THIS SECTION OF THE ANNUAL REPORT INCLUDES A NUMBER OF FORWARD-LOOKING
STATEMENTS THAT REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE. FORWARD-LOOKING STATEMENTS ARE OFTEN IDENTIFIED BY WORDS
LIKE: "BELIEVE," "EXPECT," "ESTIMATE," "ANTICIPATE," "INTEND," "PROJECT" AND
SIMILAR EXPRESSIONS, OR WORDS THAT, BY THEIR NATURE, REFER TO FUTURE EVENTS. YOU
SHOULD NOT PLACE UNDUE CERTAINTY ON THESE FORWARD-LOOKING STATEMENTS, WHICH
APPLY ONLY AS OF THE DATE OF THIS PROSPECTUS. THESE FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR OUR PREDICTIONS.
OUR CONSOLIDATED FINANCIAL STATEMENTS ARE STATED IN UNITED STATES DOLLARS (USD
OR US$) AND ARE PREPARED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. ALL REFERENCES TO "COMMON STOCK" REFER TO THE COMMON
SHARES IN OUR CAPITAL STOCK.
Overview
We were incorporated in the State of Florida on January 26, 2012, to develop an
e-waste recycling business. Our office address is 610 Jones Ferry Road, Suite
207, Carrboro, NC 27510. Because we were not able to raise sufficient capital to
execute our original business plan, we ceased that line of business and are now
engaged in discussions with third parties regarding alternative directions for
our company that could enhance shareholder value.
Going forward, we intend to seek, investigate and, if such investigation
warrants, engage in a business combination with a private entity whose business
presents an opportunity for our shareholders. No specific assets or businesses
have been definitively identified and there is no certainty that any such assets
or business will be identified, or any transactions will be consummated. See
Part I, Item 1, "Business-Our Business Plan," and Part I, Item 1A, "Risk
Factors," for additional information and risks associated with our proposed
business plan.
On November 29, 2016, we formed a new wholly-owned Delaware subsidiary, in
connection with our proposed reincorporation in the State of Delaware. The
reincorporation was to be effected in anticipation of a potential business
combination we were considering. Neither the reincorporation nor the business
combination has occurred.
We expect that we will need to raise funds in order to effectuate our business
plan. We may seek additional investors to purchase our stock to provide us with
working capital to fund our operations. Thereafter, we will seek to establish or
acquire businesses or assets with additional funds raised either via the
issuance of shares or debt. There can be no assurance that additional capital
will be available to us at all or on acceptable terms. We may seek to raise the
required capital by other means. We may have to issue debt or equity or enter
into a strategic arrangement with a third party. We currently have no
agreements, arrangements or understandings with any person to obtain funds
through bank loans, lines of credit or any other sources. Since we have no such
arrangements or plans currently in effect, our inability to raise funds will
have a severe negative impact on our ability to remain a viable company. In
pursuing the foregoing goals, we may seek to expand or change the composition of
the Board or make changes to our current capital structure, including issuing
additional shares or debt and adopting a stock option plan.
We do not expect to generate any revenues over the next 12 months, unless we are
able to enter into a business combination with an operating company. Our
principal business objective for the next 12 months will be to seek, investigate
and, if such investigation warrants, engage in a business combination with a
private entity whose business presents an opportunity for our shareholders.
During the next 12 months we anticipate incurring costs related to filing of
Exchange Act reports, and possible costs relating to consummating an acquisition
or combination. We believe we will be able to meet these costs through use of
funds in our treasury and additional amounts, as necessary, to be loaned by or
invested in us by our stockholders, management or other investors. We currently
have no debt other than loans from related parties We estimate that, assuming we
do not complete a business combination, the level of working capital needed for
these general and administrative costs for the next twelve months will be
approximately $50,000. However, this estimate is subject to change, depending on
the number of transactions in which we ultimately become involved.
17
Recent Developments
On September 25, 2020, GEM sold an aggregate of 6,000,000 restricted shares of
the Company's Common Stock to Global at a total purchase price of $30,000. Upon
the closing of the Share Sale Transaction, Peter de Svastich resigned from all
positions he held with the Company and, in connection with his resignation, he
relinquished his roles as the Company's "Principal Executive Officer" and
"Principal Financial and Accounting Officer" for SEC reporting purposes.
Effective immediately upon Peter de Svastich's resignation, John D. Rollo was
appointed as the Company's President, Secretary and Treasurer, and as the sole
member of the Company's board of the directors. In connection with his
appointments, Mr. Rollo was designated as the "Principal Executive Officer" and
"Principal Financial and Accounting Officer" of the Company for SEC reporting
purposes.
In addition, on September 25, 2020, the Company received a loan of $255,000 from
Peter L. Coker, Sr. (the "$255,000 Loan). To evidence the $255,000 Loan, the
Company issued to Mr. Coker a promissory note in the principal amount of
$255,000 (the "Coker Note"), with a maturity date of September 25, 2021.
Interest on the Coker Note accrued on the principal amount at the rate of eight
percent (8%) per annum, payable on a quarterly basis, in the amount of $5,100
per quarter, on the following dates: December 25, 2020, March 25, 2021, June 25,
2021 and September 25, 2021. The Company was entitled to prepay any amounts due
under the Coker Note without penalty or premium. On December 25, 2020, the
Company made an interest payment of $5,100.00, and on March 25, 2021, the
Company made an interest payment of $5,100. On April 14, 2021, the Company
repaid $255,000 principal amount of the Coker Note, plus $1,117.81 in interest.
In connection with the closing of the Share Sale Transaction, the Company used
the proceeds from the $225,000 Loan to pay GEM $252,750 (the "Settlement
Amount") as full and complete payment, and in full satisfaction, of the total
outstanding debt the Company owed to GEM. GEM had previously made advances to
the Company in the aggregate amount of $447,451 to pay certain expenses of the
Company (the "GEM Debt"). GEM discharged the Company from any further
obligations it may have had to GEM to repay any remaining amounts of the GEM
Debt, and the Company and GEM released each other from any claims they may have
had against each other, with respect to the GEM Debt, or otherwise. The
additional $2,250 of proceeds were used by the Company for working capital and
general corporate purposes.
On October 14, 2020, the Company sold an aggregate of 1,000,000 shares of the
Company's Common Stock to two "accredited investors," who were related parties,
for gross cash proceeds of $50,000. The Company utilized the net proceeds from
the sales for working capital and general corporate purposes.
In addition, on October 14, 2020, 3,000,000 shares of the Company's Common Stock
were cancelled and returned to the Company's number of authorized and unissued
shares of Common Stock.
On November 25, 2020, the Company received a loan of $150,000 from Hometown
International Inc. ("Hometown"), a related party (the "$150,000 Loan"). To
evidence the $150,000 Loan, the Company issued a promissory note in the
principal amount of $150,000 (the "Hometown Note"), with a maturity date of
November 25, 2021. Interest on the Hometown Note accrued on the principal amount
at the rate of six percent (6%) per annum, payable on a quarterly basis, in the
amount of $2,250 per quarter, on the following dates: February 25, 2021, May 25,
2021, August 25, 2021 and November 25, 2021. The Company was entitled to prepay
any amounts due under the Hometown Note without penalty or premium. On February
25, 2020, the Company made an interest payment of $2,250. On April 14, 2021, the
Company repaid $150,000 principal amount of the Hometown Note, plus $1,183.56 in
interest.
On December 1, 2020, the Company entered into the Benzions Consulting Agreement
with Benzions, pursuant to which Benzions was to provide business and financial
consulting services to the Company, including with respect to evaluating
potential business combinations for the Company.
On April 12, 2021, the Company entered into subscription agreements (each, a
"Subscription Agreement") with three "accredited investors" (the "Subscribers"),
pursuant to which the Company sold the Subscribers a total of 2,500,000 units of
the Company's securities (the "Units"), at a purchase price of $1.00 per Unit,
for gross proceeds to the Company of $2,500,000 (the "Offering"). Each Unit
consists of (i) one share (the "Shares") of the Company's Common Stock, and (ii)
warrants to purchase two additional shares of the Company's Common Stock (the
"Warrant Shares") until January 31, 2023, at an exercise price of $4.50 per
share (the "Warrants"). The Company intended to utilize the net proceeds from
the sales of the Units for working capital, general corporate purposes, and to
seek, investigate and, if such investigation warrants, engage in a business
combination with a private entity whose business represents an opportunity for
our shareholders.
18
On May 7, 2021, as part of the restructuring of the Company's management, the
Company and Benzions mutually agreed to terminate the Benzions Consulting
Agreement, and Mr. Rollo resigned from all positions he held with the Company
and simultaneously appointed Elliot Mermel, who was the principal of Benzions,
as the Company's President, Secretary and Treasurer, and as the sole member of
the Company's Board.
On May 25, 2021, the Company entered into the EZ Raider LOI with EZ Global and
EZ Raider, which contemplates the EZ Global's acquisition of DS Israel, the
consummation of a reverse merger by and among the Company, its acquisition
subsidiary and EZ Global, and related transactions.
On May 25, 2021, the parties to the EZ Raider LOI also entered into the Side
Letter that further memorialized the understanding between EZ Global and the
Company. Pursuant to the Side Letter, the Company wired $2,000,000 to EZ Global
to enable EZ Global to, among other things: (a) commence an audit of EZ Global
and EZ Raider; (b) renegotiate the closing date for EZ Raider's acquisition of
DS Israel, and (c) fulfill its obligations under the definitive purchase
agreement with DS Israel for such acquisition.
The consummation of the transactions contemplated by the EZ Raider LOI and the
Side Letter are contingent upon the parties entering into definitive agreements
and satisfaction of the closing conditions set forth in these agreements and
other conditions, including, but not limited to, satisfactory completion by the
Company and EZ Global of all necessary business and legal due diligence, and the
completion of audited financial statements of EZ Global.
Results of Operations
Year Ended February 28, 2021 Compared to Year Ended February 29, 2020
There is no historical financial information about us upon which to base an
evaluation of our performance. We have incurred expenses of $573,955 on our
operations from inception through February 28, 2021.
We have not generated any revenues from our operations. We cannot guarantee we
will be successful in our business operations. Our business is subject to risks
inherent in the establishment of a new business enterprise, including the
financial risks associated with the limited capital resources currently
available to us for the implementation of our business strategies (See "Risk
Factors"). To become profitable and competitive, we must develop the business
plan and execute the plan. Our management will attempt to secure financing
through various means including borrowing and investment from institutions and
private individuals.
Since inception, the majority of our time has been spent refining our business
plan and seeking a business combination with a private entity whose business
presents an opportunity for our shareholders.
Results of Operations
For the year ended For the year ended
February 28, 2021 February 29, 2020
Revenue $ - $ -
Operating expenses $ 100,798 $ 48,539
Interest Expense 10,750 -
Net loss $ (111,548 ) $ (48,539 )
19
During the year ended February 28, 2021, we incurred expenses of $100,798, as
compared to $48,539 for the year ended February 29, 2020. Of these costs, we
incurred consulting fees paid to related parties of $12,500 in the year ended
February 28, 2021 and $0in the year ended February 29, 2020. The balance of
expenses were general and administrative costs.
Liquidity and Capital Resources
As of February 28, 2021, we had current assets of $127,239, consisting of
$127,239 in cash. Our current liabilities as of February 28, 2021, were
$410,228, which is comprised of $1,828 in accounts payable and accrued expenses,
$3,400 in accrued interest payable to related parties and $405,000 in notes
payable to related parties.
The following is a summary of our cash flows provided by (used in) operating,
investing, and financing activities for the years ended February 28, 2021 and
February 29, 2020:
For the year For the year
ended ended
February 28, February 29,
2021 2020
Net Cash Used in Operating Activities $ (119,974 ) $ (41353 )
Net Cash Provided by Financing Activities $ 247,213 $ 41,353
Net Increase in Cash and Cash Equivalents $ 127,239 $
-
For the year ended February 28, 2021, we had used cash of $119,974 for operating
activities, and financing activities provided $247,213. We had a net increase in
cash and cash equivalents of $127,239 for the year ended February 28, 2021.
For the year ended February 29, 2020, we had used cash of $41,353 for operating
activities, and financing activities provided $41,353. We had a net increase in
cash and cash equivalents of $0 for the year ended February 29, 2020.
Our financing activities resulted in a cash inflow of $247,213 for the year
ended February 28, 2021, which is consisting of: (a) $50,000 of proceeds from
the issuance of common stock, (b) proceeds from advances by GEM, a former
related party, of $42,463, (c) $252,750 in repayments of advances to GEM in
connection with the Share Sale Transaction in full settlement of the outstanding
advances, and forgiveness by GEM of the remaining debt in the amount of
$194,701, (d) $405,000 of proceeds from notes payable from related parties, and
(e) capital contribution by a former related party of $2,500.
Our financing activities resulted in a cash inflow of $41,353 for the year ended
February 29, 2020, which is represented by proceeds from advances in the amount
of $41,353 from a former related party.
As reflected in the accompanying consolidated financial statements, the Company
used cash in operations of $119,974, has an accumulated deficit of $573,955, and
has a net loss of $111,548, for the year ended February 28, 2021.
As of the date of this report, we had yet to generate any revenues from our
business operations.
On October 14, 2020, the Company sold 1,000,000 shares of its Common Stock to
two "accredited investors" for cash proceeds of $50,000. The Company utilized
the net proceeds from the sales for working capital and general corporate
purposes.
On April 12, 2021, the Company sold 2,500,000 Units of the Company's securities
at a purchase price of $1.00 per Unit, to three "accredited investors" for cash
proceeds of $2,500,000, The Company intends to utilize the net proceeds from the
sales of the Units for working capital, general corporate purposes, and to seek,
investigate and, if such investigation warrants, engage in a business
combination with a private entity whose business represents an opportunity for
our shareholders.
20
On May 25, 2021, the Company wired $2,000,000 to EZ Global in connection with a
potential business combination between the Company and EZ Global.
To date, we have managed to keep our monthly cash flow requirement low by
keeping our operating expenses to a minimum. We currently have no external
sources of liquidity such as arrangements with credit institutions or
off-balance sheet arrangements that will have or are reasonably likely to have a
current or future effect on our financial condition or immediate access to
capital. Our sole director and officer has made no commitments written or oral,
with respect to providing a source of liquidity in the form of cash advances,
loans and/or financial guarantees.
Assuming we do not complete a business combination, we anticipate needing
approximately $240,000 in order to effectively execute our business plan over
the next 12 months. If we are unable to raise the funds, we will seek
alternative financing through means such as borrowings from institutions or
private individuals. There can be no assurance that we will be able to keep
costs from being more than these estimated amounts or that we will be able to
raise such funds. We expect that we will seek additional financing in the
future. However, we may not be able to obtain additional capital or generate
sufficient revenues to fund our operations. If we are unsuccessful at raising
sufficient funds, for whatever reason, to fund our operations, we may be forced
to seek a buyer for our business or another entity with which we could create a
joint venture. If all of these alternatives fail, we expect that we will be
required to seek protection from creditors under applicable bankruptcy laws.
Going Concern
Our independent auditor has expressed doubt about our ability to continue as a
going concern and believes that our ability is dependent on our ability to
implement our business plan, raise capital and generate revenues. See Note 1 of
our consolidated financial statements.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis. The preparation of consolidated
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to
prepare our consolidated financial statements. A complete summary of these
policies is included in the notes to our consolidated financial statements. In
general, management's estimates are based on historical experience, on
information from third party professionals, and on various other assumptions
that are believed to be reasonable under the facts and circumstances. Actual
results could differ from those estimates made by management.
The consolidated financial statements have been prepared in conformity GAAP,
which contemplates our continuation as a going concern. The Company has not as
yet generated any revenue and has incurred losses to date of $573,955. In
addition, the Company's current liabilities exceed its current assets by
$282,989. To date the Company has funded its operations through advances from
former stockholder, loans from related parties and the sale of Common Stock. The
Company intends on financing its future development activities and its working
capital needs largely from the sale of public equity securities with some
additional funding from other traditional financing sources, including term
notes until such time that funds provided by operations are sufficient to fund
working capital requirements. These factors raise substantial doubt about the
Company's ability to continue operating as a going concern. The Company's
ability to continue our operations as a going concern, realize the carrying
value of our assets, and discharge our liabilities in the normal course of
business is dependent upon our ability to raise capital sufficient to fund its
commitments and ongoing losses, and ultimately generate profitable operations.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued that we adopt as of
the specified effective date. We believe that the impact of recently issued
standards that are not yet effective may have an impact on our results of
operations and financial position.
21
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
stockholders.
Contractual Obligations
Not applicable.
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