KSSH Kingfish Holding Corporation (CE)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-52375

(941) 487-3653

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting, or an emerging growth company. See definition of “large accelerated filer,” "accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐

As of August 14, 2023, the number of issued and outstanding common shares of the registrant was 120,942,987.

KINGFISH HOLDING CORPORATION

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying notes are an integral part of the unaudited financial statements.

The accompanying notes are an integral part of the unaudited financial statements.

The accompanying notes are an integral part of the unaudited financial statements.

The accompanying notes are an integral part of the unaudited financial statements.

KINGFISH HOLDING CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2023

(unaudited)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 June 30, 2023 and 2022. 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, 2022.

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 June 30, 2023 (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.

Overview

Operations. The primary business of the Company is to seek a suitable private company acquisition or other business combination. The Company has not been engaged in any other business activity during the period covered by the Form 10-Q.

As a preliminary step to seeking such a business combination transaction, during the fiscal year ended September 30, 2022, the Company filed with the SEC all of its delinquent reports on Forms 10-K for the fiscal years ended September 30, 2016 through 2021, as well as all delinquent Forms 10-Q for the September 30, 2021 fiscal year (“Filing Updates”) and all Forms 10-Q for the fiscal year ended September 30, 2022.

The Company and Renovo entered into an Agreement and Plan of Merger on October 28, 2022 (“Original Merger Agreement”), pursuant to which (a) Renovo will be merged with and into the Company (the “Merger”) in accordance with the provisions of the Delaware General Corporation Law (the “DGCL”) and the separate corporate existence of Renovo shall thereupon cease, and (b) the Company shall be the legal successor or surviving corporation in the Merger. Under the terms of the Original Merger Agreement, consummation of the Merger is subject to a number of conditions, including among others (i) the Company must implement a 500-1 reverse stock split (“Reverse Stock Split”) and change the number of authorized shares of capital stock following any Reverse Stock Split as set forth in the Merger Agreement, (ii) the Company shall have been approved as a Secondary Metals Recycler under Section 538.25 of the Florida Statutes to be effective immediately following the closing of the Merger, (iii) the Company shall have receive stockholder approval of the Merger, (iv) Renovo shall have acquired ownership of all of the equity interests of 6 LLC (“6 LLC”), a Florida limited liability company owned and controlled by the shareholders of Renovo (“Renovo Owners”) which owns the buildings and property (“Property”) on which on which Renovo conducts its operations (the “Acquisition Condition”), and (v) the satisfaction of certain other customary closing conditions. Under the terms of the Original Merger Agreement, at the effective time of the Merger (“Effective Time”), each outstanding common share of Renovo (“Renovo Stock”) would be converted into and would represent the right to receive 7,200 shares of Company Stock of the Company (the “Exchange Ratio”), after giving effect to the Reverse Stock Split. In addition, the Company agreed to add certain members of the Renovo board to the Company’s Board of Directors.

Further, pursuant to the terms of the Original Merger Agreement, Renovo also agreed to provide the Company with a loan of approximately $200,000 (“Renovo Loan”), as evidenced by a promissory note, to provide the funds necessary for the Company to continue operations and consummate the transactions contemplated by the Merger Agreement (“Renovo Promissory Note”). The Original Merger Agreement also contains certain termination rights for both the Company and Renovo. The Company had the right to terminate the Merger Agreement if, among other things, the definitive Renovo Promissory Note has not been executed and funded within four business days after execution of the Merger Agreement.

In preparation for the closing of the Merger transaction, Renovo experienced unanticipated delays in the audit of its financial statements and the related disclosures required to be included in the Company’s Form 8-K filing following the closing of the Merger. As a result of these delays, it became unlikely that audit would be completed prior to the March 31, 2023, the outside termination date for the closing as set forth in the Original Merger Agreement (“Outside Termination Date”).

Further, as a result of this delay, Renovo also did not consummate its acquisition of 6 LLC prior to the February 23, 2023 maturity date of 6 LLC’s loan with Hancock Whitney Bank (“Bank Loan”) and, as a result, the Bank Loan was not assumed by the Company prior to such maturity date. As a consequence of Renovo’s failure to assume the Bank Loan and 6 LLC’s failure to pay off the Bank Loan prior to the such maturity date, 6 LLC and Renovo were in default under the terms of the Bank Loan and were required to negotiate a revised loan agreement with Hancock Whitney Bank, resulting in the payment of a $6,000 fee for a loan extension and an increase in the interest rate thereon from 4% to 7.36%. Accordingly, the revised terms of the Bank Loan and the costs of the extension adversely affected the economic impact of the Merger as originally anticipated by the parties and, as compensation to the Company for this adverse impact, the parties have agreed that the Exchange Ratio should be reduced. Separately, the parties also agreed to change the persons who would be appointed to the Company’s Board of Directors effective immediately after the Effective Time to include the persons referenced below.

On March 31, 2023, the parties entered into First Amendment to the Agreement and Plan of Merger, dated as of March 31, 2023 (“First Amendment”), which, among other things, (a) the Outside Termination Date for the closing of the Merger Agreement was extended from March 31, 2023 to May 31, 2023, (b) the Exchange Ratio was revised so as to reduce the number of shares of the Company’s Common Stock to be exchanged, after giving effect to the Reverse Stock Split, for each issued and outstanding share of Renovo Stock, at the Effective Time from 7,200 shares to 6,000 shares (“New Exchange Ratio”), and (c) identifying different persons on the Renovo board of directors who would be appointed to serve as directors on the Company’s Board of Directors, effective immediately after the Effective Time.

Notwithstanding the extension of the Outside Termination Date to May 31, 2023, Renovo still was unable to complete the audit of its financial statements prior to such extended date. Further, subsequent to the date of the First Amendment, the Company was advised by the Renovo Owners that, as the sole equity holders of 6 LLC, compliance with the Acquisition Condition would have unanticipated material adverse tax consequences to the Renovo Owners. In particular, the acquisition of 6 LLC (which is a limited liability company currently taxed as a partnership) by Renovo would cause each owner of 6 LLC to recognize income tax gain to the extent that Renovo assumed the debt obligations and other liabilities of 6 LLC pursuant to the LLC Acquisition. The potential tax impact of the LLC Acquisition on each owner of 6 LLC (and, consequently, each Renovo Owner) would substantially exceed the value of the merger consideration received by each Renovo Owner pursuant to the Merger (“Adverse Tax Impact”).

As a result of the foregoing, the parties currently are negotiating a Second Amendment to the Agreement and Plan of Merger (“Second Amendment”) which would potentially amend the Original Merger Agreement and the First Amendment to, among other things, (a) eliminate the Acquisition Condition, (b) add conditions that (i) 6 LLC enter into a lease agreement with Renovo (to be assumed by the Company following the Merger) for the Property on terms satisfactory to the Company and (ii) 6 LLC grant the Company with an exclusive option to purchase 6 LLC for a period of five (5) years following the closing of the Merger, and (c) further extend the Outside Termination Date.

Although the parties are negotiating the Second Amendment, there is no assurance that the parties will ultimate approve a Second Amendment and complete the Merger transaction and, even if executed, there is no assurance that the parties will be able to consummate a Merger transaction.

The foregoing description of the Merger and the Merger Agreement, as amended, but it does not purport to be complete and is qualified in its entirety by reference to (a) the Original Merger Agreement and the Promissory Note, a complete and true copy of each which has been filed as exhibits to our Form 8-K filed with the Securities and Exchange Commission (“SEC”) on October 31, 2022 (the “Original Merger Form 8-K”), and is incorporated herein by reference, and (b) the First Amendment, a complete and true copy of which has been filed as an exhibit to our Form 8-K filed with the SEC on April 3, 2023 (“First Amendment Merger Form 8-K”), and is incorporated herein by reference. Unless the context otherwise requires, the Original Merger Agreement and the First Amendment are referred to herein collectively as the “Merger Agreement.”

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 close the Merger or we are otherwise able to secure additional financing to continue operations. Further, our ability to continue as a going concern also is dependent upon our ability to close the Merger transaction or, if the Merger transaction is not closed, to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve profitable operations. Other than the Merger, we do not have any current plans, understandings or agreements with respect to the raising of such funds.

We currently 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, through both convertible and non-convertible loans.

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 to recommence our operations.

In connection with the Merger transaction, the Company, borrowed funds from Renovo pursuant to the Renovo Promissory Note. We anticipate the proceeds from the Renovo Loan will be sufficient to fund our operations through the date on which the Merger is consummated. If we consummate the Merger, we believe that we will generate sufficient revenue from our operations to fund our operations and our debt obligations.

If, however, we are unable to consummate the Merger or the Merger is otherwise terminated, we will likely need to identify additional sources of financing to continue funding our business activities and repayment of our debt obligations under the Renovo Promissory Note until such time as we may consummate a merger or business contribution, if ever, with another target company or operation. Under such circumstances, we may need to seek funds through additional sales of debt or equity securities or by some other means. Although Mr. Toomey has provided us with additional debt financing from time to time, we have no formal commitment that Mr. Toomey or any other person or entity will provide the Company with working capital sufficient to maintain operations until we consummate a merger or other business combination with a target company. Furthermore, a failure to consummate the Merger may adversely affect our ability to raise additional capital through Mr. Toomey or any other person or entity.

Since we have no such arrangements or plans currently in effect to raise additional capital in the event that the Merger is not consummated, 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 June 30, 2023 and 2022

Revenues. Because we currently do not have any business operations, we have not had any revenues during the three months ended June 30, 2023 and 2022.

Operating Expenses. We had operating expenses of $9,364 and $23,469 for the three months ended June 30, 2023 and June 30, 2022, respectively. The decrease in expenses for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 were due to a decrease in professional fees. The decrease in professional fees was due to the Company beginning discussions surrounding the Merger during the three months ended June 30, 2022.  

Other Expenses. We had interest expense of $4,732 and $1,688 for the three months ended June 30, 2023 and June 30, 2022, respectively. The interest expenses in 2023 increased from those in 2022 due to the accrued interest on the increased amount of outstanding debt.

 Net Income (Loss). We recognized a net loss of $14,096 and $25,157 for the three months ended June 30, 2023 and June 30, 2022, respectively. The decrease in net loss was attributed to a decrease in professional fees.

Comparison of Nine Months Ended June 30, 2023 and 2022

Revenues. Because we currently do not have any business operations, we have not had any revenues during the nine months ended June 30, 2023 and June 30, 2022.

Operating Expenses. We had operating expenses of $82,570 and $83,032 for the nine months ended June 30, 2023 and June 30, 2022, respectively. The decrease in operating expenses was due to a decrease in professional fees.

Other Expenses. We had interest expense of $13,208 and $4,640 for the nine months ended June 30, 2023 and June 30, 2022, respectively. The interest expenses in 2023 increased from those in 2022 due to the accrued interest on the increased amount of outstanding debt.

Net Income (Loss). We recognized a net loss of $95,778 and $87,672 for the nine months ended June 30, 2023 and June 30, 2022, respectively. The increase in net loss was directly attributed to interest expenses incurred during the nine-month period

Liquidity and Capital Resources

As of June 30, 2023, the Company had limited cash resources and we had a working capital deficit of $349,969. Our current liabilities were $354,520 at June 30, 2023 and $324,437 at September 30, 2022, respectively. Our total assets increased from $246 at September 30, 2022 to $4,551 at June 30, 2023 due to proceeds from a note payable to a related party.

Other than our anticipated consummation of the Merger, we had no material commitments for capital expenditures as of June 30, 2023. 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.

On October 28, 2022, the Company and Renovo entered into the Merger Agreement, pursuant to which Renovo will be merged with and into the Company, with the Company being the legal successor or surviving corporation in the Merger. Pursuant to the terms of the Merger Agreement, Renovo loaned $200,000 in principal amount to the Company on October 28, 2022 (referred to as the Renovo Loan). The Renovo Loan is evidenced by a consolidated promissory note, dated October 28, 2022, issued by the Company to Renovo (referred to as the Renovo Promissory Note). The Renovo Promissory Note bears interest, commencing on the date of the loan, at an initial rate of 6% per annum and the note matures on October 28, 2024. No payments of principal or interest are due prior to the maturity date and on such date all such amounts are payable in full. The Company may prepay the amounts owed under the Renovo Promissory Note at any time without any prepayment penalties. In the event of a default by the Company under the Renovo Promissory Note, the outstanding principal amount, accrued and unpaid interest, and all other amounts payable under the Renovo Promissory Note shall become immediately due and payable without notice, declaration, or other act on the part of the Renovo.

The proceeds of the Renovo Loan have been used to provide the funds necessary for the Company to continue operations and consummate the transactions contemplated by the Merger Agreement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “Smaller Reporting Company”, the Company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedure

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report. Based upon that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of the end of such period, our disclosure controls and procedures were not effective as of June 30, 2023 due to material weakness in our internal control over financial reporting in providing reasonable assurance in timely alerting management to material information relating to the Company and that information required to be disclosed in our reports is recorded, processed, summarized, and reported as required to be included in our periodic filings with the Commission. Due to the Company’s limited resources and staffing, management has not developed a plan to mitigate the above material weaknesses. Despite the existence of these material weaknesses, the Company believes the financial information presented herein is materially correct and in accordance with generally accepted accounting principles in the United States.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls or in other factors that could significantly affect our disclosure controls and procedures subsequent to the date of the above referenced evaluation. Furthermore, there was no change in our internal control over financial reporting or in other factors during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are presently no pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

As a “Smaller Reporting Company”, the Company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS ON SECURITIES

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

* Exhibit Filed Herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.