ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes to the consolidated financial statements included later in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly “Special Note Regarding Forward-Looking Statements.”
Overview
Ridgefield Acquisition Corp. (“we”, “us”, “our”, “Ridgefield” or the “Company”) was originally incorporated as a Colorado corporation on October 13, 1983 under the name Ozo Diversified, Inc. On June 23, 2006, the Company filed Articles of Merger with the Secretary of State of the State of Nevada that effected the merger between the Company and a wholly-owned subsidiary formed under the laws of the State of Nevada (“RAC-NV”), pursuant to the Articles of Merger, whereby RAC-NV was the surviving corporation. The merger changed the domicile of the Company from the State of Colorado to the State of Nevada. Furthermore, as a result of the Articles of Merger the Company is authorized to issue 35,000,000 shares of capital stock consisting of 30,000,000 shares of common stock, $.001 par value per share and 5,000,000 shares of preferred stock, $.01 par value per share.
Since July 2000, the Company has suspended all operations, except for necessary administrative matters relating to the timely filing of periodic reports as required by the Securities Exchange Act of 1934. The Company is a “shell company” as defined in Rule 12b-2 of the Exchange Act. Accordingly, during the twelve months ended December 31, 2024 and 2023 we earned no revenues.
Our principal executive office is located at 3827 S Carson St, Unit 505-25 PMB 1078, Carson City, NV 89701 and the telephone number is (805) 484-8855. Our website address is www.ridgefieldacquisition.com. None of the information on our website is part of this Form 10-K.
Outlook
Our plan of operation is to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. In seeking to arrange a merger, acquisition, business combination or other arrangement, our objective will be to obtain long-term capital appreciation for the Company’s shareholders. While we have identified various operating entities, none have risen to the level of being a viable entity for a merger, acquisition, business combination or other arrangement. There can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
The selection of a business opportunity is a complex process and involves a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, we believe that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders, creating a means for providing incentive stock options or similar benefits to key employees, and other factors.
In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders’ advice and consent, or because of a requirement of state law to do so.
The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that we will be able to obtain such additional funds, if needed.
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In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, our objective will be to obtain long-term capital appreciation for the Company’s shareholders. As stated before, there can be no assurance that we will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, and there can be no assurance that such a transaction will result in long-term capital appreciation.
In connection with its Acquisition Strategy, the Company expects to encounter competition from other entities having business objectives similar to those of the Company. Many of these entities, including SPACs, venture capital firms, blind pool companies, large industrial and financial institutions, small business investment companies and wealthy individuals, are well-established and have extensive experience in connection with identifying and effecting acquisitions directly or through affiliates. Many of these competitors possess greater financial, technical, human and other resources than the Company and there can be no assurance that the Company will have the ability to compete successfully with such entities. The Company’s financial resources will be limited in comparison to those of many of its competitors. The Company’s limited financial resources may compel the Company to select certain less attractive acquisition prospects.
Results of Operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023
Revenues
The Company earned no revenues from operations during the years ended December 31, 2024 and December 31, 2023. The net loss for 2024 was $67,552, compared to $72,982 in 2023. This decrease in net loss reflects reductions in general and administrative (G&A) expenses partially offset by higher interest expense.
General and Administrative Expenses
G&A expenses, which include professional fees, service charges, office expenses, and similar items, totaled $51,683 for the year ended December 31, 2024, compared to $60,082 for the prior year, a decrease of $8,399. This decline is primarily due to professional fees. In 2023, the Company incurred approximately $15,000 in additional audit-related fees related to the transition between its former and current independent registered public accounting firms, as well as higher annual audit fees. Looking ahead, we anticipate annual increases in compliance costs, public company expenses, and fees for due diligence on potential transactions.
Other Expenses
Other expenses, which include state licenses, filing fees, minimum tax expense, and net interest expense, increased to $15,869 for the year ended December 31, 2024, compared to $12,900 for the prior year. This increase was primarily driven by higher net interest expense, which rose to $13,591 in 2024 from $10,500 in 2023. The increase reflects the growth in underlying principal balances and the duration they were outstanding. This trend is expected to continue.
Liquidity and Capital Resources
Cash requirements for working capital and capital expenditures have been funded from cash balances on hand, loans and the issuance of common stock. As of December 31, 2024, we had cash and cash equivalents of $16,949 and working capital of $13,934, excluding the related party debt. With the related party debt, we had a working capital deficit of ($152,555).
Cash and cash equivalents consist of cash and money market funds. We did not have any short-term or long-term investments as of December 31, 2024.
Historically, the Company satisfied its working capital needs from related party loans and equity infusions, primarily from Steven N. Bronson, the Chairman, President, CEO, and majority shareholder, and entities that he controls.
On March 23, 2022, the Company executed a Revolving Promissory Note (the “Bronson Note”), in the principal amount of up to $200,000 payable to Steven N. Bronson, the Company’s Chairman of the Board, President and Chief Executive Officer, pursuant to which Mr. Bronson may make loans to the Company from time to time. The Bronson Note has a maturity date of March 23, 2027, and provides for interest to accrue on the unpaid principal at a rate of eight percent (8.0%) per annum (calculated on the basis of a
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360-day year), compounded quarterly and payable quarterly on the last business day of the calendar quarter. The Bronson Note may be prepaid by the Company at any time without penalty.
On September 27, 2022, the Company executed a Revolving Promissory Note (the “Qualstar Note”), payable to Qualstar Corporation (“Qualstar”). Mr. Bronson is the President and CEO of Qualstar Corporation, as well as its largest shareholder. Under the terms of the Qualstar Note, Qualstar may (but is not required to) make loans to the Company from time to time upon request by the Company, up to a maximum principal amount of $200,000 outstanding at any time. The Note may be prepaid by the Company at any time without penalty and is repayable on demand by Qualstar on or after December 31, 2024. The Note provides for interest to accrue on the outstanding principal balance at a rate of ten percent (10.0%) per annum (calculated on the basis of a 360-day year), compounded and payable quarterly. As of the date of issuance of these financial statements, Qualstar has not made a demand for payment.
During the twelve months ended December 31, 2023 and December 31, 2024, the following amounts were payable under all loans:
Note Payable to
Note Payable to
Steven N. Bronson
Qualstar Corporation
Principal
Interest
Principal
Interest
Balance January 1, 2023
Additions
Cash Payments
Balance December 31, 2023
Additions
Cash Payments
Balance December 31, 2024
On April 23, 2024, the Company sold 25,000,000 shares (the “Shares”) of its Common Stock to Mr. Bronson, at a price of $0.002 per share, for an aggregate purchase price of $50,000. Mr. Bronson paid the purchase price for the Shares in cash. The Shares were offered and sold exclusively to Mr. Bronson in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), as a transaction not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. Mr. Bronson represented his intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificate representing the Shares issued in the transaction. The offer and sale of the Shares were made without any general solicitation or advertising.
While the cash received from the related party loans and equity transactions will satisfy the Company’s immediate financial needs, it will not by itself provide the Company with sufficient capital to finance a merger, acquisition or business combination between the Company and a viable operating entity. The Company may need additional funds to complete a merger, acquisition or business combination between the Company and a viable operating entity. There can be no assurances that the Company will be able to obtain additional funds if and when needed.
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Critical Estimates and Judgments
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates and judgments, including those related to receivables and accrued expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable based on the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of the Company’s deferred income tax asset valuation allowance. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements.
Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“U.S. GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Going Concern
The Company has an accumulated deficit balance as of December 31, 2024 and net loss during the year ended December 31, 2024. The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern for the next twelve months from the date of this filing, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. The Company is continually analyzing its current costs and is attempting to make additional cost reductions where possible. We expect that we will continue to generate losses from operations throughout 2025.
In order to continue as a going concern and to develop a reliable source of revenues and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through borrowing and/or sales of equity and debt securities. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
Economy and Inflation
Many leading economists predict high rates of inflation will continue through 2025. We do not believe inflation has had a material effect on our Company’s results of operations. This might not be the case if inflation continues to grow. A prolonged period of high inflation may also impact our ability to carry out our acquisition strategy. On the other hand, if business conditions deteriorate, it may be easier for us to identify an acquisition candidate.
Off-Balance-Sheet and Contractual Obligations
Our liquidity is not dependent on the use of off-balance-sheet financing arrangements.
