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EX-32.1 - CERTIFICATION - ITS BURGER TIME RESTAURANT GROUP, INC.prti_ex321.htm
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EX-31.2 - CERTIFICATION - ITS BURGER TIME RESTAURANT GROUP, INC.prti_ex312.htm

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended: September 30, 2014

 

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

 

For the transition period from ________ to _________

 

Commission file number: 000-52901

 

PRETORIA RESOURCES TWO, INC.

(Name of Small Business Issuer in its charter)

 

Nevada

 

16-0383696

(State or other jurisdiction of Identification No.)

 

(I.R.S. Employer incorporation or organization)

 

20 West Park Avenue, Suite 207, Long Beach, NY 11561

Address of registrant's principal executive offices

 

(516) 442-1883

Issuer’s telephone number

 

4392 Enchantment Cove Lane, Charlotte North Carolina 28216

 (Former name, former address and former

fiscal year, if changed since last report)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an 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

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

 

 

 

 

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

 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At March 4, 2015 there were 1,000,000 shares of common stock outstanding.

 

 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Balance Sheets

 

    As of  
    September 30,
2014
    December 31,
2013
 
    (Unaudited)      
         

CURRENT ASSETS

       

Cash

 

$

-

   

$

-

 

TOTAL CURRENT ASSETS

   

-

     

-

 

TOTAL ASSETS

   

-

     

-

 
               

CURRENT LIABILITIES

               

Accounts Payable

   

2,050

     

2,550

 

Related Party Note Payable

   

75,815

     

75,315

 

Accrued Interest - Related Party

   

19,444

     

14,896

 

TOTAL CURRENT LIABILITIES

   

97,309

     

92,761

 

TOTAL LIABILITIES

   

97,309

     

92,761

 

 

STOCKHOLDER'S DEFICIT

               

Preferred stock ($0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2014 and December 31, 2013)

   

-

     

-

 

Common stock ($0.0001 par value; 100,000,000 shares authorized; 1,000,000 issued and outstanding at September 30, 2014 and December 31, 2013)

   

100

     

100

 

Additional Paid in Capital

   

22,600

      22,600  

Accumulated Deficit During Development Stage

 

(120,009

)

 

(115,461

)

TOTAL STOCKHOLDER'S DEFICIT

 

(97,309

)

 

(92,761

)

TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT

 

$

-

   

$

-

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-1

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statements of Operations 

 

    For the three months  
    ended September 30,  
    2014     2013  
    (unaudited)     (unaudited)  
         

Income

 

$

-

   

$

-

 

Total Revenue

 

$

-

   

$

-

 
               

EXPENSES:

               

Selling, General and Administrative

   

-

     

36

 

Professional Fees

   

-

     

3,439

 

Total Expense

   

-

     

3,475

 

Loss from operations

   

-

   

(3,475

)

OTHER INCOME/(EXPENSE):

               

Gain on Forgiveness of Debt

   

-

     

-

 

Interest Expense

 

(1,516

)

 

(1,726

)

               

NET LOSS

 

(1,516

)

 

(5,201

)

Basic and fully diluted net loss per common share:

 

(0.00

)

 

(0.01

)

               

Weighted average common shares outstanding

   

1,000,000

     

1,000,000

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-2

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statements of Operations 

  

    For the nine months ended
September 30,
    For the Period From Inception (May 25, 2007) to
September 30,
 
    2014     2013     2014  
    (unaudited)     (unaudited)      
             

Income

 

$

-

   

$

-

   

$

-

 

Total Revenue

 

$

-

   

$

-

   

$

-

 
                       

EXPENSES:

                       

Selling, General and Administrative

   

-

     

108

     

6,876

 

Professional Fees

   

-

     

12,285

     

86,091

 

Total Expense

   

-

     

12,393

     

92,967

 

Loss from operations

   

-

   

(12,393

)

 

(92,967

)

OTHER INCOME/(EXPENSE):

                       

Interest Expense

 

(4,548

)

 

(4,924

)

 

(27,042

)

                       

NET LOSS

 

(4,548

)

 

(17,317

)

 

(120,009

)

Basic and fully diluted net loss per common share:

 

(0.00

)

 

(0.02

)

       
                       

Weighted average common shares outstanding

   

1,000,000

     

1,000,000

         

 

The accompanying notes are an integral part of these financial statements.

 

 
F-3

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statement of Stockholder's Deficit

 

                    Additional     Deficit Accumulated During      
    Common Stock     Preferred Stock     Paid-in     Development     Total  
    Shares     Amount     Shares     Amount     Capital     Stage     Equity  
                             

Balances, December 31, 2007

 

1,000,000

   

$

100

   

-

   

$

-

   

$

-

   

$

(9,895

)

 

$

(9,795

)

                                                       

Net loss

   

-

     

-

     

-

     

-

     

-

   

(11,474

)

 

(11,474

)

                                                       

Capital Contributions

   

-

     

-

     

-

     

-

     

-

     

-

     

-

 
                                                       

Issuance of common shares

   

-

     

-

     

-

     

-

     

-

     

-

     

-

 
                                                       

Balances, December 31, 2008

   

1,000,000

   

$

100

     

-

   

$

-

   

$

-

   

$

(21,369

)

 

$

(21,269

)

                                                       

Net loss

   

-

     

-

     

-

   

$

-

   

$

-

   

$

(9,772

)

 

$

(9,772

)

                                                       

Balances, December 31, 2009

   

1,000,000

   

$

100

     

-

   

$

-

   

$

-

   

$

(31,141

)

 

$

(31,041

)

                                                       

Net loss

   

-

     

-

     

-

   

$

-

   

$

-

   

$

(15,405

)

 

$

(15,405

)

                                                       

Balances, December 31, 2010

   

1,000,000

   

$

100

     

-

   

$

-

   

$

-

   

$

(46,546

)

 

$

(46,446

)

                                                       

Net loss

   

-

     

-

     

-

     

-

     

-

   

$

(22,881

)

 

$

(22,881

)

                                                       

Balances, December 31, 2011

   

1,000,000

   

$

100

     

-

   

$

-

   

$

-

   

$

(69,427

)

 

$

(69,327

)

                                                       

Net loss

   

-

     

-

     

-

     

-

     

-

   

$

(24,671

)

 

$

(24,671

)

                                                       

Balances, December 31, 2012

   

1,000,000

   

$

100

     

-

   

$

-

   

$

-

   

$

(94,098

)

 

$

(93,998

)

                                                       

Additional Paid in Capital

   

-

     

-

     

-

     

-

     

22,600

     

-

     

22,600

 
                                                       

Net loss

   

-

     

-

     

-

     

-

     

-

   

(21,363

)

 

(21,363

)

                                                       

Balances, December 31, 2013

   

1,000,000

   

$

100

     

-

   

$

-

   

$

22,600

   

$

(115,461

)

 

$

(92,761

)

                                                       

Net loss

   

-

     

-

     

-

     

-

   

$

-

   

(4,548

)

 

(4,548

)

                                                       

Balances, September 30, 2014

   

1,000,000

   

$

100

     

-

   

$

-

   

$

22,600

   

$

(120,009

)

 

$

(97,309

)

 

The accompanying notes are an integral part of these financial statements.

 

 
F-4

 

Pretoria Resources Two, Inc.

(A Development Stage Company)

Statements of Cash Flows

 

    For the nine months ended
September 30,
    Cumulative Totals Since Inception May 25, 2007 to September 30,  
    2014     2013     2014  
    (Unaudited)     (Unaudited)     (Unaudited)  

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net loss

 

$

(4,548

)

 

$

(17,317

)

 

$

(120,009

)

Adjustments to reconcile net (loss)

                       

to net cash provided by (used in) operations:

                       

Changes in Assets and Liabilities:

                       

Gain on Forgiveness of Debt

   

-

     

-

     

22,600

 

Increase (decrease) in Accounts Payable

 

(500

)

   

1,509

     

2,050

 

Increase (decrease) in Accrued Expenses - Related Party

   

4,548

     

4,025

     

19,444

 

Increase (decrease) in Accrued Expenses

   

-

     

900

     

-

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

(500

)

 

(10,883

)

 

(75,915

)

CASH FLOWS FROM FINANCING ACTIVITIES:

                       

Note Payable to Related Party

   

500

     

10,875

     

75,815

 

Note Payable

   

-

     

-

     

-

 

Capital Stock Purchase

   

-

     

-

     

100

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

   

500

     

10,875

     

75,915

 
                       

NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS

   

-

   

(8

)

   

-

 
                       

CASH AND CASH EQUIVALENTS,

                       

BEGINNING OF THE PERIOD

   

-

     

12

     

-

 
                       

END OF THE PERIOD

 

$

-

   

$

4

   

$

-

 
                       

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                       

CASH PAID DURING THE PERIOD FOR:

                       

Interest

 

$

-

   

$

-

   

$

-

 

Taxes

 

$

-

   

$

-

   

$

-

 
                       

NON CASH INVESTING AND FINANCING ACTIVITIES

                       

Gain on Forgiveness of Debt

 

$

-

   

$

-

   

$

22,600

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-5

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE A - BUSINESS ACTIVITY

 

Pretoria Resources Two, Inc. (the "Company”) was organized under the laws of the State of Nevada on September 27, 2007 and is the successor in interest to Pretoria Resources, Inc., which was a corporation organized under the laws of the State of Delaware on May 25, 2007 as a corporation. The Company’s objective is to acquire or merge with a target business or company in a business combination.

 

NOTE B - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has a deficit accumulated during the development stage of $120,009 used cash from operations of $75,915 since its inception, and has a negative working capital of $97,309 at September 30, 2014. 

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to continue as a going concern is also dependent on its ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however there is no assurance of additional funding being available. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty.

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation- The financial statements included herein were prepared under the accrual basis of accounting.

 

Cash and Cash Equivalents- For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.

 

Management’s Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.

 

 
F-6

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

 

Revenue Recognition- The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

 

(i)

persuasive evidence of an arrangement exists,

 

 

(ii)

the services have been rendered and all required milestones achieved,

 

 

(iii)

the sales price is fixed or determinable, and

 

 

(iv)

collectability is reasonably assured.

 

Comprehensive Income (Loss) - The Company reports Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.

 

Net Income per Common Share- Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of September 30, 2014.

 

Deferred Taxes- The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

Fair Value of Financial Instruments- The carrying amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.

 

Accounts Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of September 30, 2014, the balance in Accounts Receivable was $0.

 

Impairment of Long-Lived Assets- The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the period ended September 30, 2014.

 

 
F-7

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

 

Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

 

Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

 

Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

Level 3

Pricing inputs that are generally observable inputs and not corroborated by market data.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at September 30, 2014.

 

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at September 30, 2014, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the period ended September 30, 2014.

 

 
F-8

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

 

Recently Issued Accounting Pronouncements

 

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

 

 

-

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

 

-

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

 

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

 

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 has not had a material impact on our financial position or results of operations.

 

 
F-9

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT’D

 

Recently Issued Accounting Pronouncements – Cont’d

 

In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income” in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 has not had a material impact on our financial position or results of operations.

 

In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.

 

NOTE D - SEGMENT REPORTING

 

The Company follows the guidance set forth by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of September 30, 2014.

 

NOTE E - CAPITAL STOCK

 

The Company is authorized to issue 100,000,000 common shares at $.0001 par value per share.

 

During the period from inception (May 25, 2007) through September 30, 2014, the Company issued 1,000,000 shares to Allison Carroll.

 

On December 23, 2008, former, major shareholders Gail Davis and Barbara Deadwiley resigned as officers and as members of the Company’s board; all shares were cancelled and issued to Allison Carroll who now serves as the Company’s officer and board member.

 

The Company is authorized to issue 10,000,000 preferred shares at $.0001 par value per share. During the period from inception (May 25, 2007) through September 30, 2014, the Company issued no preferred shares.

 

NOTE F - DEVELOPMENT STAGE COMPANY

 

The Company is in the development stage as of September 30, 2014 and to date has had no significant operations. Recovery of the Company assets is dependent on future events, the outcome of which is indeterminable. In addition, successful completion of the Company’s development program and its transition, ultimately, to attaining profitable operations is dependent upon obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure.

 

 
F-10

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE G - RELATED PARTY NOTE PAYABLE AND NOTE PAYABLE

 

The Company has Notes Payable outstanding to related parties:

 

    September 30,     September 30,  
    2014     2013  
       

Note Payable, due upon demand, 8% per year

 

$

75,815

   

66,095

 

 

The accrued interest on Note Payable to Related Party not paid for the period from inception (May 25, 2007) through September 30, 2014 was $19,444.

 

The Notes Payable is listed as follows:

 

    December 31,     December 31,  
    2013     2012  
       

Note Payable, due upon demand, 8% per year

 

$

0

   

15,000

 

 

On November 14, 2013, the above debt was forgiven. At the time of forgiveness, accrued interest on Note Payable not paid for the period from inception (May 25, 2007) through November 14, 2013 was $7,600. Since the Note Payable is between the Company and a related party, the Forgiveness of Debt was adjusted to be included in Additional Paid in Capital.

 

NOTE H - INCOME TAX

 

The Company provides for income taxes under (now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

 

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. For Federal and New York income tax purposes, the Company has net operating loss carry forwards that expire through 2030. The net operating loss as of September 30, 2014, is approximately $97,409 and $92,834 as of December 31, 2012. No tax benefit has been reported in the financial statements because after evaluating our own potential tax uncertainties, the Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the following reasons:

 

    September 30,
2014
    December 31,
2013
 

Deferred tax asset:

       

NOL Carry forward

 

$

33,119

   

31,563

 

Valuation allowances

 

(33,119

)

 

(31,563

)

Deferred Tax Asset

 

$

0

     

0

 

 

 
F-11

 

PRETORIA RESOURCES TWO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2014

 

NOTE I - SUBSEQUENT EVENT

 

In an agreement dated December 17, 2014, the Company and Allison Carroll (the principal stockholder and sole officer and director of the Company as of said date) entered into the following transaction with Bryan Glass and Ronald Williams:

 

Ms. Carroll

 

(i) sold 500,000 shares of the Company’s common stock registered in her name to Mr. Glass;

(ii) sold 450,000 shares of the Company’s common Stock registered in her name to Mr. Williams;

(iii) forgave all debt owed by the Company to her as of said date;

(iv) resigned as the Company’s sole executive officer; and

(v) in her capacity as the sole member of the board of directors, appointed Bryan Glass to serve as a director of the Company.

 

In consideration of Ms. Carroll’s agreements, Mr. Glass and Mr. Williams agreed (x) to pay all costs and expenses of the Company after the date of the agreement in connection with its operations generally and all costs and expenses that the Company will incur in connection with satisfying its obligations under the Exchange Act until the first to occur of a business combination or two years from the date of the agreement; and (y) actively engage in the identification of and negotiation with an operating company with which the Company would enter into a Business Transaction and to pay all costs and expenses of the Company that may be incurred in connection with such activities. Subsequent to consummation of the foregoing transactions, the board of directors appointed Ronald Williams to serve as the Company’s President, chief executive officer and chief financial officer. The transactions consummated pursuant to the foregoing agreement represented a change in control and a change in leadership of the Company.

 

 
F-12

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Statements, other than historical facts, contained in this Quarterly Report on Form 10-Q, including statements of potential acquisitions and our strategies, plans and objectives, are "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Although we believe that our forward looking statements are based on reasonable assumptions, we caution that such statements are subject to a wide range of risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are important factors that could cause actual results to differ materially from the forward looking statements, including, but not limited to; the time management devotes to identifying a target business; management’s ability to consummate a business combination; the financial condition of the target company with which we may enter a business combination; the effect of existing and future laws; governmental regulations; the political and economic climate of the United States; and conditions in the capital markets. We undertake no duty to update or revise these forward-looking statements.

 

When used in this Form 10-Q, the words, "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of important reasons.

 

Preliminary Note

  

By agreement dated December 17, 2014, among Pretoria Resources Two, Inc. (“we”, “us” or the “Company”), Allison Carroll (the Company’s sole shareholder, director and officer as of such date), Bryan Glass and Ronald Williams, Ms. Carroll (i) sold 500,000 shares of the Company’s common stock registered in her name to Mr. Glass; (ii) sold 450,000 shares of the Company’s common Stock registered in her name to Mr. Williams; (iii) forgave all debt owed by the Company to her as of said date; (iv) resigned as the Company’s sole executive officer; and (v) in her capacity as the sole member of the board of directors, appointed Bryan Glass to serve as a director of the Company. In consideration of Ms. Carroll’s agreements, Bryan Glass and Ronald Williams agreed (i) to pay all costs and expenses of the Company after the date of the agreement in connection with its operations generally and all costs and expenses that the Company will incur in connection with satisfying its obligations under the Exchange Act until the first to occur of a “Business Transaction” or two years from the date of the agreement; and (ii) actively engage in the identification of and negotiation with an operating company with which the Company would enter into a “Business Transaction” and to pay all costs and expenses of the Company that may be incurred in connection with such activities. Subsequent to consummation of the foregoing transactions, the board of directors appointed Ronald Williams to serve as the Company’s chief executive officer and chief financial officer. Throughout this report, we refer to the foregoing agreement as the “December 2014 Agreement.”

 

This report gives effect to certain elements of the December 2014 Agreement, including that Mr. Glass and Mr. Williams agreed to satisfy all of the Company’s financial obligations, as described above, but neither the financial statements filed with this report nor the discussion of such financial statements herein give effect to the forgiveness of debt by Ms. Carroll resulting from the December 2014 Agreement because her agreement occurred subsequent to the closing period of such financial statements.

 

The transactions consummated pursuant to the December 2014 Agreement represented a change in control of the Company and were reported in a Current Report on Form 8-K filed with the SEC on December 18, 2014.

 

Overview

 

The Company was incorporated in the State of Nevada on September 27, 2007 and is the successor in interest to Pretoria Resources, Inc., a Delaware corporation, upon the merger of the companies effective October 1, 2007. We are a developmental stage company and have not generated any revenues to date. We were organized to serve as a vehicle for a business combination through a capital stock exchange, merger, reverse acquisition, asset acquisition or other similar business combination (a “Business Combination”) with an operating or development stage business (the “Target”) which desires to utilize our status as a reporting company under the Exchange Act.

 

 
2

  

The Company voluntarily filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on December 10, 2007, and since its effectiveness, the Company has focused its efforts on identifying a possible Target for a Business Combination. We are not presently engaged in, and will not engage in, any substantive commercial business operations unless and until we consummate a Business Combination. Our fiscal year ends on December 31.

 

Based on our business activities, the Company is a “shell company” as defined under the Exchange Act because we have no operations and nominal assets consisting solely of cash and/or cash equivalents. Because we are a “shell” company, the Business Combination we enter into with a Target will be deemed to be a “reverse acquisition” or “reverse merger.” We are also a “blank check” company as defined under the Exchange Act because we are a development stage company that is issuing a “penny stock” (as defined under the Exchange Act) and have no specific business plan or purpose other than to merge with an unidentified company or companies. Many states have enacted statutes, rules and regulations limiting the sale of securities of blank check companies in their respective jurisdictions.

 

Our management has broad discretion with respect to identifying and selecting a prospective Target. We have not established any specific attributes or criteria (financial or otherwise) for a prospective Target and may enter into a Business Combination with a development stage company, a distressed company or a foreign company engaged in any industry. Our sole officer and director has never served as an officer or director of a development stage public company that has consummated a Business Combination such as that contemplated by our Company. Accordingly, she may not successfully identify a Target or conclude a Business Combination. In addition, our management engages in other business activities and is not obligated to devote any specific number of hours to our matters. Management intends to devote only as much time as it deems necessary to our affairs.

 

We cannot assure you that we will be successful in concluding a Business Combination. We will not realize any revenues or generate any income unless and until we successfully merge with or acquire an operating business that is generating revenues and otherwise is operating profitably. Moreover, we can offer no guarantee that the Company will achieve long-term or immediate short-term earnings from any Business Combination.

 

Any entity with which we enter into a Business Combination will be subject to numerous risks in connection with its operations. To the extent we affect a Business Combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of such companies. If we consummate a Business Combination with a foreign entity, we will be subject to all of the risks attendant to foreign operations. Although our management will endeavor to evaluate the risks inherent in a particular Target, we cannot assure you that we will properly ascertain or assess all significant risk factors.

 

We expect that in connection with any Business Combination, we will issue a significant number of shares of our common stock (equal to at least 80% of the total number of shares outstanding after giving effect to the transaction and likely, a significantly higher percentage) in order to ensure that the Business Combination qualifies as a “tax free” transaction under federal tax laws. The issuance of additional shares of our capital stock will significantly reduce the equity interest of our stockholders prior to the transaction and cause a change in control in our Company and likely result in the resignation or removal of our officer and director as of the date of the transaction.

 

Our management anticipates that our Company likely will affect only one Business Combination, due primarily to our limited financial resources and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management's plan to offer a controlling interest to a Target in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us because it will not permit us to offset potential losses from one venture against potential gains from another.

 

Liquidity and Capital Resources

 

At September 30, 2014 and December 31, 2013, our fiscal year end, we had no assets. At September 30, 2014, the Company had total liabilities of $97,309 compared with total liabilities of $92,762 at December 31, 2013, in each case, comprised exclusively of amounts owed to a current stockholder and accounts payable. All debt owed to such individuals was forgiven subsequent to the date of this report, as reported by the Company in it current Report on Form 8-K as filed with the SEC on December 18, 2014.

 

 
3

  

During the next twelve months we anticipate incurring costs related to filing periodic reports under the Exchange Act, investigating and analyzing Targets and, possibly, consummating a Business Combination. These costs are difficult to quantify given the multitude of variables associated with such activities. The Company expects that its principal stockholders will pay all such costs and expenses until the earlier of the date that the Company consummates a business combination or December 16, 2016, in accordance with their obligations under the December 2014 Agreement. Our ongoing expenses will result in continued net operating losses that will increase until we can consummate a Business Transaction with a profitable Target Business, if ever.

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:

 

    Three Months Ended
September 30,
2014
    Three Months Ended
September 30,
2013
    For the Cumulative Period from May 25, 2007 (Inception) to
September 30,
2014
 

Net Cash Provided By (Used In) Operating Activities

 

$

(500

)

 

$

(10,883

)

 

$

(75,915

)

Net Cash Provided By Financing Activities

 

$

500

   

$

10,875

   

$

(75,915

)

Net Increase (Decrease) in Cash and Cash Equivalents

 

$

-

   

$

(8

)

 

$

-

 

 

We do not expect to engage in any substantive activities unless and until such time as we enter into a Business Combination with a Target, if ever. We cannot provide investors with any assurance that we will have sufficient capital resources to fund our operations and realize our business objectives.

 

Results of Operations

 

Since our inception, we have not engaged in any substantive operations, other than seeking to identify a Target, nor have we generated any revenues. We reported a net loss for the three and nine month periods ended September 30, 2014 of $1,516 and $4,548, compared to a net loss of $5,201 and $17,317 for the comparable 2013 periods, and have suffered a net loss since inception of $120,009. At September 30, 2014, we had a working capital deficit of $97,309 compared to a working capital deficit of $92,762 at December 31, 2013. Since our inception, our operating expenses have principally comprised professional fees and expenses incurred in connection with the filing of reports under the Exchange Act, as well as interest accrued on loans from one of our stockholders.

 

We do not expect to engage in any activities, other than seeking to identify a Target, unless and until such time as we enter into a Business Combination with a Target, if ever. We cannot provide investors with any assessment as to the nature of a Target’s operations or speculate as to the status of its products or operations, whether at the time of the Business Combination it will be generating revenues or its future prospects.

 

Going Concern

 

Our negative working capital, continuing operating losses, failure to generate revenues and lack of operating capital create substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to obtain capital from our affiliates to fund our operations, generate cash from the sale of its securities and attain future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.

 

Emerging Growth Company

 

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

 

 
4

  

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Contractual Obligations

 

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

Item 4(T). Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of September 30, 2014, the Company’s management performed an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer, who is the Company’s principal executive officer and principal financial officer and who we refer to herein as our PEO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act), pursuant to Exchange Act Rule 13a-15. As a result of our continuing efforts to remediate the material weaknesses in our internal control over financial reporting that existed as of December 31, 2012 and which remained extant as of the close of the period covered by this Report, our PEO concluded that the Company's disclosure controls and procedures were not effective as of September 30, 2014.

 

The weaknesses in our disclosure and procedures encompassed weaknesses in certain elements of our internal control over financial reporting (ICFR) that our subsumed within our disclosure controls and procedures. A material weakness is defined in Section 210.1-02(4) of Regulation S-X as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The specific weaknesses relate to elements of our ICFR that provide reasonable assurances that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and comprise the following:

 

·

We did not maintain effective controls over the control environment.

·

We did not maintain effective controls over financial statement disclosure.

·

We did not maintain effective controls over financial reporting.

·

There existed a lack of segregation of duties in regard to the Company’s financial reporting, procedures for depositing of funds, procedures for cash disbursements, procedures for checkbook entries, period close procedures, and procedures for financial statement preparation, because we have only one officer who is responsible for all such duties.

 

We believe that the weaknesses in our disclosure controls and procedures and ICFR are a direct consequence of our size, available resources and the nature of our business. We are a “shell company,” as defined under the Securities Act, in that we have no operations and no revenues and only nominal assets. Further, we have no full-time employees. As a result, we are constrained by our lack of resources to take the types of corrective actions that would be necessary to remediate the material weaknesses, including, for example, engaging additional accounting personnel and adopting an audit committee charter and seating an audit committee with at least one independent member who qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K

 

Changes in Internal Controls

 

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) during the three months ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
5

  

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are presently no material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

Item 1A. Risk Factors.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

N/A

 

Item 5. Other Information.

 

None.

 

 
6

  

Item 6. Exhibits.

 

Exhibit

 

Description

   

31.1

 

Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

   

31.2

 

Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

   

32.1*

 

Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

 

101.INS

XBRL Instance Document

   

101.SCH

XBRL Taxonomy Extension Schema Document

   

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

   

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

   

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

____________

* Pursuant to Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

 

 
7

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

PRETORIA RESOURCES TWO, INC.

     

Date: March 4, 2015

By:

/s/ Ronald Williams

 

 

Name:

Ronald Williams

 

 

Title:

President, Principal Executive Officer and Principal Financial Officer

 

 

 

8