Note D - Going Concern Uncertainty
Prior to April 1, 2011, the Company had no operating history, limited cash on hand, no operating assets and a business plan with inherent risk. Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s annual financial statements which includes a statement describing our going concern status. This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.
The Company’s current business plan is to provide the conversion and filing of various documents prepared in accordance with either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, for small to mid-sized public companies with the U.S. Securities and Exchange Commission (SEC) electronically through EDGAR, the Commission’s Electronic Data Gathering, Analysis, and Retrieval system. The Company is not and has never been affiliated with the U.S. Securities and Exchange Commission in any manner.
Kevin Halter, Jr., our controlling stockholder, is also the President and majority stockholder of Securities Transfer Corporation, an affiliated entity which formerly provided services comparable to those of the Company. Mr. Halter is not obligated to contribute any specific number of hours to our affairs, which may result in an conflict of interest in allocating his time between our operations and his other business affairs. If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to manage our business plan.
Prior to April 1, 2011, the Company’s current and former majority stockholders maintained the corporate status of the Company by providing all nominal working capital support on the Company’s behalf from August 1, 2004 (date of bankruptcy settlement) through December 15, 2010 (date of transaction with Edgar).
The Company’s continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis. Further, the Company faces considerable risk in it’s business plan and a potential shortfall of funding due to our potential inability to raise capital in the equity securities market. If no additional operating capital is received during the next twelve months, the Company will be forced to rely on existing cash in the bank and additional funds loaned by management and/or significant stockholders.
Subsequent to the December 15, 2010 transaction date, the Company and it’s current controlling stockholder, Kevin Halter, Jr., agreed that additional funds were necessary to support the corporate entity, comply with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and commence operations under the Company’s business plan. To this end, Mr. Halter has loaned the Company $25,000 through a loan agreement bearing interest at 6.0% and maturity due upon demand. However, the Company is at the mercy of current and future economic trends, as well as current and future business operations for the Company and/or the Company’s majority stockholder to have the resources available to support the Company. Should this pledge fail to provide financing, the Company has not identified any alternative sources of working capital to support the Company.
Note D - Going Concern Uncertainty - Continued
If necessary in the future, the Company may offer sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.
The Company’s certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock and 100,000,000 shares of common stock. The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede potential takeover of the Company, which takeover may be in the best interest of stockholders. The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.
In a restricted cash flow scenario, the Company may be unable to maintain its business plan, and could, instead, delay all cash intensive activities. Without necessary cash flow, the Company could become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.
While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.