were either partially paid or
became null and void after the six-year statute of limitations.
From its inception in 1986 through June 30, 2008, Conectisys had aggregate
revenues of approximately $524,000 from the sale of its H-NET AMR systems.
Operations: None
Customers: None
Employees: None
Note 2 Basis of Presentation and Summary of significant accounting policies
Basis of presentation
The accompanying financial statements have been prepared in accordance with the
generally accepted accounting principles in the United States of America
("U.S. GAAP") and pursuant to the rules and regulations of the Securities
Exchange Commission ("SEC"). The Company's fiscal year ends on September 30.
Cash and cash equivalents
Cash and cash equivalents consist of amounts of cash on hand and bank deposits.
Use of estimates and assumptions
The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the amounts of assets
and liabilities reported and disclosures of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of revenues
and expenses during the periods presented. Actual results could differ from
these estimates.
Income taxes
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their perspective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which the temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the
period that includes the enactment date. Valuation allowances are recorded,
when necessary, to reduce deferred tax assets to the amount expected to be
realized.
As a result of the implementation of certain provisions of ASC 740, Income
Taxes ("ASC 740"), which clarify the accounting and disclosure for uncertainty
in tax position, as defined, ASC 740 seeks to reduce the diversity in practice
associated with certain aspects of the recognition and measurement related
to accounting for income taxes. The Company has adopted the provisions of
ASC 740 and has analyzed filing positions in each of the federal and state
jurisdictions where the Company is required to file income tax returns, as
well as open tax years in such jurisdictions. The Company has identified
the U.S. federal jurisdiction, and the states of Nevada and California, as
its "major" tax jurisdictions. However, the Company has certain tax attribute
carryforwards, which will remain subject to review and adjustment by the
relevant tax authorities until the statute of limitations closes with respect
to the year in which such attributes are utilized.
The Company believes that its income tax filing positions and deductions will
be sustained on audit and do not anticipate any adjustments that will result
in a material change to its financial position. Therefore, no reserves for
uncertain income tax positions have been recorded pursuant to ASC 740. The
Company's policy for recording interest and penalties associated with
income-based tax audits is to record such items as a component of income
taxes.
Commitments and Contingencies
In the ordinary course of business, the Company is subject to certain
contingencies, including legal proceedings and claims arising out of the
business that relate to a wide range of matters, such as government
investigations and tax matters. The Company recognizes a liability for
such contingency if it determines it is probable that a loss has
occurred and a reasonable estimate of the loss can be made. The
Company may consider many factors in making these assessments including
historical and specific facts and circumstances of each matter.
Loss per share
Basic loss per share is computed by dividing net loss attributable to
holders of Common Stock by the weighted average number of Common Stock
outstanding during the period. Diluted loss per share reflect the
potential dilution that could occur if securities to issue Common Stock
were exercised.
Recently issued accounting pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)
Simplifying the Accounting for Income Taxes. The update is intended
to simplify the current rules regarding the accounting for income taxes
and addresses several technical topics including accounting for franchise
taxes, allocating income taxes between a loss in continuing operations
and in other categories such as discontinued operations, reporting income
taxes for legal entities that are not subject to income taxes, and interim
accounting for enacted changes in tax laws. The new standard is effective
for fiscal years beginning after December 15, 2020; however, early adoption
is permitted.
The Company does not expect the adoption of this standard have a material
impact on the consolidated and combined financial statements. The Company
does not believe other recently issued but not yet effective accounting
standards, if currently adopted, would have a material effect on its
financial position, statements of operations and cash flows.
Subsequent event
The Company evaluated subsequent events and transactions after March 31,
2021 through the date that these unaudited financial statements are
available to be issued. There are no material subsequent events that
required recognition or additional disclosure in the financial statements.
Going concern
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. Additional capital
infusion is necessary in order to fund current expenditures, acquire
business opportunities and achieve profitable operations. This factor
raises substantial doubt about the Company's ability to continue as a
going concern.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations Our Company
Conectisys Corporation, a Colorado corporation ("Conectisys", the "Company,
"we", "us" or "our") is a shell company seeking to create value for its
shareholders by merging with another entity with experienced management
and opportunities for growth in return for shares of our Common Stock.
No potential merger candidate has been identified at this time.
We do not propose to restrict our search for a business opportunity to
any particular industry or geographical area and may, therefore, engage
in essentially any business in any industry. We have unrestricted
discretion in seeking and participating in a business opportunity,
subject to the availability of such opportunities, economic conditions,
and other factors.
The selection of a business opportunity in which to participate is
complex and risky. Additionally, we have only limited resources and
may find it difficult to locate good opportunities. There can be no
assurance that we will be able to identify and acquire any business
opportunity which will ultimately prove to be beneficial to us and
our shareholders. We will select any potential business
opportunity based on our management's best business judgment.
Our activities are subject to several significant risks, which arise
primarily as a result of the fact that we have no specific business
and may acquire or participate in a business opportunity based on the
decision of management, which potentially could act without the consent,
vote, or approval of our shareholders. The risks faced by us are further
increased as a result of a lack of resources and our inability to provide
a prospective business opportunity with significant capital.
Our History
The Company was incorporated in Colorado on February 2, 1986 under the
name Coastal Financial Corp. On December 5, 1994, Coastal Financial
Corp. changed its name to BDR Industries, Inc., which changed its
name on October 16, 1995, to Conectisys Corporation.
The Company was engaged in the development of a low-cost automatic
meter reading, or AMR Solution, until it ceased all business activity
in 2008.
We filed our last Form 10-K for the year ended September 30, 2007 on
January 14, 2008.
We filed our last Form 10-Q for the three and nine months ended
June 30, 2008 on September 15, 2008.
Since August 1, 2020, Mr. Danilo Cacciamatta has been the sole
director and only officer of the Company.
Revenue
We have had no revenues from fiscal year 2008 through the date of
this filing.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Except as required
by law, we undertake no duty to update any forward-looking statement
after the date of this report, either to conform any statement to
reflect actual results or to reflect the occurrence of unanticipated
events.
General Business Plan
Our business plan to seek a merger has many uncertainties which pose
risks to investors.
We intend to seek, investigate and, if such investigation warrants,
acquire an interest in business opportunities presented to us by
persons or firms which desire to seek the advantages of an issuer
who has complied with the Securities Act of 1934 (the "1934 Act").
We will not restrict our search to any specific business, industry
or geographical location, and we may participate in business ventures
of virtually any nature. This discussion of our proposed business
is purposefully general and is not meant to be restrictive of our
unlimited discretion to search for and enter into potential business
opportunities. We anticipate that we may be able to participate
in only one potential business venture because of our lack of
financial resources. We may seek a business opportunity with entities
which have recently commenced operations, or that desire to utilize
the public marketplace in order to raise additional capital in order
to expand into new products or markets, to develop a new product
or service, or for other corporate purposes. All of these activities
have risk to investors including dilution and management.
We expect that the selection of a business opportunity will be complex.
Due to general economic conditions, rapid technological advances being
made in some industries and shortages of available capital, we believe
that there are numerous firms seeking the benefits of an issuer
who has complied with the 1934 Act. Such benefits may include
facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock
options or similar benefits to key employees, providing liquidity
(subject to restrictions of applicable statutes) for all stockholders
and other factors. Potentially, available business opportunities may
occur in many different industries and at various stages of development,
all of which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
We have, and will continue to have, essentially no assets to provide
the owners of business opportunities. However, we will be able to
offer owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in an issuer who has complied with the
1934 Act without incurring the cost and time required to conduct an
initial public offering.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, our Board of Directors. We intend to concentrate
on identifying preliminary prospective business opportunities which may
be brought to our attention through present associations of our director,
professional advisors or by our stockholders. In analyzing prospective
business opportunities, we will consider such matters as (i) available
technical, financial and managerial resources; (ii) working capital and
other financial requirements; (iii) history of operations, if any, and
prospectsfor the future; (iv) nature of present and expected competition;
(v) quality, experience and depth of management services; (vi) potential
for further research, development or exploration; (vii) specific risk
factors not now foreseeable but that may be anticipated to impact the
proposed activities of the company; (viii) potential for growth or
expansion; (ix) potential for profit; (x) public recognition and
acceptance of products, services or trades; (xi) name identification;
and (xii) other factors that we consider relevant. As part of our
investigation of the business opportunity, we expect to meet personally
with management and key personnel. To the extent possible, we intend to
utilize written reports and personal investigation to evaluate the
above factors.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after
closing of the proposed transaction.
Acquisition Interest
In implementing a structure for a particular business acquisition, we may
become a party to a merger, consolidation, reorganization, joint venture,
or licensing agreement with another company or entity. We may also acquire
stock or assets of an existing business. Upon consummation of a transaction,
it is probable that our present management and stockholders will no longer
be in control of us. In addition, our sole director may, as part of the
terms of the acquisition transaction, resign and be replaced by new directors
without a vote of our stockholders, or sell his stock in us. Any such sale
will only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under
application federal and state securities laws. In some circumstances,
as a negotiated element of the transaction, we may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, it will
be undertaken by the surviving entity after it has successfully consummated
a merger or acquisition and is no longer considered an inactive company.
The issuance of substantial additional securities and their potential sale
into any trading market which may develop in our securities may have a
depressive effect on the value of our securities in the future. There is no
assurance that such a trading market will develop.
While the actual terms of a transaction cannot be predicted, it is expected
that the parties to any business transaction on will find it desirable to
avoid the creation of a taxable event and thereby structure the business
transaction in a so called "tax free" reorganization under Sections 368(a)
(1) or 351 of the Internal Revenue Code (the "Code"). In order to obtain
tax-free treatment under the Code, it may be necessary for the owner of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, our stockholders would retain less than 20% of the
issued and outstanding shares of the surviving entity. This would result in
significant dilution in the equity of our stockholders.
As part of our investigation, we expect to meet personally with management
and key personnel, visit and inspect material facilities, obtain
independent analysis of verification of certain information provided,
check references of management and key personnel, and take other reasonable
investigative measures, to the extent of our limited financial resources and
management expertise. The manner in which we participate in an opportunity
will depend on the nature of the opportunity, the respective needs and
desires of both parties, and the management of the opportunity.
With respect to any merger or acquisition, and depending upon, among
other things, the target company's assets and liabilities, our
stockholders will in all likelihood hold a substantially lesser
percentage ownership interest in us following any merger or acquisition.
The percentage ownership may be subject to significant reduction in the
event we acquire a target company with assets and expectations of growth.
Any merger or acquisition can be expected to have a significant dilutive
effect on the percentage of shares held by our stockholders.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written business agreements. Although the
terms of such agreements cannot be predicted, generally we anticipate
that such agreements will (i) require specific representations and
warranties by all of the parties; (ii) specify certain events of
default; (iii) detail the terms of closing and the conditions which
must be satisfied by each of the parties prior to and after such
closing; (iv) outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants; (v) set
forth remedies on efaults; and (vi) include miscellaneous other terms.
As stated above, we will not acquire or merge with any entity which
cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction.
If such audited financial statements are not available at closing,
or within time parameters necessary to insure our compliance within
the requirements of the 1934 Act, or if the audited financial
statements provided do not conform to the representations made by
that business to be acquired, the definitive closing documents will
provide that the proposed transaction will be voidable, at the discretion
of our present management. If such transaction is voided, the definitive
closing documents will also contain a provision providing for
reimbursement for our costs associated with the proposed transaction.
Competition
We believe we are an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we
have. In view of our limited financial resources and limited management
availability, we will continue to be at a significant competitive
disadvantage compared to our competitors.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of
1933, as amended, and the 1934 Act, we believe we will not be subject
to regulation under the Investment Company Act of 1940 (the 1940 Act)
insofar as we will not be engaged in the business of investing or trading
in securities. In the event we engage in business combinations that result
in us holding passive investment interests in a number of entities, we could
be subject to regulation under the 1940 Act. In such event, we would be
required to register as an investment company and incur significant
registration and compliance costs. We have obtained no formal determination
from the SEC as to our status under the 1940 Act and, consequently,
any violation of the 1940 Act would subject us to material adverse
consequences. We believe that, currently, we are exempt under Regulation
3a-2 of the 1940 Act.
Intellectual Property
We own no intellectual property.
Employees
We presently have no full time executive, operational, or clerical staff.
Mr. Cacciamatta has been the sole director and sole officer of the Company
since August 1, 2020.
Factors Affecting Future Performance
Rather than an operating business, our goal is to obtain debt and/or equity
financing to meet our ongoing operating expenses and attempt to merge with
another entity with experienced management and opportunities for growth in
return for shares of our Common Stock to create value for our shareholders.
Although there is no assurance that this series of events will be successfully
completed, we believe we can successfully complete an acquisition or merger
which will enable us to continue as a going concern. Any acquisition or merger
will most likely be dilutive to our existing stockholders.
Plan of Operations
We are currently investigating to identify and acquire a target company or
business seeking the perceived advantages of being a publicly held corporation.
Our principal business objective for the next 12 months and beyond such time
will be to achieve long-term growth potential through a combination with a
business rather than immediate, short-term earnings. The Company will not
restrict our potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business.
The Company does not currently engage in any business activities that provide
cash flow. The costs of investigating and analyzing business combinations and
administering the Company's business for the next 12 months are estimated to
be as follows:
(i) filing of Exchange Act reports, (approximately $5,000);
(ii) costs relating to consummating an acquisition (approximately $5,000); and
(iii) general and administrative expenses (approximately $5,000).
To the extent that the Company's capital resources are insufficient to meet
current or planned operating requirements, the Company will seek additional
funds through equity or debt financing, collaborative or other arrangements
with corporate partners, licensees or others, and from other sources, which
may have the effect of diluting the holdings of existing shareholders. The
Company has no current arrangements with respect to, or sources of, such
additional financing and the Company does not anticipate that existing
shareholders will provide any portion of the Company's future financing
requirements.
No assurance can be given that additional financing will be
available when needed or that such financing will be available on terms
acceptable to the Company. If adequate funds are not available, the Company
may be required to delay or terminate expenditures for certain of its
programs that it would otherwise seek to develop and commercialize. This
would have a material adverse effect on the Company. These factors raise
substantial doubt about the ability of the Company to continue as a
going concern.
The Company may consider a business that has recently commenced operations,
is a developing company in need of additional funds for expansion into new
products or markets, is seeking to develop a new product or service, or
is an established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a
company which does not need substantial additional capital, but which
desires to establish a public trading market for its shares, while avoiding,
among other things, the time delays, significant expense, and loss of
voting control which ay occur in a public offering.
None of our officers or directors has had any preliminary contact or
discussions with any representative of any other entity regarding a
business combination with us. Any target business that is selected may
be a financially unstable company or an entity in its early stages of
development or growth, including entities without established records
of sales or earnings. In that event, we will be subject to numerous
risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition,
we may effect a business combination with an entity in an industry
characterized by a high level of isk, and, although our management
will endeavor to evaluate the isks inherent in a particular target
business, there can be no assurance that we will properly ascertain
or assess all significant risks.
Our management anticipates that it
will likely be able to effect only one business combination,
due primarily to our limited financing, and the dilution of interest
for present and prospective shareholders, which is likely to occur
as a result of our management's plan to offer a controlling interest
to a target business in order to achieve a tax-free reorganization.
This lack of diversification should be considered a substantial risk
in investing in us, because it will not permit us to offset potential
losses from one venture against gains from another.
The Company anticipates that the selection of a business combination
will be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries
and shortages of available capital, our management believes that there
are numerous firms seeking even the limited additional capital that
we will have and/or the perceived benefits of becoming a publicly traded
corporation. Such perceived benefits of becoming a publicly traded
corporation include, among other things, facilitating or improving
the terms on which additional equity financing may be obtained, providing
liquidity for the rincipals of and investors in a business, creating a
means for providing incentive stock options or similar benefits to key
employees, and offering greater flexibility in structuring acquisitions,
joint ventures and the like through the issuance of stock. Potentially
available business combinations may occur in many different industries
and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex.
Sources of Business Opportunities
The Company intends to use various sources in its search for potential
business opportunities, including its officers and directors, consultants,
special advisors, securities broker-dealers, venture capitalists, members
of the financial community and others who may present management with
unsolicited proposals. Because of the Company's limited capital, it may
not be able to retain on a fee basis professional firms specializing in
business acquisitions and reorganizations. The Company will most likely
have to rely on outside sources, not otherwise associated with the Company
that will accept their compensation only after the Company has finalized a
successful cquisition or merger. The Company will rely upon the expertise
and contacts of such persons, use notices in written publications and
personal contacts to find merger and acquisition candidates, the exact
number of such contacts are dependent upon the skill and industriousness
of the participants and the conditions of the marketplace. To date the
Company has not engaged or entered into any definitive agreements nor
understandings regarding retention of any consultant to assist the Company
in its search for business opportunities, nor is management presently in
a position to actively seek or retain any prospective consultants for
these purposes.
The Company does not intend to restrict its search to
any specific kind of industry or business. The Company may investigate
and ultimately acquire a venture that is in its preliminary or development
stage, is already in operation, or in various stages of its corporate
existence and evelopment. Management cannot predict at this time the
status or nature of any venture in which the Company may participate.
A potential venture might need additional capital or merely desire
to have its shares publicly traded. The most likely scenario for a
possible business arrangement ould involve the acquisition of, or merger
with, an operating business that does not need additional capital, but
which merely desires to establish a public trading market for its shares.
Management believes that the Company could provide a potential public
vehicle for a private ntity interested in becoming a publicly held
corporation without the time and expense typically associated with
an initial public offering.
Evaluation
Once the Company has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine
whether acquisition or merger is warranted or whether further
investigation is necessary. Such determination will generally
be based on management's knowledge and experience. See Item 5.
Directors and Executive Officers. Management may elect to engage
outside independent consultants to perform preliminary analysis of
potential business opportunities. However, because of the Company's
limited capital it may not have the necessary funds for a complete and
exhaustive investigation of any particular opportunity. Management will
not devote full time to finding a merger candidate and will continue
to engage in outside nrelated activities.
In evaluating such potential business opportunities, the Company will
consider, to the extent relevant to the specific opportunity, several
factors including potential benefits to the Company and its shareholders;
working capital, financial requirements and availability of additional
financing; history of operation, if any; nature of present and expected
competition; quality and experience of management; need for further
research, development or exploration; potential for growth and expansion;
potential for profits; and other factors deemed relevant to the specific
opportunity.
Because the Company has not located or identified any specific
business opportunity as of the date hereof, there may be unidentified risks
that cannot be adequately expressed prior to the identification of a
specific business opportunity. There can be no assurance following
consummation of any acquisition or merger that the business venture will
develop into a going concern or, if the business is already operating,
that it will continue to operate successfully. Many of the potential
business opportunities available to the Company may involve new and
untested products, processes or market strategies which may not ultimately
prove successful.
Form of Potential Acquisition or Merger
Presently the Company cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate
potential opportunity will be reviewed and, upon the basis of that
review, a suitable legal structure or method of participation will
be chosen. The particular manner in which the Company participates in a
specific business opportunity will depend upon the nature of that
opportunity, the respective needs and desires of the Company and
management of the opportunity, and the relative negotiating strength
of the parties involved. Actual participation in a business venture
may take the form of an asset urchase, lease, joint venture, license,
partnership, stock purchase, reorganization, merger or consolidation.
The Company may act directly or indirectly through an interest in a
partnership, corporation, or other form of organization however, the
Company does not intend to participate in opportunities through the
purchase of minority stock positions.
Because of the Company's current status of inactivity since 2008 and
its concomitant lack of assets and relevant operating history, it is
likely that any potential merger or acquisition with another operating
business will require substantial dilution to the Company's existing
shareholders' interests. There will probably be a change in control
of the Company, with the incoming owners of the targeted merger or
acquisition candidate taking over control of the Company. Management
has not established any guidelines as to the amount of control it
will offer to prospective business opportunity candidates, since this
issue will depend to a large degree on the economic strength and
desirability of each candidate, nd the corresponding relative bargaining
power of the parties. However, management will endeavor to negotiate the
best possible terms for the benefit of the Company's shareholders as
the case arises. anagement may actively negotiate or otherwise consent
to the purchase of any portion of their Common Stock as a condition to,
or in connection with, a proposed merger or acquisition. In such an event,
existing shareholders may not be afforded an opportunity to approve or
consent to any particular stock buy-out transactionManagement does not
have any plans to borrow funds to compensate any persons, consultants,
or promoters in conjunction with its efforts to find and acquire or
merge with another business opportunity.
Management does not have any plans
to borrow funds to pay compensation to any prospective business opportunity,
or shareholders, management, creditors, or other potential parties to the
acquisition or merger. In either case, it is unlikely that the Company
would be able to borrow significant funds for such purposes from any
conventional lending sources. In all probability, a public sale of the
Company's securities would also be unfeasible, and management does
not contemplate any form of new public offering at this time. In
the event that the Company does need to raise capital, it would
most likely have to rely on the private sale of its securities.
Such a private sale would be limited to persons exempt under the
Commission's Regulation D or other rule, or provision for exemption,
if any applies. However, no private sales are contemplated by the
Company's management at this time. If a private sale of the Company's
securities is deemed appropriate in the future, management will
endeavor to acquire funds on the best terms available to the Company.
However, there can be no assurance that the Company will be able to
obtain funding when and if needed, or that such funding, if available,
can be obtained on terms reasonable or acceptable to the Company.
In the event of a successful acquisition or merger, a finder's fee, in
the form of cash or securities of the Company, may be paid to persons
instrumental in facilitating the transaction. The Company has not
established any criteria or limits for the determination of a finder's
fee, although most likely an appropriate finder's fee will be negotiated
between the parties, including the potential business opportunity
candidate, based upon economic considerations and reasonable value
as estimated and mutually agreed upon at that time. A finder's fee
would only be payable upon completion of the proposed acquisition or
merger in the normal case, and management does not contemplate any
other arrangement at this time. Current management has not in the
past used any particular consultants, advisors or finders. Management
has not actively undertaken a search for, or retention of, any finder's
fee arrangement with any person. It is possible that a potential merger
or acquisition candidate ould have its own finder's fee arrangement, or
other similar business brokerage or investment banking arrangement,
whereupon the terms may be overned by a pre-existing contract; in such
case, the Company may be limited in its ability to affect the terms of
compensation, but most likely the terms would be disclosed and subject
to approval pursuant to submission of the proposed transaction to a
vote of the Company's hareholders. Management cannot predict any other
terms of a finder's fee arrangement at this time. If such a fee arrangement
was proposed, independent management and directors would negotiate the best
terms available to the Company so as not to compromise the fiduciary
duties of the epresentative in the proposed transaction, and the Company
would require that the proposed arrangement would be submitted to the
shareholders for prior ratification in an appropriate manner.
Off-Balance Sheet Arrangements
Per SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, such as changes in financial
condition, revenues, expenses, results of operations, liquidity, capital
expenditures, or capital resources that are material to investors. We
have no off-balance sheet arrangements.
Accounting for Acquisitions
In accordance with the guidance for business combinations, we determine
whether a transaction or other event is a business combination, which
requires that the assets acquired and liabilities assumed constitute a
business. Each business combination is then accounted for by applying the
acquisition method. If the assets acquired are not a business, we account
for the transaction or other event as an asset acquisition. Under both
methods, we recognize the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquired entity. In
addition, for transactions that are business combinations, we evaluate
the existence of goodwill or a gain from a bargain purchase. We
capitalize acquisition-related costs and fees associated with asset
acquisitions and immediately expense acquisition-related costs and fees
associated with business combinations.
CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are disclosed in Note 2 of our
Unaudited Financial Statements.