Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d ) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM _______________ TO _______________.
Commission file number: 000-28015
ROADSHIPS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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20-5034780
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(State or other Jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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134 Vintage Park Blvd., Suite A-183, Houston, Texas 77070
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(Address of principal executive offices)
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(281) 606-4642
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(Registrant’s telephone number, including area code)
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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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o |
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Accelerated filer |
o
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| Non-accelerated filer | o |
(do not check if a smaller reporting company)
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Smaller reporting company |
x
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Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).
Yes o No x
The number of shares of the registrant’s common stock outstanding as of May 24, 2013, was 2,987,633,430.
ROADSHIPS HOLDINGS, INC.
FORM 10-Q
INDEX
2
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
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03/31/13
(Unaudited)
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12/31/12
(Audited)
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash
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$ | 566 | $ | 306 | ||||
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Total current assets
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566 | 306 | ||||||
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Non-current assets:
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||||||||
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Property, plant and equipment, net of accumulated depreciation of $114,599 and $112,836 as of March 31, 2013 and December 31, 2012, respectively
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8,511 | 10,274 | ||||||
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TOTAL ASSETS
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$ | 9,077 | $ | 10,580 | ||||
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LIABILITIES
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||||||||
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Accounts payable and accrued expenses
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$ | 379,233 | $ | 20,611 | ||||
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Accounts payable - related party
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638 | 638 | ||||||
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Bank overdraft
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95 | 35 | ||||||
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Loans from related parties
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12,899 | 123,006 | ||||||
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Total current liabilities
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392,865 | 144,290 | ||||||
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TOTAL LIABILITIES
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392,865 | 144,290 | ||||||
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STOCKHOLDERS’ DEFICIT
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||||||||
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Common stock, $0.00001 par value. Three billion shares authorized. 2,487,633,430 and 187,633,430 issued and outstanding at March 31, 2013 and December 31, 2012, respectively.
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24,876 | 1,876 | ||||||
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Series A Convertible Preferred Stock, par value $0.0001. 4 shares authorized, 1 and zero shares outstanding at March 31, 2013 and December 31, 2012, respectively
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- | - | ||||||
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Series B Convertible Preferred Stock, par value $0.00001. 10,000,000 shares authorized, 39,312 and zero shares outstanding at March 31, 2013 and December 31, 2012, respectively
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- | - | ||||||
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Additional paid in capital
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226,828,225 | 5,637,749 | ||||||
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Development stage deficit
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(227,236,889 | ) | (5,773,335 | ) | ||||
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TOTAL STOCKHOLDERS’ DEFICIT
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(383,788 | ) | (133,710 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$ | 9,077 | $ | 10,580 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
3
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended March 31,
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2013
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2012
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Inception (9/26/08) to 03/31/13
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REVENUES AND GROSS MARGIN
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Revenues
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$ | - | $ | - | $ | 13,636 | ||||||
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Cost of sales
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- | - | 16,215 | |||||||||
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Gross margin
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- | - | (2,579 | ) | ||||||||
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EXPENSES
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||||||||||||
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General and administrative
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409,321 | 33,949 | 4,791,852 | |||||||||
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Depreciation
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1,767 | 9,012 | 113,765 | |||||||||
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Total operating expenses
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411,088 | 42,961 | 4,905,617 | |||||||||
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Operating loss
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(411,088 | ) | (42,961 | ) | (4,908,196 | ) | ||||||
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OTHER INCOME / (EXPENSE)
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||||||||||||
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Interest expense
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(1,077 | ) | (636 | ) | (6,139 | ) | ||||||
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Loss on debt extinguishment
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(221,051,734 | ) | - | (221,051,734 | ) | |||||||
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Costs related to abandoned acquisition
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- | - | (1,270,760 | ) | ||||||||
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Total other
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(221,052,811 | ) | (636 | ) | (222,328,633 | ) | ||||||
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Foreign exchange gains / (losses)
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345 | (2,609 | ) | (60 | ) | |||||||
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Net loss
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$ | (221,463,554 | ) | $ | (46,206 | ) | $ | (227,236,889 | ) | |||
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Net loss per common share - basic and diluted
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$ | (0.33 | ) | $ | - | |||||||
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Weighted average shares outstanding
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673,188,986 | 187,633,430 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)
(Unaudited)
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Common Stock
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Series A Convertible Preferred Stock
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Series B Convertible Preferred Stock
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Additional
Paid In
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Deficit Accumulated
During the
Development
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Total
Stockholders'
Equity /
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||||||||||||||||||||||||||||||||
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Date
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Capital
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Stage
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(Deficit)
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||||||||||||||||||||||||||||
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Inception – Issuance of founders shares September 26, 2008
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09/26/08
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53,750,000 | $ | 538 | $ | - | $ | - | $ | (538 | ) | $ | - | $ | - | ||||||||||||||||||||||
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Net loss 9/26/08 to 12/31/08
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(220 | ) | (220 | ) | |||||||||||||||||||||||||||||||||
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Balances, 12/31/08
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53,750,000 | 538 | - | - | - | - | (538 | ) | (220 | ) | (220 | ) | |||||||||||||||||||||||||
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Shareholder forgiveness of debt
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04/01/09
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$ | 1,980 | $ | $ | 1,980 | |||||||||||||||||||||||||||||||
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Shares issued to acquire Roadships Acquisitions Pty, Ltd (Australia)
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05/30/09
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10,000 | - | - | - | ||||||||||||||||||||||||||||||||
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Stock dividend to existing shareholders
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06/15/09
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106,197,430 | 1,061 | (1,061 | ) | - | |||||||||||||||||||||||||||||||
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Shares issued to acquire Endeavour Logistics Pty, Ltd.
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06/22/09
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500 | - | 108,074 | 108,074 | ||||||||||||||||||||||||||||||||
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Shares issued to President for services
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10/01/09
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5,000,000 | 50 | 849,950 | 850,000 | ||||||||||||||||||||||||||||||||
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Shares issued for services
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11/19/09
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7,675,500 | 77 | 1,303,675 | 1,303,752 | ||||||||||||||||||||||||||||||||
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Reduction of notes payable by related party
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2,926 | 2,926 | |||||||||||||||||||||||||||||||||||
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Contribution of equipment by related party
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7,427 | 7,427 | |||||||||||||||||||||||||||||||||||
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Payment of expenses by shareholders
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115,246 | 115,246 | |||||||||||||||||||||||||||||||||||
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Net loss, year ended 12/31/09
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(2,297,656 | ) | (2,297,656 | ) | |||||||||||||||||||||||||||||||||
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Balance, 12/31/09
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172,633,430 | $ | 1,726 | - | - | - | - | 2,387,679 | $ | (2,297,876 | ) | $ | 91,529 | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)
(Unaudited)
(Continued)
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Common Stock
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Series A Convertible Preferred Stock
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Series B Convertible Preferred Stock
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Additional Paid In |
Deficit Accumulated
During the Development
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Total
Stockholders' Equity /
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||||||||||||||||||||||||||||||||
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Date
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Capital
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Stage
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(Deficit)
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||||||||||||||||||||||||||||
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Payment of expenses by shareholders
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104,316
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104,316
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Cash contributions by shareholders
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42,956
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42,956
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|||||||||||||||||||||||||||||||||||
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Stock based compensation
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11/24/10 |
10,000,000
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100
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1,699,900
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1,700,000
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||||||||||||||||||||||||||||||||
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Interest and principal payments made by related party
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4,408
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4,408
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Net loss
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(1,882,914
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) |
(1,882,914
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Balance, 12/31/10
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182,633,430
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1,826
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- |
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- |
-
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- |
4,239,259
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(4,180,790
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60,295
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Shares issued as deposit for acquisition
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01/25/11
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5,000,000
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50
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1,249,950
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1,250,000
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Expenses paid by affiliates
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64,390
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64,390
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Cash contributed by related party
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16,250
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16,250
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Interest and principal payments made by related party
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1,236
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1,236
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Net loss
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(1,412,051
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) |
(1,412,051
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Balance, 12/31/11
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187,633,430
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$ |
1,876
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-
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-
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-
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-
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5,571,085
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$ |
(5,592,841
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) | $ |
(19,880
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) | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY / (DEFICIT)
(Unaudited)
(Continued)
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Common Stock
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Series A Convertible Preferred Stock
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Series B Convertible Preferred Stock
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Additional Paid In |
Deficit Accumulated
During the
Development |
Total
Stockholders'
Equity / |
||||||||||||||||||||||||||||||||
| Date | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Stage |
(Deficit)
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||||||||||||||||||||||||||||
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Grant of options to officers
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07/02/12
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66,664
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66,664
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Net loss
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(180,494
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) |
(180,494
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) | |||||||||||||||||||||||||||||||||
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Balance, 12/31/12
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187,633,430
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$
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1,876
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-
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-
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-
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-
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5,637,749
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$
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(5,773,335
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) |
$
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(133,710
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) | ||||||||||||||||||||||
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Common shares issued for debt reduction
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2,300,000,000
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23,000
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22,977,000
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23,000,000
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|||||||||||||||||||||||||||||||||
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Class A Preferred shares issued for debt reduction
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1
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-
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99,900,510
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99,900,510
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|||||||||||||||||||||||||||||||||
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Class B Preferred shares issued for debt reduction
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39,312
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-
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98,280,000
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98,280,000
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|||||||||||||||||||||||||||||||||
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Amortization of officer options
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32,966
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32,966
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|||||||||||||||||||||||||||||||||||
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Net loss
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(221,463,554
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) |
(221,463,554
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) | |||||||||||||||||||||||||||||||||
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-
|
|||||||||||||||||||||||||||||||||||||
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Balance, 03/31/13
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2,487,633,430
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|
$
|
24,876
|
1
|
-
|
39,312
|
-
|
226,828,225
|
$
|
(227,236,889
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) |
$
|
(383,788
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) | ||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended March 31,
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Inception (9/26/08) | |||||||||||
| 2013 | 2012 | to 03/31/13 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
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Net Loss
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$ | (221,463,554 | ) | $ | (46,206 | ) | $ | (227,236,889 | ) | |||
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Depreciation expense
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1,767 | 9,012 | 113,765 | |||||||||
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Stock Options Expense
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32,966 | - | 3,953,380 | |||||||||
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Non-cash costs related to abandoned acquisitions
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- | - | 1,250,000 | |||||||||
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Loss on retirement of debt
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221,051,734 | - | 221,051,734 | |||||||||
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Changes in operating assets and liabilities:
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||||||||||||
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Accounts payable and accrued expenses
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360,332 | (4,928 | ) | 383,682 | ||||||||
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Accounts payable - related party
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- | - | 638 | |||||||||
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Capital lease obligation
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- | - | (5,559 | ) | ||||||||
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Interest payable
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- | 636 | 4,532 | |||||||||
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Net cash used in operating activities
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(16,755 | ) | (41,486 | ) | (484,717 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| - | - | - | ||||||||||
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Net cash used in investing activities
|
- | - | - | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
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Cash proceeds from shareholder contributions
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- | - | 59,206 | |||||||||
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Proceeds from notes payable
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- | - | 7,400 | |||||||||
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Principal payments on notes payable
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- | - | (7,400 | ) | ||||||||
|
Payment of expenses by related parties
|
- | - | 287,166 | |||||||||
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Cash proceeds from shareholder loan
|
17,360 | - | 151,554 | |||||||||
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Principal payments on shareholder loans
|
- | 38,662 | (14,072 | ) | ||||||||
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Net cash provided by financing activities
|
17,360 | 38,662 | 483,854 | |||||||||
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Effect of foreign exchange transactions
|
(345 | ) | 2,609 | 1,429 | ||||||||
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Net increase/(decrease) in cash
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260 | (215 | ) | (566 | ) | |||||||
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Cash and equivalents - beginning of period
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306 | 231 | - | |||||||||
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Cash and equivalents - end of period
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$ | 566 | $ | 16 | $ | 566 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
ROADSHIPS HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
| Three Months Ended March 31, | Inception (9/26/08) to | |||||||||||
|
2013
|
2012 | 03/31/13 | ||||||||||
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SUPPLEMENTARY INFORMATION
|
||||||||||||
|
Cash paid for interest
|
1,916
|
-
|
1,916
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|||||||||
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Cash paid for income taxes
|
-
|
-
|
-
|
|||||||||
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING TRANSACTIONS
|
||||||||||||
|
Acquisition of Endeavor Logistics Pty, Ltd. for stock
|
-
|
-
|
108,074
|
|||||||||
|
Forgiveness of shareholder loan
|
-
|
-
|
1,980
|
|||||||||
|
Deposit on acquisition paid in stock
|
-
|
1,250,000
|
1,250,000
|
|||||||||
| Common stock issued to settle debt | 23,000 | |||||||||||
| Preferred stock issued to settle debt | 98,281 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
9
ROADSHIPS HOLDINGS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2013
Note 1 – Organization and Nature of Business
History
Roadships Holdings, Inc. was formed in Delaware on June 5, 2006 as Caddystats, Inc. (Roadships Holdings, Inc. and Caddystats shall hereinafter be collectively referred to as “Roadships” “Caddystats” “Roadships Holdings”, the “Company”, “we’ or “us”).
The Company adopted the accounting acquirer’s year end, December 31.
Our Business
Roadships is an emerging company in the short-sea and ground freight industry sectors operating through its wholly owned subsidiaries in the United States and Australia.
We have acquired several domestic and foreign subsidiaries to facilitate our entry into these markets. In the United States, Roadships Acquisitions US, Inc. is our subsidiary designated to identify and act upon synergistic acquisition targets in North America. Roadships America, Inc. was established to develop and accommodate organic growth within the North America markets.
On May 25, 2009, we acquired Roadships Acquisitions Pty, Ltd. a corporation formed under the laws of Australia, which we expect to use to identify and act upon synergistic acquisition targets in Australia and the surrounding area.
On June 15, 2009, we acquired Endeavour Logistics Pty. Ltd., to establish to develop and accommodate organic growth within the Australia markets. We renamed Endeavor Logistics Pty Ltd. to Roadships Freight Pty Ltd.
In the United States, Roadships Acquisitions US, Inc. is our subsidiary designated to identify and act upon synergistic acquisition targets throughout North America. Roadships America, Inc., was established to develop and accommodate organic growth within the North America markets.
Roadships is currently attempting to develop a High Speed (HS) Monohull ship design based on a vessel concept that was initially developed by Kvaerner Masa Yards - Technology (now STX Europe). The HS vessel design was conceived in the early 1990’s for short sea shipping transportation throughout Europe using a hull form derived from a high speed ROPAX ferry built in Helsinki, Finland. This hull form was extensively tested and improved over a period of 5 years to optimize the hull form that offers the least resistance and allows the ship to maintain speed up to SS5.
Ground Freight Mergers and Acquisitions
The gestation period for a HS Monohull vessel is eighteen (18) months, best case, from start to finish. To drive short term cash flow, the Company’s strategic intent calls for the acquisition, merger and assimilation of privately held regional freight companies ranging in value from Eight Million USD ($8,000,000) to Twenty Million USD ($20,000,000). Strategically, Management intends to identify and acquire two (2) target operations quarterly – with one of the two being an over-performer and the other an under-performer – synergistically merging the two so as to optimize future operations of both operating entities.
10
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies
Condensed Consolidated Financial Statements
In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the period ending March 31, 2013. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our audited financial statements for the period ended December 31, 2012, as reported in Form 10-K filed with the Securities and Exchange Commission on April 16, 2013.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Principles of Consolidation
Our consolidated financial statements include the accounts of Roadships Holdings, Inc. and all majority-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.
Property, Plant and Equipment
We record our property plant and equipment at historical cost. The estimated useful lives of these assets range from three to seven years and are depreciated using the straight-line method over the asset’s useful life.
Foreign Currency Risk
We currently have two subsidiaries operating in Australia. At March 31, 2013 and December 31, 2012, we had $591 and $294 Australian Dollars, respectively ($566 and $306 US Dollars, respectively) deposited into Australian banks.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
11
Net Loss Per Share
Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same for the three months ended March 31, 2013 as the effect of our potential common stock equivalents would be anti-dilutive.
Recent Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, ‘‘Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, “Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles -Goodwill and Other -General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
Note 3 – Going Concern
We have not begun our core operations in the short-sea and ground freight industries and have not yet acquired the assets to enter these markets and we will require additional capital to do so. There is no guarantee that we will acquire the capital to procure the assets to enter these markets or, upon doing so, that we will generate positive cash flows from operations. Roadships Holdings’ financial statements have been prepared on a development stage company basis. Substantial doubt exists as to Roadships Holdings’ ability to continue as a going concern. No adjustment has been made to these financial statements for the outcome of this uncertainty.
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Note 4 – Related Party Transactions
For the three months ended March 31, 2013, we had the following transactions with our major shareholder and Chief Executive Officer, Micheal Nugent:
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·
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We received $17,360 in cash loans to pay operating expenses,
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·
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We accrued $1,077 in interest payable,
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·
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We issued 2,300,000,000 shares of common stock to Mr. Nugent, retiring $23,000 of accumulated debts owed to him, and recording a loss on retirement of debt of $22,977,000 (see Note 5 for a more detailed explanation of this stock issuance),
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·
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We issued 1 share of Class A Convertible Preferred Stock and 39,312 Series B Convertible Preferred Stock, retiring $98,281of accumulated debts owed to him, and recording a loss on retirement of debt of $198,082,229, collectively, for these two issuances (see Note 5 for a more detailed explanation of this stock issuance),
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·
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We recorded a foreign exchange gain associated with the extinguishment of debt of $7,495.
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According to our agreement with this shareholder, we accrue interest on all unpaid amounts at 5%. Principal and interest are callable at any time. If principal and interest are called and not repaid, the loan is considered in default after which interest is accrued at 10%.
As of the date of this report, no principal or interest has been called by the maker of the note. The outstanding balance at March 31, 2013 is $11,722 and 1,077, respectively, for principal and interest.
Note 5 – Capital
At December 31, 2012, we had 187,633,430 common shares issued and outstanding from a total of 1 billion authorized.
Common Stock
On March 12, 2013, the Board of Directors voted to increase the number of common shares authorized to 3,000,000,000, changing the par value of the shares to $0.00001. The Consolidated Statement of Stockholders’ Equity / (Deficit) included in this quarterly report has been adjusted to reflect this change in par value.
Also on March 12, 2013, the Company issued to our Chief Executive Officer, Micheal Nugent, 2,300,000,000 shares of common stock in exchange for a reduction in debt from the Company to him in the amount of $23,000. We valued the shares at their fair value of the stock’s closing price on the grant date, recording an increase to Additional Paid in Capital of $23,000,000, a reduction of interest and principal of $2,437 and 20,563, respectively, and recorded a loss on retirement of debt of $22,977,000.
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Preferred Stock
On March 12, 2013, the Board of Directors authorized 4 shares of Class A Convertible Preferred Stock and 10,000,000 shares of Class B Convertible Preferred Stock. Class A and B Convertible Preferred Stock have the following attributes:
Series A Convertible Preferred Stock
The Series A Preferred Stock is convertible into the number of shares of Common Stock which equals 4 times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of conversion, plus ii) the total number of shares of Series B Preferred Stocks which are issued and outstanding at the time of conversion.
The Series A Preferred Stock voting rights are equal to the number of shares of Common Stock which equals 4 times the sum of: i) the total number of shares of Common Stock which are issued and outstanding, plus ii) the total number of shares of Series B Preferred Stocks which are issued and outstanding.
Series B Convertible Preferred Stock
Each share of Series B Preferred Stock is convertible at par value $0.00001 per share (the “Series B Preferred”), at any time, and/or from time to time, into the number of shares of the Corporation's common stock, par value $0.00001 per share (the "Common Stock") equal to the price of the Series B Preferred Stock ($2.50), divided by the par value of the Series B Preferred (par value of $0.0001per share), subject to adjustment as may be determined by the Board of Directors from time to time (the "Conversion Rate").
Based on the $2.50 price per share of Series B Preferred Stock, and a par value of $0.0001 per share for Series B Preferred each share of Series B Preferred Stock is convertible into 250,000 shares of Common Stock.
Each share of Series B Preferred Stock has 10 votes for any election or other vote placed before the shareholders of the Common stock
The Preferred A stock has a stated value of $.0001 and no stated dividend rate and is non-participatory. The Series A and Series B has liquidation preference over common stock. The Voting Rights for each share of Series A is equal to 1 vote per share (equal to 4 times the number of common and Preferred B shares outstanding) and Series B Preferred Stock have 10 votes per shares.
The Holder has the right to convert the Preferred A and B to common shares of the Company with the Series A convertible to 4 times the number of common and Preferred B shares outstanding and Series B convertible to 250,000 common shares per Preferred B share. The Preferred Series A and Series B represents voting control based on management’s interpretation of the Company bylaws and Certificate of Designation.
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Issuances of Preferred Stock
On March 12, 2013, the Company issued 1 share of Series A Convertible Preferred Stock and 39,312 shares of Series B Convertible Preferred Stock to our Chief Executive Officer, Micheal Nugent, in exchange for a reduction of debt in the amount of $98,281.
Valuation of Control Rights
Control is managed both through the Common Stock; Preferred Series A and Series B voting rights and the control over the covenants, articles and by laws. We estimated the control premium for the voting control of the Holders Common Stock; Preferred Series A shares and Series B shares based on Transportation; Construction Contractors & Engineering Services; Distribution;and Industrial & Farm Equipment & Machinery industries at 19.70% as of3/12/13. This control premium was derived by utilizing historical median control premium over the last 20 years within the Company’s similar industry.
We deemed the value of the Control premium was $393,600 which was based on the following inputs:
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1.
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The common stock price was $.01 as of 3/12/13;
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2.
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187,633,430 common shares outstanding and the Holders Securities representing control and majority voting rights: 2,300,000,000 Common Shares (92,613,893 and 6,174,254 shares previously held by the Holder); 1 share of Preferred Series A (9,950,690,968 voting rights) and 39,312 Series B Preferred shares issued (393,120 voting rights);
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3.
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A 19.70% premium over the common shares for the voting preferences;
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4.
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9,950,690,968 voting rights of the issued 2,300,000,000 Common Shares (92,613,893 and 6,174,254 shares previously held by the Holder); 1 share of Preferred Series A (9,950,690,968 voting rights) and 39,312 Series B Preferred shares issued (393,120 voting rights) based on the Company bylaws and Managements interpretation of the Certificate of Designation; and
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5.
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12,438,717,518 total voting rights – all shares issued and outstanding
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6.
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A 99.26% voting control from the issued Common; Preferred A and Preferred B shares.
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We therefore valued the Control Premium at $393,600, and valued all of the features of all classes of stock issued on March 12, 2013, according to the table below.
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Common Stock
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Series A Convertible Preferred
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Series B Convertible Preferred
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Common Stock
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Number of shares outstanding at March 12, 2013
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1 | 39,312 | ||||||||||
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Closing price of common stock on grant date
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$ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||
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Common shares outstanding immediately before grant
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187,633,430 | |||||||||||
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March 12, 2013 grant
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2,300,000,000 | |||||||||||
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Common shares outstanding, March 12, 2013
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2,487,633,430 | |||||||||||
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March 12, 2013 grant at closing price
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$ | 23,000,000 | ||||||||||
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Series A Beneficial Conversion Feature
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Number of shares convertible of Series A into common:
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(4 x 2,487,633,430) + (39,312 x 4)
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9,950,690,968 | |||||||||||
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Series A value on grant date
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$ | 99,506,910 | ||||||||||
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Series B Beneficial Conversion Feature
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Per share conversion ratio
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250,000 | |||||||||||
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Number of shares issuable upon conversion
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9,828,000,000 | |||||||||||
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Series B value on grant date
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$ | 98,280,000 | ||||||||||
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Recap of stock issuance valuations
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Common stock fair value at grant date
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23,000,000 | |||||||||||
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Preferred Stock Beneficial Conversion Feature
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99,506,910 | 98,280,000 | ||||||||||
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Control Premium value
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393,600 | |||||||||||
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Total value recorded
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$ | 23,000,000 | $ | 99,900,510 | $ | 98,280,000 | ||||||
Therefore, in recording the issuance of Series A and B Convertible Preferred Stock, we increased Additional Paid Capital by $198,180,510 ($99,900,510 + $98,280,000), reduced the principal amount owed to Mr. Nugent in the amount of $98,281, and recorded a loss on retirement of debt of $198,082,229.
Note 6 – Property, Plant and Equipment
Property, Plant and Equipment consists principally of office furniture and equipment and vehicles. Balances at March 31, 2013 and December 31, 2012 are as follows:
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03/31/13
(Unaudited)
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12/31/12
(Audited)
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Office equipment
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$ | 87,836 | $ | 87,836 | ||||
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Equipment
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23,362 | 23,362 | ||||||
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Vehicles
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11,912 | 11,912 | ||||||
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Total fixed assets at cost
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123,110 | 123,110 | ||||||
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Less: accumulated depreciation
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(114,599 | ) | (112,836 | ) | ||||
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Net fixed assets
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$ | 8,511 | $ | 10,274 | ||||
Note 7 – Subsequent Events
Subsequent to March 31, 2013, we issued 500,000,000 shares to five consultants for services.
We have evaluated subsequent events through the date of this report.
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This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. “Forward-looking statements” may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or “anticipate” and other similar words.
Although we believe that the expectations reflected in our “forward-looking statements” are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any “forward-looking statements”, are subject to change and to inherent risks and uncertainties, such as those disclosed in this report. In light of the significant uncertainties inherent in the “forward-looking statements” included in this report, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Except for its ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any “forward-looking statement”. Accordingly, the reader should not rely on “forward-looking statements”, because they are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by the “forward-looking statements”.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements, including the notes to those financial statements, included elsewhere in this report.
Overview
Roadships Holdings, Inc. is an emerging company in the short-sea and ground freight industry sectors operating through its wholly owned subsidiaries in the U.S. and Australia.
In the United States, Roadships Acquisitions US, Inc. is our subsidiary designated to identify and act upon synergistic acquisition targets throughout North America. Roadships America, Inc, was established to develop and accommodate organic growth within the North American markets.
Roadships is currently attempting to develop a High Speed (HS) Monohull ship design based on a vessel concept that was initially developed by Kvaerner Masa Yards - Technology (now STX Europe). The HS vessel design was conceived in the early 1990's for short sea shipping transportation throughout Europe using a hull form derived from a high speed ROPAX ferry built in Helsinki, Finland. This hull form was extensively tested and improved over a period of 5 years to optimize the hull form that offers the least resistance and allows the ship to maintain speed up to SS5.
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Results of Operations - Three Months Ended March 31, 2013 versus 2012
We had general and administrative expenses of $409,321 for the three months ended March 31, 2013 versus $33,949 for the same period in 2012. The principal difference is the expensing of five contracts for services from consultants in the amount of $370,000.
Depreciation is significantly less for the three months ended March 31, 2013 versus the same period in 2012 because many of the assets depreciated during 2012 are now fully depreciated.
Interest expense increased from $636 to $1,077 for the three months ended March 31, 2011 versus 2012, respectively. The increase is due to an increase in outstanding shareholder loans.
Liquidity and Capital Resources
Our financial statements have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
The Company has virtually no liquid assets. We are currently seeking financing to attain our business goals, but there is no guarantee that we will obtain such financing or, upon obtaining it, that we will be able to invest in productive assets that will result in positive cash flows from operations.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had negative cash flows from operations, recurring losses, and negative working capital at March 31, 2013 and December 31, 2012. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Management intends to finance these deficits by making additional shareholder notes and seeking additional outside financing through either debt or sales of its common stock.
Plan of Operation
Roadships Holdings, Inc. (“Roadships”), operates in the transport industry – short-sea freight shipping, shipping logistics, and ground freight transport. The Company’s business model and business plan (the “Plan”) have remained unchanged from the juncture of the reverse merger (February – March 2009.
Although operationally integrated, Roadships operations are best examined as three “strategic business units” (SBUs): 1) Short Sea Freight Shipping; 2) Freight Shipping Logistics, and; 3) Ground Freight Transport.
Short Sea Shipping:
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Research and development on the establishment Roadships USA trade routes;
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Pre-application research and development on a waiver of The Jones Act;
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Preliminary logistical preparation on the ordering and construction of two USA built Roadships High Speed Monohulls;
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In discussions with European and USA based ship operators on strategic partnerships;
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Finalization of strategic sales and marketing for the Company’s new trailer designs or retrofit package for use with the new Roadships High Speed Monohulls;
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Preliminary logistical preparation for the release of Roadships’ new loading and unloading equipment for the Company’s High Speed Monohulls;
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Freight Shipping Logistics:
Although Roadships’ management team has considerable experience in industry sector, frankly freight logistics services have taken a back seat to developments in the Company’s Short Sea Shipping and Ground Transportation SBUs. However, the Company intends to penetrate both the USA and Australian markets over the short-term, most likely by means of merger or acquisition in penetrating the former.
A smaller reporting company is not required to provide the information required by this item.
Evaluation of Disclosure Controls and Procedures.
We maintain "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based upon the evaluation of our officers and directors of our disclosure controls and procedures as of March 31, 2013, the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), our Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. Our management concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We are a small organization with only a few employees. Under these circumstances it is impossible to completely segregate duties. We do not expect our internal controls to be effective until such time as we are able to begin full operations and even then there are no assurances that our disclosure controls will be adequate in future periods.
Change In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
None
None
None
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Exhibit No.
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Description of Exhibit
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3.1
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Articles of Incorporation, as filed June 5, 2007 (included as Exhibit 3.1 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).
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3.2
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Bylaws (included as Exhibit 3.2 to the Form SB-2 filed April 5, 2007, and incorporated herein by reference).
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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20
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: May 29, 2013
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Roadships Holdings, Inc | |
| By: |
/s/ Michael Nugent
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| Michael Nugent | ||
| Chief Executive Officer | ||
| By: |
/s/ Michael Norton Smith
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| Michael Norton Smith | ||
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Chief Financial Officer
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