UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-Q

 

(Mark one)

x	Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2021

 

¨	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: 0-53900

 

Renewable Energy Acquisition Corp.

(Exact name of registrant as specified in its charter)

 

Nevada	74-3219044
(State of incorporation)	(IRS Employer ID Number)

 

2694 Blackwater Rd NW, Longville, MN 56655

(Address of principal executive offices)

 

(952) 541-1155

(Issuer's telephone number)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x NO ¨

 

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

 

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
	Emerging growth company ¨

 

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

 

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

 

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

 

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

 

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: As of May 17, 2021, 700,000 shares of common stock, par value $0.0001, were outstanding.

 

 

 

Renewable Energy Acquisition Corp.

 

Form 10-Q for the Quarter Ended March 31, 2021

 

Table of Contents

 

	Page
Part I - Financial Information
Item 1 - Financial Statements	3
Item 2 - Management's Discussion and Analysis of Financial Condition and Plan of Operations	12
Item 3 - Quantitative and Qualitative Disclosures About Market Risk	17
Item 4 - Controls and Procedures	17
Item 5 - Other Information	18
Part II - Other Information
Item 1 - Legal Proceedings	18
Item 1A - Risk Factors	18
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3 - Defaults Upon Senior Securities	18
Item 4 - Mine Safety Disclosures	18
Item 5 - Other Information	18
Item 6 - Exhibits	18
Signatures	19

 

 

Renewable Energy Acquisition Corp.

Balance Sheets

March 31, 2021 and December 31, 2020

 

		(Unaudited)
		March 31,				December 31,
		2021				2020
ASSETS
Current Assets
Cash and cash equivalents		$	9,978			$	7,190
Other receivable			6,000				-
Total Current Assets		$	15,978			$	7,190
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable - trade		$	51,651			$	45,705
Short-term advances			12,000				12,000
Notes payable to stockholders			83,619				83,619
Notes payable			15,650				15,650
Accrued interest payable - stockholders			15,929				14,992
Accrued interest payable - other			787				552
Total Current Liabilities			179,636				172,518
Commitments and Contingencies
Stockholders' Deficit
Preferred stock - $0.001 par value; 5,000,000 shares authorized; none issued and outstanding			-				-
Common stock - $0.001 par value; 5,000,000 shares authorized; 700,000 shares issued and outstanding			70				70
Additional paid-in capital			63,586				63,586
Accumulated deficit			(227,314	)			(228,984	)
Total Stockholders' Deficit			(163,658	)			(165,328	)
Total Liabilities and Stockholders’ Deficit		$	15,978			$	7,190

 

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

 

 

Renewable Energy Acquisition Corp.

Statements of Operations (Unaudited)

For The Three Months Ended March 31, 2021 and 2020

 

		For the Three Months Ended March 31,
		2021				2020
Revenues		$	-			$	-
Operating expenses
Professional fees			9,439				-
Other expenses			2,086				1,232
Income-Standstill Payments			(15,000	)			-
Total operating expenses			(3,475	)			1,232
Income (loss) from operations			3,475				(1,232	)
Other income (expense)
Other income / (expenses):
Interest expense			(868	)			(818	)
Interest expense - related party			(937	)			(844	)
Total other income / (expenses):			(1,805	)			(1,662	)
Income / (Loss) before provision for income taxes			1,670				(2,894	)
Provision for income taxes			-				-
Net income / (loss)		$	1,670			$	(2,894	)
Net loss per weighted-average share of common stock outstanding - basic and diluted		$	0.00			$	(0.00	)
Weighted-average number of shares of common stock outstanding - basic and diluted			700,000				700,000

 

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

 

 

Renewable Energy Acquisition Corp.

Condensed Statement of Changes in Stockholders’ Deficit (Unaudited)

For The Three Months Ended March 31, 2021 and 2020

 

		Common Stock								Additional
										paid in				Accumulated
		Shares				Amount				capital				deficit				Total
Balance as of December 31, 2019			700,000			$	70			$	63,586			$	(178,068	)		$	(114,412	)
Net loss			-				-				-				(2,894	)			(2,894	)
Balance at March 31, 2020			700,000			$	70			$	63,586			$	(180,962	)		$	(117,306	)
Balance as of December 31, 2020			700,000			$	70			$	63,586			$	(228,984	)		$	(165,328	)
Net income			-				-				-				1,670				1,670
Balance at March 31, 2021			700,000			$	70			$	63,586			$	(227,314	)		$	(163,658	)

 

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

 

 

Renewable Energy Acquisition Corp.

Statements of Cash Flows (Unaudited)

For The Three Months Ended March 31, 2021 and 2020

 

		For the Three Months Ended March 31,
		2020				2019
Cash Flows from Operating Activities
Net income / (loss)		$	1,670			$	(2,894	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
(Increase) Decrease in
Other receivable			(6,000	)			-
Increase (Decrease) in
Accounts payable – trade			5,946				(1,424	)
Accrued interest payable			1,172				891
Net cash provided by (used in) operating activities			2,788				(3,427	)
Cash Flows from Financing Activities
Cash received from notes payable to stockholders			-				3,500
Net cash provided by financing activities			-				3,500
Increase in cash and cash equivalents			2,788				73
Cash and cash equivalents at beginning of period			7,190				1,663
Cash and cash equivalents at end of period		$	9,978			$	1,736
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid during the period		$	633			$	771
Income taxes paid during the period		$	-			$	-

 

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

 

 

Renewable Energy Acquisition Corp.

Notes to Financial Statements

 

Note A - Background and Description of Business

 

Renewable Energy Acquisition Corp. (the “Company”) was incorporated on June 21, 2007 under the laws of the State of Nevada.

 

The Company was formed as a blank check company to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, the Company’s efforts have been limited to organizational activities and the investigation of various potential business transactions, none of which has yet led to a definitive agreement.

 

Note B - Preparation of Financial Statements

 

The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has elected a year-end of December 31.

 

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 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.

 

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.

 

For segment reporting purposes, the Company operated in only one industry segment during the periods represented in the accompanying financial statements and makes all operating decisions and allocates resources based on the best benefit to the Company as a whole.

 

We have prepared the accompanying condensed financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the condensed financial statements in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Operating results for the three- month period ended March 31, 2021 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2021.

 

For further information, refer to the Company's financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020. 

 

 

Note C - Going Concern Uncertainty

 

The Company was formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, the Company’s efforts have been limited to organizational activities and the investigation of various potential business transactions, none of which has yet led to a definitive agreement. There is no assurance that the Company will be able to be successful in the implementation of this business plan.

 

The Company has no operating history, limited cash on hand, no operating assets and has a business plan with inherent risk. Because of these factors, management has determined there is substantial doubt about our ability to continue as a going concern exists from the twelve months following the issuance of these financial statements.

 

Because of the Company's lack of operating assets, the Company’s continuance is fully dependent upon either future sales of securities and/or advances or loans from significant stockholders or corporate officers to provide sufficient working capital to preserve the integrity of the corporate entity during the development phase.

 

The Company's continued existence is dependent upon its ability to implement its business plan, generate sufficient cash flows from operations to support its daily operations, and provide sufficient resources to retire existing liabilities and obligations on a timely basis. The Company faces considerable risk in its business plan and a potential shortfall of funding due to our uncertainty to raise adequate capital in the equity securities market.

 

The Company is dependent upon existing cash balances to support its day-to-day operations. In the event that working capital sufficient to maintain the corporate entity and implement our business plan is not available, the Company’s existing controlling stockholders intend to maintain the corporate status of the Company and provide all necessary working capital support on the Company's behalf. However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for either management or existing controlling stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company’s existing controlling stockholders to have the resources available to support the Company.

 

The Company anticipates offering future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.

 

The Company’s Articles of Incorporation authorizes the issuance of up to 5,000,000 million shares of preferred stock and 5,000,000 shares of common stock. The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede the implementation of the Company’s business plan. The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.

 

In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.

 

While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.

 

Note D - Summary of Significant Accounting Policies

 

Cash and cash equivalents

 

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

 

 

Income taxes

 

The Company files income tax returns in the United States of America and various states, as appropriate and applicable. The Company is no longer subject to U.S. federal, state and local, as applicable, income tax examinations by regulatory taxing authorities for any period prior to January 1, 2018.

 

The Company uses the asset and liability method of accounting for income taxes. At March 31, 2021 and December 31, 2020, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accrued interest.

 

Recognition of potential liabilities are required as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority. The Company has no liability for uncertain tax positions. 

 

Income (loss) per share

 

Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.

 

Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).

 

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.

 

For the three months ended March 31, 2021 and 2020, respectively, the Company did not have any outstanding items which could be deemed to be dilutive.

 

New and Pending Accounting Pronouncements

 

The Company is of the opinion that any and all pending accounting pronouncements, either in the adoption phase or not yet required to be adopted, will not have a significant impact on the Company's financial position or results of operations.

 

Note E - Fair Value of Financial Instruments

 

The carrying amount of cash, accounts receivable, short term advances and notes payable, as applicable, approximates fair value due to the short-term nature of these items and/or the current interest rates payable in relation to current market conditions.

 

Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.

 

Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.

 

 

Note F - Notes Payable

 

During the year ended December 31, 2020, the third party loaned an additional $12,500 in cash to the Company to support operations. These advances are due upon demand and bear interest at 6.0% per annum. As of March 31, 2021 and December 31, 2020,  accrued interest amounted to $787 and $552, respectively.

 

Note G - Notes Payable to Stockholders

 

The Company borrowed $8,150 from the majority shareholder during the year ended December 31, 2020. The advances are due upon demand and bear interest at 6.0% per annum.

 

The Company has accrued interest payable to the majority stockholder aggregating $15,929 and $14,992 as of March 31, 2021 and December 31, 2020, respectively.

 

As of March 31, 2021 and December 31, 2020, the outstanding aggregate balances payable to stockholders were as follows:

 

		March 31,				December 31,
		2021				2020
Notes payable		$	83,619			$	83,619
Accrued interest payable			15,929				14,992
Total due stockholders		$	99,548			$	98,611

 

Note H - Contingencies

 

On March 11, 2020, the World Health Organization declared the new strain of the coronavirus (COVID-19) a global pandemic. Federal, state, and local governments have since implemented various restrictions, including travel restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions and limitations on business operations. While this uncertain matter may negatively impact the results of operations, cash flows and financial position of the Company in the future, the related financial impact cannot be reasonably estimated at this time.

 

Note I – Short Term Advances

 

During the year ended December 31, 2018, the Company borrowed $17,000 in advances from credit card lines of credit. During the year ended December 31, 2019 the Company repaid $5,000 leaving a balance of $12,000 at March 31, 2021 and December 31, 2020. The weighted average interest rate on these borrowings is approximately 15%. The unused credit limit on cash advances totaled approximately $0.00. During three months ended March 31, 2021 and the three months ended March 31, 2020, the Company recorded interest expense of $632 and $771, respectively on these advances.

 

Note J – Standstill Agreement

 

On November 13, 2020, pursuant to a Standstill Agreement dated October 30, 2020 ("the Agreement"), the Company received a $5,000 standstill fee from Florida Intellectual Properties, LLC ("FIP"). Pursuant to the terms of the Agreement, the Company agreed to negotiate in good faith to enter into a business combination agreement with FIP, and to not consider or negotiate other similar transactions so long as the Agreement remains in effect. The Agreement does not obligate either party to consummate a transaction, and until a definitive agreement is reached, or until the Agreement is cancelled by either party, FPI agreed to pay an additional $5,000 standstill fee on the first of each successive month.  For the year ended December 31, 2020 the Company received and recorded $10,000 as Income-Standstill Payments as an offset to operating expenses as the funds must be used for expenses incurred in the ordinary course of business.

 

 

Company received an additional $9,000 in standstill fees from FIP during the period from January 1, 2021 through March 31, 2021, as of which date FIP is $6,000 in arrears in the payment of standstill fees due under the standstill agreement, and neither party has terminated the agreement.

 

Note K - Subsequent Events

 

Management has evaluated all activity of the Company through May 17, 2021, the issue date of the financial statements for disclosure purposes. The Company received an additional $3,000 in standstill fees from FIP during the period from March 31, through May 17, 2021. 

 

 

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

 

(1)

Caution Regarding Forward-Looking Information

 

Certain statements contained in this quarterly filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

 

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.

 

Given these uncertainties, readers of this Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

 

(2)

General

 

Renewable Energy Acquisition Corp. (the “Company”) was incorporated on June 21, 2007 under the laws of the State of Nevada.

 

The Company was formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, our efforts have been limited to organizational activities and the investigation of various potential business transactions, none of which has yet led to a definitive agreement.

 

(3)

Results of Operations

 

The Company had no revenue for the three month period ended March 31, 2021 and 2020, respectively.

 

Operating expenses / (income) of $(3,475), and $1,232 for the three month periods ended March 31, 2021 and 2020 , respectively, were directly related to maintaining the corporate entity, investigating opportunities pursuant to the Company’s business plan and continued compliance with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended. The increase was related to increased fees for the Company’s 2020 audit. The  Company recorded an additional $15,000 in standstill fees from FIP during the period from January 1, 2021 through March 31, 2021, as of which date FIP is $6,000 in arrears in the payment of standstill fees due under the standstill agreement, and neither party has terminated the agreement.

 

 Other expenses of $1,805 and $1,662 for the three month periods ended March 31, 2021 and 2021, respectively, were due to interest expenses on related party note payables and short term advances.

 

The Company may or may not experience increases in expenses in future periods as the Company explores various options for the implementation of its business plan. However, at this time, the Company has not executed or consummated any definitive agreements with any identified business combination target. Further, it is anticipated that future expenditure levels may increase as the Company intends to fully comply with its periodic reporting requirements.

 

 

The Company does not expect to generate any meaningful revenue or incur operating expenses for purposes other than fulfilling the obligations of a reporting company under the Securities Exchange Act of 1934 unless and until such time that the Company acquires or participates in a business with revenue producing activities.

 

Loss per share for the three month periods ended March 31, 2021 and 2020 were $0.00, and $(0.00), respectively, based on the weighted-average shares issued and outstanding at the end of each such period.

 

(4)

Plan of Business

 

We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the advantages of being a publicly held corporation. We file reports with the Securities and Exchange Commission as a result of registering our common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). After the consummation of a business transaction with an operating company, the surviving company resulting from the transaction will continue to be subject to the reporting requirements of the Exchange Act. Although an operating company may choose to effectuate a business combination with a company that is trading on the OTC Bulletin Board in order to become public, the terms of such a transaction to the operating company may not be as favorable as those available from us as a non-trading reporting company. Therefore, we believe that we may be attractive to a private operating company seeking to become public.

 

We were formed as a vehicle to pursue a merger, capital stock exchange, asset acquisition or other similar business transaction with an operating business in either the renewable energy or the environmental industries and their related infrastructures. Nevertheless, we are not restricted from pursuing an opportunity in any industry at the discretion of the board of directors. The renewable energy industry and its related infrastructure generally includes the production, generation, transmission and distribution of electricity, heat, fuel and other consumable forms of energy through the utilization of renewable fuel sources such as, but not limited to, geothermal, biofuels, synfuels, wind, ocean waves, "clean coal," and waste stream pyrolysis; and the infrastructure needed to maintain and operate the facilities, services and installations used in the foregoing areas.

 

Although we may consider a target business in any segment of any industry, we currently intend to concentrate our search for an acquisition candidate on companies in the following segments:

 

·

Wind electric generation, distribution and transmission;

 

·

Solar power;

 

·

Co-generation;

 

·

Bio-mass;

 

·

Synthetic gas production, distribution and transmission;

 

·

Energy efficiency and energy conservation related products and services;

 

·

Alternative transportation technologies;

 

·

Steam generation and distribution;

 

·

Alternative transportation technologies;

 

·

Energy storage technologies;

 

·

Other alternative and renewable energy technologies; and

 

·

The development, installation, financing, or manufacturing of any of the above.

 

 

Development Plan

 

Based on our proposed business activities, we are a "blank check" company. The U.S. Securities and Exchange Commission (the "SEC") defines "blank check" companies as,

 

any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.

 

We also qualify as a "shell company," as defined under Rule 12b-2 adopted by the SEC pursuant to the Exchange Act, because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of blank check companies in their respective jurisdictions.

 

Management does not intend to undertake any effort to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements. We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the advantages of being a reporting company. After the consummation of a business combination with an operating company, the surviving company will continue to be subject to the reporting requirements of the Exchange Act, which may be advantageous when establishing a public market. Furthermore, being a reporting company is required in order to seek a listing on a national exchange.

 

We have a nominal amount of capital and will depend on our directors to provide us with the necessary funds to implement our business plan. We intend to seek opportunities demonstrating the potential of long-term growth as opposed to short-term earnings. However, at the present time, we have not identified any business opportunity that we plan to pursue, nor have we reached any agreement or definitive understanding with any person concerning an acquisition or merger. The analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors. Our officers and directors will collectively devote approximately five hours per week to searching for a target company until an acquisition candidate is identified and a transaction closed.

 

We believe that business opportunities may come to our attention from various sources, including, professional advisors such as attorneys, and accountants, securities broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited proposals. We have no plan, understanding, agreements, or commitments with any individual for such person to act as a finder of opportunities for us. We can give no assurances that we will be successful in finding or acquiring a desirable business opportunity, given the limited funds that are expected to be available to us for implementation of our business plan. Furthermore, we can give no assurances that any acquisition, if it occurs, will be on terms that are favorable to us or our current stockholders. Discussions have been held from time to time with potential business combination candidates, and the Company has been paid standstill fees in connection with Letters of Intent that were entered into regarding potential business combinations. However, as of this date, no Letter of Intent has resulted in any definitive agreement being entered into with any party. We have flexibility in seeking, analyzing and participating in potential business opportunities. In our effort to analyze potential acquisition targets, we will consider the following kinds of factors:

 

	·	Potential for growth, indicated by new technology, anticipated market expansion or new products;
	·	Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
	·	Strength and diversity of management, either in place or scheduled for recruitment;
	·	Capital requirements and anticipated availability of required funds, to be provided from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;
	·	The cost of participation by us as compared to the perceived tangible and intangible values and potentials;
	·	The extent to which the business opportunity can be advanced;
	·	The accessibility of required management expertise, personnel, raw materials, services, professional assistance, and other required items; and
	·	Other relevant factors.

 

 

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which may make the task of comparative investigation and analysis of such business opportunities difficult and complex. Due to our limited capital available for investigation, we may not discover or be able to fully investigate potential adverse factors concerning the opportunity to be acquired.

 

Form of Acquisition

 

The manner in which we participate in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of us and the promoters of the opportunity, and the relative negotiating strength of us and such promoters. It is likely that we will acquire our participation in a business opportunity through the issuance of our common stock or other securities. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other tax free transaction provisions under the Code, all prior stockholders would retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who are stockholders prior to the acquisition. Our present stockholders will likely not have control of our majority voting securities following an acquisition transaction. However, our present stockholders will benefit from such a transaction by retaining an equity interest in the surviving company, a cash payment in exchange for outstanding shares, or a combination of both cash and equity. As part of such a transaction, our present directors or officers may resign and one or more new directors or officers may be appointed in connection with the transaction.

 

In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving us, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval. It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to us of the related costs incurred.

 

(5)

Liquidity and Capital Resources

 

Our cash provided by operating activities for three months ended March 31, 2021 was $2,788 that primarily reflects our net income of $1,670, an increase in other receivables of $6,000, changes in accounts payable of $5,946, and change in interest payable of $1,172, compared to cash used in operation s of $(3,427) for the three months ended March 31, 2020, that mainly reflects our net loss of $2,894, change in accounts payable of $1,424, and change in interest payable of $891.

 

Our cash provided by financing activities for three months ended March 31, 2021 were $0 compared to $3,500 for the three months ended March 31, 2020 the Company and received proceeds from notes payable from a stockholder of $3,500.

 

 

At March 31, 2021 and December 31, 2020, the Company had working capital deficits of $163,658 and $165,328 respectively, including notes payable to stockholders of $83,619 and $83,619, respectively in each respective period. 

 

It is the belief of management and significant stockholders that they will provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company’s majority stockholder to have the resources available to support the Company. Should this pledge fail to provide financing, the Company has not identified any alternative sources. Consequently, there is substantial doubt about the Company's ability to continue as a going concern. The Company estimates it cash requirement for the next 12 months to be approximately $30,000.

 

The Company's need for working capital may change dramatically as a result of any business acquisition or combination transaction. There can be no assurance that the Company will identify any such business, product, technology or company suitable for acquisition in the future. Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage the business, product, technology or company it acquires.

 

The Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a merger or acquisition candidate. Accordingly, there can be no assurance that sufficient funds will be available to the Company to allow it to cover the expenses related to such activities.

 

(6)

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

 

Our significant accounting policies are summarized in Note D of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

 

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

Not required of a smaller reporting company.

 

Item 4 - Controls and Procedures

 

(a)

Evaluation of Disclosure Controls and Procedures

 

Our management, under the supervision and with the participation of our Chief Executive and Financial Officer (Certifying Officer), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Certifying Officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to an inherent weakness in our internal controls over financial reporting due to our status as a shell corporation and having a sole supervising officer. However, our Certifying Officer believes that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.

 

(b)

Changes in Internal Controls

 

There were no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 1A - Risk Factors

 

The COVID-19 outbreak may adversely impact our ability to implement our business plan

 

As a shell company, we have no specific business plan or purpose other than to merge with an unidentified company or companies. The outbreak of the coronavirus (COVID-19) has resulted in travel restrictions, the shutdown of businesses, quarantines, market downturns, and other mandatory and voluntary changes in behavior related to the pandemic. Reverse merger transactions involving shell companies often involve a contemporaneous funding event. The resulting impacts of the COVID-19 outbreak mentioned above may adversely impact our ability to find a willing merger partner in the near future. If we are able to attract a merger partner, our ability to conduct proper due diligence may be hindered, and finally, if we do enter into an agreement with at suitable target, we may not be able to find investors willing to fund the transaction. The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain.

 

 

Item 5 - Other Information

 

Part II - Other Information

 

Item 1. Legal Proceedings

 

We are not a party to any material pending legal proceedings.

 

Item 1A. Risk Factors

 

Not Applicable.

 

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

 

During the three months ended September 30, 2020 we had no unregistered sales of equity securities.

 

Item 3. Defaults Upon Senior Securities

 

Not Applicable.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

Not Applicable.

 

Item 6 - Exhibits

 

31.1	Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to 18 U.S.C. Section 1350
101	Interactive data files pursuant to Rule 405 of Regulation S-T.

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			Renewable Energy Acquisition Corp.
Dated:	May 17, 2021		/s/ Craig S. Laughlin
			Craig S. Laughlin
			President, Chief Executive Officer
			and Chief Financial Officer (Principal Executive and Financial Officer)