Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.05pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.00pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.09pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
volatility+1
Positive rising
No words rose this year.
Risk Factors (Item 1A)
5,723 words
ITEM 1A. RISK FACTORS
Risks Relating to Our Business and Financial Condition
We currently have no operations, and investors therefore have no basis for evaluating the Company’s future prospects.
We currently have no operations and will rely upon a merger with or acquisition of an operating business to commence operations and generate revenue. Because we have no operations and have not generated revenues, investors have no basis for evaluating our ability to achieve our business objective of locating and completing a business combination with a target business. We have no current arrangements or understandings concerning a business combination with any prospective target business. We may be to complete a business combination in a reasonable timeframe, on reasonable terms, or at all. If we to complete a business combination as planned, we will never generate any operating revenues.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
adversely+1
Positive rising
No words rose this year.
MD&A (Item 7)
1,172 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company currently has no operations or revenue as of the date of this Report. We are currently in the process of developing a comprehensive business plan. Management intends to explore and identify viable business opportunities within the U.S and globally, including seeking to acquire a business in a reverse merger. Our ability to effectively identify, develop, and implement a feasible plan for our company may be hindered by risks and uncertainties beyond our control, including, without limitation, the continued effects of the coronavirus pandemic on the U.S. and global economies. For more information about the risk of COVID-19 on our business, see Item 1.A. - “Risk Factors”.
We may face difficulties or delays in our search for a business combination and may not have access to sufficient capital to consummate it.
We may face difficulty identifying a viable business opportunity, negotiating, or paying for any resulting business combination. Economic factors that are beyond our control such as increased competition for acquisitions of operating entities that we expect to encounter as a result thereof may hinder our efforts to locate and/or obtain a business that is suitable for our business goals at a price we can afford and on terms that will enable us to grow our business to generate value to our shareholders sufficiently. We have limited capital, and we may not be able to take advantage of any available business opportunities on favorable terms or at all due to the limited availability of capital. There can be no assurance that we will have sufficient capital to provide us with the necessary funds to successfully develop and implement our plan of operation or acquire a business we deem to be appropriate or necessary to accomplish our objectives, in which case we may be forced to terminate our business plan and your investment in the Company could become worthless.
Investors will likely lose their investment if we are not successful in acquiring a new business and generating material revenues.
If we are not successful in developing a viable business plan and acquiring a new business through which to implement it, our investors’ entire investment in the Company could become worthless. Even if we are successful in combining with or acquiring the assets of an operating entity, we can provide no assurances that the Company will be able to generate significant revenue in the short term or at all, or that investors will profit from their investment. If we are unsuccessful, our investors will likely lose their entire investment.
We may not become profitable if we cannot manage our growth effectively.
Businesses, including development-stage companies like ours and/or any operating business or businesses we may acquire, often grow rapidly and tend to have difficulty managing their growth. If we can acquire an operating business, we will likely need to expand our management team and other key personnel by recruiting and employing experienced executives, key employees, and/or consultants capable of providing the necessary support.
We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to lose money, and your investment could be lost.
Because we have limited capital, we may need to raise additional capital in the future by issuing debt or equity securities, the terms of which may dilute our current investors and/or reduce or limit their liquidation or other rights.
We may require additional capital to acquire a business. We may not be able to obtain additional capital when needed. Future business development activities, as well as administrative expenses such as salaries, insurance, general overhead, legal and compliance costs, and accounting expenses, will require a substantial amount of additional capital. The terms of securities we issue in future capital raising transactions may be more favorable to new investors, and may include liquidation preferences, superior voting rights or the issuance of other derivative securities, which could have a further dilutive effect on or subordinate the rights of our current investors. Any additional capital raised through the sale of equity securities will likely dilute the ownership percentage of our shareholders. Additionally, any debt securities we issue would likely create a liquidation preference superior to our current investors and, if convertible into shares of Common Stock, would also pose the risk of dilution.
We may be unable to obtain necessary financing if and when required.
Our ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and in the particular industry or industries in which we may choose to operate), our limited operating history and current lack of operations, the national and global economies, and the condition of the market for microcap securities. If the amount of capital we can raise from financing activities, together with any revenues we may generate from future operations, is not sufficient to satisfy our capital needs, we may be required to discontinue our development or implementation of a business plan, cancel our search for business opportunities, cease our operations, divest our assets at unattractive prices or obtain financing on unattractive terms. If any of the foregoing should happen, our shareholders could lose some or all of their investment.
Because we are still developing our business plan, we do not have any agreement for a business combination.
We have no current arrangement, agreement, or understanding with respect to engaging in a business combination with any specific entity. We may not be successful in identifying and evaluating a suitable acquisition candidate or in consummating a business combination. We are neutral as to what industry or segment for any target company. We have not established specific metrics and criteria we will look for in a target company, and if and when we do, we may face difficulty reaching a mutual agreement with any such entity, including in light of market trends and forces beyond our control. Given our early-stage status, there is considerable uncertainty and therefore inherent risk to investors that we will not succeed in developing and implementing a viable business plan.
Risks Related to a Potential Business Acquisition
We may encounter difficulty locating and consummating a business combination, including as a result of the competitive disadvantages we have.
We expect to face intense competition in our search for a revenue-producing business to combine with or acquire. Given the current economic climate, venture capital firms, larger companies, blank check companies such as special purpose acquisition companies and other investors are purchasing operating entities or the assets thereof in high volumes and at relatively discounted prices. These parties may have greater capital or human resources than we do and/or more experience in a particular industry within which we choose to search. Most of these competitors have a certain amount of liquid cash available to take advantage of favorable market conditions for prospective business purchaser such as those caused by the recent pandemic. Any delay or inability to locate, negotiate and enter into a business combination as a result of the relative illiquidity of our current asset or other disadvantages we have relative to our competitors could cause us to losevaluable business opportunities to our competitors, which would have a material adverse effect on our business.
We may expend significant time and capital on a prospective business combination that is not ultimately consummated.
The investigation of each specific target business and any subsequent negotiation and drafting of related agreements, S.E.C. disclosure and other documents will require substantial amounts of management’s time and attention and material additional costs in connection with outsourced services from accountants, attorneys, and other professionals. We will likely expend significant time and resources searching for, conducting due diligence on, and negotiating transaction terms in connection with a proposed business combination that may not ultimately come to fruition. In such event, all of the time and capital resources expended by the Company in such a pursuit may be lost and unrecoverable by the Company or its shareholders. Unanticipated issues which may be beyond our control or that of the seller of the applicable business may arise that force us to terminate discussions with a target company, such as the target’s failure or inability to provide adequate documentation to assist in our investigation, a party’s failure to obtain required waivers or consents to consummate the transaction as required by the inability to obtain the required audits, applicable laws, charter documents and agreements, the appearance of a competitive bid from another prospective purchaser, or the seller’s inability to maintain its operations for a sufficient time to allow the transaction to close. Such risks are inherent in any search for a new business and investors should be aware of them before investing in an enterprise such as ours.
Conflicts of interest may arise between us and our shareholders, directors, or management, which may have a negative impact on our ability to consummate a business combination or favorable terms or generate revenue.
Our Chief Executive Officer, Mr. John Tan Honjian and our Chief Financial Officer, Mr. Mohd Azham bin Azudin are not required to commit their full time to our affairs, which may result in a conflict of interest in allocating their time between managing the Company and other businesses in which he is or may be involved. We do not intend to have any employees prior to the consummation of a business combination. Our officers are not obligated to contribute any specific number of hours to our affairs, and they may engage in other business endeavors while they provide consulting services to the Company. If any of their other business affairs require them to devote substantial amounts of time to such matters, it could materially limit their ability to devote their time and attention to our business which could have a negative impact on our ability to consummate a business combination or generate revenue.
It is possible that we obtain an operating company in which a director or officer of the Company has an ownership interest in or that he or she is an officer, director, or employee of. If we do obtain any business affiliated with an officer or director, such business combination may be on terms other than what would be arrived at in an arms-length transaction. If any conflict of interest arises, it could adversely affect a business combination or subsequent operations of the Company, in which case our shareholders may see diminished value relative to what would have been available through a transaction with an independent third party.
We may engage in a business combination that causes tax consequences to us and our shareholders.
Federal and state tax consequences will, in all likelihood, be a significant factor in considering any business combination that we may undertake. Under current federal law, such transactions may be subject to significant taxation to the buyer and its shareholders under applicable federal and state tax laws. While we intend to structure any business combination so as to minimize the federal and state tax consequences to the extent practicable in accordance with our business objectives, there can be no assurance that any business combination we undertake will meet the statutory or regulatory requirements of a tax-free reorganization or similar favorable treatment or that the parties to such a transaction will obtain the tax treatment intended or expected upon a transfer of equity interests or assets. A non-qualifying reorganization, combination or similar transaction could result in the imposition of significant taxation, both at the federal and state levels, which may have an adverse effect on both parties to the transaction, including our shareholders.
Our shareholders will unlikely to be afforded any opportunity to evaluate or approve a business combination.
Our shareholders will unlikely be afforded the opportunity to evaluate and approve a proposed business combination. In most cases, business combinations do not require shareholder approval under applicable law, and our Articles of Incorporation and Bylaws do not allow our shareholders the right to approve such a transaction. Further, Mr. John Tan Honjian, our Chief Executive Officer and sole director, controls our operations. Accordingly, our shareholders will be relying almost exclusively on the judgment of our board of directors (“Board”) and Chief Executive Officer and any persons on whom they may depend concerning a potential business combination. In order to develop and implement our business plan, we may hire lawyers, accountants, technical experts, appraisers, or other consultants to assist with determining the Company’s direction and consummating any transactions contemplated. We may rely on such persons in making difficult decisions in connection with the Company’s future business and prospects. Our Board will make the selection of any such persons, and any expenses incurred or decisions made based on any of the foregoing could prove to be adverse to the Company in hindsight, the result of which could be diminished value to our shareholders.
Because our search for a business combination is not presently limited to a particular industry, sector or any specific target businesses, prospective investors will be unable to evaluate the merits or risks of any particular target business’s operations until such time as they are identified and disclosed.
We are still determining the Company’s business plan, and we may seek to complete a business combination with an operating entity in any number of industries or sectors. Because we have not yet entered into any letter of intent or agreement to acquire a particular business, prospective investors currently have no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition, prospects or other metrics or qualities they deem appropriate in considering to invest in the Company. Further, if we complete a business combination, we may be affected by numerous risks inherent in the operations of the business we acquire. For example, if we acquire a financially unstable business or an entity lacking an established operating history, we may be affected by the risks inherent in the business and operations of a new business or a development-stage entity. Although our management intends to evaluate and weigh the merits and risks inherent in a particular target business and make a decision based on the Company and its shareholders’ interests, there can be no assurance that we will properly ascertain or assess all the significant risks inherent in a target business, that we will have adequate time to complete due diligence or that we will ultimately acquire a viable business and generate material revenue therefrom. Furthermore, some of these risks may be outside of our control and leave us with no ability to reduce the likelihood that those risks will adversely impact a target business or mitigate any harm to the Company caused thereby. Should we select a course of action, or fail to select a course of action, that ultimately exposes us to unknown or unidentified risks, our business will be harmed and you could lose some or all of your investment.
Past performance by our management and their affiliates may not be indicative of the future performance of an investment in us.
While our Chief Executive Officer has prior experience in advising businesses, his past performance, the performance of other entities or persons with which he is involved, or the performance of any other personnel we may retain in the future will not necessarily be an indication of either (i) that we will be able to locate a suitable candidate for our initial business combination or (ii) the future operating results of the Company including with respect to any business combination we may consummate. You should not rely on the historical record of him or any other of our personnel or their affiliates’ performance as indicative of our future performance or that an investment in us will be profitable. In addition, an investment in the Company is not an investment in any entities affiliated with our management or other personnel. While management intends to endeavor to locate a viable business opportunity and generate shareholder value, there can be no assurance that we will succeed in this endeavor.
We may seek business combination opportunities in industries or sectors that are outside of our management’s area of expertise.
We will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractiveopportunity for the Company. Although management intends to endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all the significant risks, or that we will accurately determine the actual value of a prospective operating entity to acquire. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s ability to evaluate and make decisions on behalf of the Company may be limited, or we may make material expenditures on additional personnel or consultants to assist management in the Company’s operations. Investors should be aware that the information contained herein regarding the areas of our management’s expertise will not necessarily be relevant to an understanding of the business that we ultimately elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant risks or strategic opportunities that may arise. Accordingly, any shareholders in the Company following a business combination could suffer a reduction in the value of their shares, and any resulting loss will likely not be recoverable.
We may attempt to complete a business combination with a private target company about which little information is available, and such target entity may not generate revenue as expected or otherwise by compatibility with us as expected.
In pursuing our search for a business to acquire, we will likely seek to complete a business combination with a privately held company. Very little public information generally exists about private companies, and the only information available to us prior to making a decision may be from documents and information provided directly to us by the target company in connection with the transaction. Such documents or information or the conclusions we draw therefrom could prove to be inaccurate or misleading. As such, we may be required to make our decision on whether to pursue a potential business combination based on limited, incomplete, or faulty information, which may result in our subsequent operations generating less revenue than expected, which could materially harm our financial condition and results of operations.
Our ability to assess the management of a prospective target business may be limited and, as a result, we may acquire a target business whose management does not have the skills, qualifications, or abilities to enable a seamless transition, which could, in turn, negatively impact our results of operations.
When evaluating the desirability of a potential business combination, our ability to assess the target business’s management may be limited due to a lack of time, resources, or information. Our management’s assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities expected. Further, in most cases, the target’s management may be expected to want to manage us and replace our Chief Executive Officer. Should the target’s management not possess the skills, qualifications, or abilities necessary to manage a public company or assist with their former entity’s merger or combination into ours, the operations and profitability of the post-acquisition business may be negatively impacted and our shareholders could suffer a reduction in the value of their shares.
Any business we acquire will likely lack diversity of operations or geographical reach, and in such case, we will be subject to risks associated with dependence on a single industry or region.
Our search for a business will likely be focused on entities with a single or limited business activity and/or that operate in a limited geographic area. While larger companies have the ability to manage their risk by diversifying their operations among different industries and regions, smaller companies such as ours and the entities we anticipate reviewing for a potential business combination generally lack diversification, in terms of both the nature and geographic scope of their business. As a result, we will likely be impacted more acutely by risks affecting the industry or the region in which we operate than we would if our business were more diversified. In addition to general economic risks, we could be exposed to natural disasters, civil unrest, technological advances, and other uncontrollable developments that will threaten our viability if and to the extent our future operations are limited to a single industry or region. If we do not diversify our operations, our financial condition and the results of our operations will be at risk.
Changes in laws or regulations, or failure to comply with the laws and regulations applicable to us, may adversely affect our business, our ability to negotiate and complete a business combination, and the results of our operations.
We are subject to laws and regulations enacted by federal, state, and local governments. In addition to S.E.C. regulations, any business we acquire in the future may be subject to substantial legal or regulatory oversight and restrictions, which could hinder our growth and incur material amounts on compliance. Compliance with and monitoring applicable laws and regulations may be difficult, time-consuming, and costly. Those laws and regulations and their interpretation and application by courts and administrative judges may also change from time to time, and any such changes could be unfavorable to us and could have a material adverse effect on our business, investments, and results of operations. In addition, as interpreted and applied, a failure to comply with applicable laws or regulations could result in material defense or remedial costs and/or damage that adversely affect our financial condition.
Because we are considered a “shell company” under applicable securities rules, investors may be unable to rely on the resale exemption provided by Rule 144 of the Securities Act. As a result, investors may be unable to resell their shares and could lose their entire investment. We are also subject to additional disclosure requirements if we acquire or dispose of significant assets during our business. We will incur additional costs in meeting these requirements, adversely impacting on our financial performance and, therefore, the value of your investment.
We are considered a “shell company” under Rule 405 of Regulation C of the Securities Act. A “shell company” has either no or nominal operations or assets, or assets consisting solely of cash and cash equivalents. As a result, our investors are not allowed to rely on Rule 144 of the Securities Act for one year from the date that we cease to be a shell company. Because investors may not be able to rely on an exemption for the resale of their shares other than Rule 144, and there is no guarantee that we will cease to be a shell company, they may not be able to resell our shares in the future and could lose their entire investment as a result.
Because we are considered a “shell company” under Rule 405 of Regulation C of the Securities Act, we are also subject to additional disclosure requirements if we enter into a transaction that results in a significant acquisition or disposition of assets. We must provide a prospectus-level disclosure regarding the transaction and detailed financial information in such a situation. To comply with these requirements, we will incur additional legal and accounting costs, which will adversely impact on the results of our operations. As a result, the value of an investment in our shares may decline due to these additional costs.
Rule 144 safe harbor does not apply to the resale of shares issued by us unless and until we have ceased to be a shell company and have satisfied the requirements of Rule 144(i)(1)(2).
The SEC has adopted final rules, amending Rule 144, which became effective on February 15, 2008. Accordingly, the securities in this offering can only be resold through registration under the Securities Act, meeting the safe harbor provisions of paragraph (i) of Rule 144, or relying on Section 4(1) of the Securities Act of 1933 for non-affiliates.
According to Rule 144, one year must elapse from the time a “shell company,” defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, ceases to be a “shell company” and files Form 10 information with the SEC. During this time, the issuer must remain current in its filing obligations before a restricted shareholder can resell their holdings in reliance on Rule 144.
The term “Form 10 information” means the information that is required by SEC Form 10 to register under the Exchange Act, for each class of securities being sold under Rule 144. The information on Form 10 is deemed filed when the initial filing is made with the SEC. Under Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
Because we are a “shell company,” the holders of our restricted securities will not be able to sell their securities in reliance on Rule 144, and we cannot file registration statements under Section 5 of the Securities Act using a Form S-8 until we cease being a “shell company.”
We are a “shell company” as the applicable federal securities laws define that term. Specifically, because of the nature and amount of our assets and our very limited operations, pursuant to applicable federal rules, we are considered a “shell company” . Applicable provisions of Rule 144 specify that during the time that we are a “shell company” and for one year thereafter, holders of our restricted securities cannot sell those securities in reliance on Rule 144. This restriction may potentially affect future efforts to form additional capital through unregistered offerings. Another implication of us being a shell company is that we cannot file registration statements under Section 5 of the Securities Act using Form S-8, a short form of registration to register securities issued to employees and consultants under an employee benefit plan. As a result, one year after we cease being a shell company, assuming we are current in our reporting requirements with the Securities and Exchange Commission and have filed current “Form 10 information” with the SEC reflecting our status as an entity that is no longer a shell company for not less than 12 months, holders of our restricted securities may then sell those securities in reliance on Rule 144 (provided, however, those holders satisfy all of the applicable requirements of that rule). For us to cease being a “shell company,” we must have more than nominal operations and more than nominal assets or assets that do not consist solely of cash or cash equivalents. Shares purchased in this offer, which will be immediately resaleable, and sales of all of our other shares if and when applicable restrictions against resale expire, could have a depressive effect on the market price, if any, of our common stock and the shares we are offering.
Risks Related to Our Common Stock
Due to factors beyond our control, our stock price may be volatile.
There is currently a very limited market for our Common Stock, and there can be no guarantee that an active market for our Common Stock will develop, even if we are successful in consummating a business combination. The volatility in UBYH’s Common Stock is mainly due to its shell company status, low trading volume, and limited liquidity in the OTC market. Further, even if an active market for our Common Stock develops, it will likely be subject to significant price volatility compared to more seasoned issuers. We expect that the price of our common stock will continue to be more volatile than that of more seasoned issues in the foreseeable future. Fluctuations in the price of our Common Stock can be based on various factors in addition to those otherwise described in this Report, including:
General speculative fever;
A prospective business combination and the terms and conditions thereof;
The operating performance of any business we acquire, including any failure to achieve material revenues therefrom;
The performance of our competitors in the marketplace, both pre- and post-combination.
The public’s reaction to our press releases, S.E.C. filings, website content, and other public announcements and information.
Changes in earnings estimates of any business that we acquire or recommendations by any research analysts who may follow us or other companies in the industry of a business that we acquire;
Variations in general economic conditions, including those that may be caused by uncontrollable events such as the COVID-19 pandemic and the resulting decline in the economy;
The public disclosure of the terms of any financing we disclose in the future;
The number of shares of our Common Stock that are publicly traded in the future;
Actions of our existing shareholders, including sales of Common Stock by our then directors and then executive officers or by significant investors; and
The employment or termination of key personnel.
Many of these factors are beyond our control. They may decrease the market price of our Common Stock, regardless of whether we can consummate a business combination and of our current or subsequent operating performance and financial condition. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class-action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.
Because trading in our Common Stock is so limited, investors who purchase our Common Stock may depress the market if they sell Common Stock.
Our Common Stock trades on the Expert Market. The Expert Market is generally very illiquid, and most stocks traded there are of companies that are not required to file reports with the SEC under the Exchange Act and do not meet the guidelines of the OTC Market. Our Common Stock itself infrequently trades.
The market price of our Common Stock may decline if a substantial number of shares are sold at once or in large blocks.
Presently, the market for our Common Stock is limited. If an active market for our shares develops in the future, some or all of our shareholders may sell their shares of our Common Stock, which may depress the market price. Any sale of a substantial number of these shares in the public market, or the perception that such a sale could occur, could cause the market price of our Common Stock to decline, reducing the value of the shares held by our other shareholders.
Future issuance of our Common Stock could dilute the interests of our existing shareholders, particularly in connection with an acquisition and any resulting financing.
We may issue additional shares of our Common Stock in the future. Issuing a substantial amount of our Common Stock could substantially dilute the interests of our shareholders. In addition, the sale of a substantial amount of Common Stock in the public market, either in the initial issuance or in a subsequent resale by the target company in a business combination that received our Common Stock as consideration or by investors who have previously acquired such Common Stock, could have an adverse effect on the market price of our Common Stock.
Due to recent changes to Rule 15c2-11 under the Securities Exchange Act of 1934, our Common Stock may become subject to limitations or reductions on stock price, liquidity, or volume.
On September 16, 2020, the S.E.C. adopted amendments to Rule 15c2-11 under the Securities Exchange Act of 1934 (the “Exchange Act”). This Rule applies to broker-dealers who quote securities listed on over-the-counter markets such as our Common Stock. The Rule, as amended, prohibits broker-dealers from publishing quotations on OTC Markets for an issuer’s securities unless they are based on current publicly available information about the Issuer. When it becomes effective, the amended Rule will also limit the Rule’s “piggyback” exception, which allows broker-dealers to publish quotations for a security in reliance on the quotations of a broker-dealer that initially performed the information review required by the Rule, to issuers with current publicly available information or issuers that are up to date in their Exchange Act reports. As of this date, we are uncertain what effect the Rule may have on us.
The Rule changes could harm our Common Stock’s liquidity and/or market price by either preventing our shares from being quoted or driving up our compliance costs. Because we are a voluntary filing under Section 15(d) of the Exchange Act and not a public reporting company, the practical impact of these changes is to require us to maintain a level of periodic disclosure we are not presently required to maintain, which would cause us to incur material additional expenses. Further, if we cannot provide or maintain current public information about our Company, our stockholders may face difficulties in selling their shares of our Common Stock at desired prices, quantities, or times, or at all, as a result of the amendments to the Rule.
adverse
Plan of Operation
The Company has no operations from a continuing business other than the expenditure related to running the Company, and it has no revenue from continuing operations as of the date of this Report.
Management intends to explore and identify business opportunities within the U.S and globally, including a potential acquisition of an operating entity through a reverse merger, asset purchase, or similar transaction. Our Chief Executive Officer has experience in business consulting. However, no assurances can be given that he can identify and implement a viable business strategy or that any such strategy will result in profits. Our ability to effectively identify, develop, and implement a feasible plan for our business may be adversely affected by risks and uncertainties beyond our control, including, without limitation, the ongoing impact of the COVID-19 pandemic on the U.S. and global economies. For more information about the risk of coronavirus on our business, see Item 1A “Risk Factors.”
We do not currently engage in business activities providing revenue or cash flow. However, during the next 12 months, we anticipate incurring costs related to investigating, evaluating, and negotiating potential business combinations, filing S.E.C. reports, and consummating an acquisition of an operating business.
Given our limited capital resources, we may consider a business combination with an entity that has recently commenced operations, is a developing company, or is otherwise in need of additional funds for the development of new products or services or expansion into new markets. Alternatively, a business combination may involve the acquisition of, or merger with, an entity that desires access to the U.S. capital markets.
As of the date of this Report, our management has not had any discussions with any representative of any other entity regarding a potential business combination. Any selected target business may be financially unstable or in the early stages of development. In such an event, we expect to be subject to numerous risks inherent in the business and operations of a financially unstable or early-stage entity. In addition, we may have a business combination with an entity in an industry characterized by a high level of risk or in which our management has limited experience, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that, due to our limited capital, we will likely only be able to affect one business combination. This lack of diversification will likely pose a substantial risk in investing in the Company indefinitely because it will not permit us to offset potential losses from one venture or operating territory againstgains from another. The risks we face will likely be heightened if we acquire a business operating in a single industry or geographical region.
We anticipate that selecting a business combination will be a complex and risk-prone process. Because of general economic conditions, including unfavorable conditions caused by the coronavirus pandemic, rapid technological advances in some industries, and shortages of available capital, management believes that several firms are seeking business opportunities at this time at discounted rates, with which we will compete. We expect that any potentially available business combinations may appear in various industries or regions and at various stages of development, all of which will likely render the task of comparative investigation and analysis of such business opportunitieschallenging and complicated. Once we have developed and begun to implement our business plan, management intends to fund our working capital requirements through a combination of our existing funds and future issuances of debt or equity securities. Our working capital requirements are expected to increase in line with implementing a business plan and the commencement of operations.
Based on our current operations, we do not have sufficient working capital to fund our operations over the next 12 months. If we can close a reverse merger, we will likely need capital as a condition of closing that acquisition. Because of the uncertainties, we cannot be certain how much capital we need to raise or the type of securities we will be required to issue. In connection with a reverse merger, we will be required to issue a controlling block of our securities to the target shareholders, which will be very dilutive.
Additional issuances of equity or convertible debt securities will dilute our current shareholders’ equity. Further, such securities might have rights, preferences, or privileges senior to our Common Stock. Additional financing may not be available on acceptable terms, or at all. If adequate funds are not available or available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
We anticipate that we will incur operating losses in the next 12 months, principally costs related to our being obligated to file reports with the S.E.C. Our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and unpredictable business model, recognition of revenue sources, and the management of growth. To address these risks, we must, among other things, develop, implement, and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain, and motivate qualified personnel. There can be no assurance that we will successfully address such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition, and results of operations.
Off-Balance Sheet Arrangements
As of the date of this Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The independent registered public accounting firm auditors’ report accompanying our May 31, 2025, financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern”, which contemplates realizing our assets and satisfying our liabilities and commitments in the ordinary course of business.
