The accompanying notes are integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are integral part of these unaudited condensed consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements
For the three month period ended March 31, 2016
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization, Nature of Business and Trade Name
HK Battery Technology Inc. (the “Company”), a development stage company, was incorporated under the laws of the State of Delaware on April 16, 2004 as Nano Holdings International, Inc. and subsequently changed its name to Nevada Gold Holdings, Inc. Nevada Gold Enterprises, Inc., a Nevada corporation, was incorporated under the laws of the State of Nevada on October 2, 2008. On December 31, 2008, Nevada Gold Acquisition Corp., a Nevada corporation and a wholly owned subsidiary of Nevada Gold Holdings, Inc., merged with and into Nevada Gold Enterprises, Inc. (the “Merger”). Nevada Gold Enterprises, Inc. was the surviving corporation in the Merger. As a result of the Merger, Nevada Gold Enterprises, Inc., became a wholly-owned subsidiary of Nevada Gold Holdings, Inc. The Merger was treated as a reverse merger and recapitalization for financial accounting purposes. As a result of the Merger, the Company recorded an aggregate stock issuance of 2,626,263 shares of common stock with a net value of $(180,978). The negative recapitalization net value recognized was the result of the Company restating the equity structure of the legal subsidiary using the exchange ratio established in the definitive Merger agreement to reflect the number of shares of the legal parent issued in the Merger. Nevada Gold Enterprises, Inc. was considered the acquirer for accounting purposes, and Nevada Gold Holdings, Inc. was considered the surviving company for legal purposes. Acordingly, the accompanying financial statements present the historical financial statements of Nevada Gold Enterprises, Inc., as the historical financial statements of Nevada Gold Holdings, Inc. (i.e., a reverse merger). The Company was previously engaged in the acquisition, exploration and development of gold mining claims in Nevada. In February 2013, the Company withdrew from the gold exploration business to explore opportunities in the battery technology field. On August 7, 2013, the Company changed its name to HK Battery Technology Inc. As of November 23, 2015, our wholly-owned subsidiary, Nevada Gold Enterprises, Inc., was dissolved.
On June 21, 2015, we formed HK Battery Technology LLC, a Nevada limited liability company and our wholly-owned subsidiary, managed by Jianguo Xu, and HK System Integration, LLC, a Nevada limited liability company and our wholly-owned subsidiary, managed by Junwen Hou. As of March 31, 2016, neither of these subsidiaries conducted any business, had any income or expenses or had any bank accounts.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of consolidated financial statements using 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. A change in management’s estimates or assumptions could have a material impact on the Company’s financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, HK Battery Technology LLC and HK System Integration LLC. The wholly-owned subsidiaries have not conducted any business, have not had an income nor incurred any expenses, and do not have any employees or bank accounts.
Cash
Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. The Company's cash is held with local and national banking institutions and subjected to current insurance limits of the Federal Deposit Insurance Corporation (“FDIC”) of $250,000 per banking institution. As of March 31, 2016, the Company bank balances in these bank accounts exceeded the insured amount by $26,708,585. The Company has not experienced any losses related to this concentration of risk
.
There are no cash equivalents as of March 31, 2016.
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Loss Per Share
Basic loss per share is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. We calculated the loss per share as $0.02 as of March 31, 2016. No Diluted earnings per share have been calculated for the reported period.
Recent Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception –to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended September 30, 2014, thereby no longer presenting or disclosing any information previously required by Topic 915.
Income Taxes
We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.
As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspect of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of October 2, 2008, and have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as open tax years in these jurisdictions. We have identified the U.S. federal and Delaware as our “major” tax jurisdictions and generally, we remain subject to Internal Revenue Service examination of our 2007 through 2014 U.S. federal income tax returns. However, we have certain tax attribute carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.
We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes. We have no interest or penalties as of March 31, 2016 and 2015.
NOTE 2 - GOING CONCERN
The Company sustained operating losses during the first quarter of and incurred negative cash flows of $1,082,472 from operations in 2016. The company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing, as may be required.
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.
8
Through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material adverse effect upon it and its shareholders.
NOTE 3 – NOTES RECEIVABLE – RELATED PARTIES
On January 26, 2011, the Company made a loan of $200,000 to Hybrid Kinetic Motors Corporation, a related party. The loan is unsecured and due on demand with 3% interest per annum. The balance of the accrued interest is $25,052 and $25,052 as of March 31, 2016 and December 31, 2015, respectively.
NOTE 4 – NOTES PAYABLE
The Company converted the old payables to American Compass Inc. (“ACI”) with the amount of $775,000 to a new note at the end of 2012. In 2013, the Company borrowed additional amounts from ACI at a 3% per year interest rate. As of December 31, 2013, the balance of the Note to ACI was $2,195,000. The Notes are unsecured with an interest rate of 3%.
On March 25, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $360,000 (the “March Note”) in order to cover the Company’s operating expenses. The Note provides for interest of three percent (3%) per annum and is due upon demand from American Compass Inc. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On June 25, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $230,000 (the “June Note”) in order to cover the Company’s operating expenses. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On July 31, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $80,000 (the “July Note”) in order to cover the Company’s operating expenses. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On August 31, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $90,000 (the “August Note”) in order to cover the Company’s operating expenses. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On September 30, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $110,000 (the “September Note”) in order to cover the Company’s operating expenses. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On October 31, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $110,000 (the “October Note”) in order to cover the Company’s operating expense. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On November 30, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $40,000 (the “November Note”) in order to cover the Company’s operating expense. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
On December 31, 2014, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $230,000 (the “December Note together with the March Note, June Note, July Note and August Note, September Note, October Note, November Note, collectively, the “Notes””) in order to cover the Company’s operating expense. The Additional Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan to fund the general and administrative expenses of the Company as the Company does not currently generate any revenues.
9
On January 31, 2015, the Company entered into a Demand Promissory Note with ACI, borrowing the amount of $50,000 (the “January Note” together with the March Note, June Note, July Note and August Note, September Note, October Note, November Note and December Note, collectively, the “Notes”) in order to cover the Company’s operating expense. The January Note provides for interest of three percent (3%) per annum and is due upon demand from ACI. The Company will use the proceeds of the loan and administrative expenses of the Company.
On June 28, 2015 (“Effective Date”), the Company entered into a Debt Offset Agreement with Delta Advanced Technology Corporation, a Nevada corporation (“DATC”), and American Compass, Inc., a California corporation (“ACI”), to offset certain indebtedness owed to ACI. As of the Effective Date, DATC is indebted to the Company in the amount of $3,750,000.00 (the “DATC Debt”) and the Company is indebted to ACI in the amount of $3,750,000.00 (the “Company Debt”). As of the Effective Date, ACI is indebted to DATC in the amount of $3,750,000.00 (the “ACI Debt”). Pursuant to the Debt Offset Agreement, (i) ACI assumed the DATC Debt to the Company; (ii) the Company unconditionally and irrevocably released DATC of all liabilities and obligations to the Company; (iii) DATC unconditionally and irrevocably released ACI of all liabilities and obligations to DATC; and (iv) ACI and the Company acknowledged and agreed to offset the Company Debt against the DATC Debt assumed by ACI, leaving a balance due from ACI to the Company in the amount of $0 (the “Remaining Balance”).
As of March 31, 2016, the balance of the Notes payable to ACI was $0. The total accrued interest was $0 and $159,562 for the quarter ended March 31, 2016 and 2015, respectively.
NOTE 5 – ACCOUNTS PAYABLE - OTHERS
On April 15, 2015, the Company entered into a Demand Promissory Note with Billion Energy Holdings Limited, a Hong Kong corporation (“BEHL”), pursuant to which the Company promised to pay to BEHL $5,750,000 (the “Note”). The Note provides for 0% interest and is due upon demand from BEHL.
NOTE 6 – STOCKHOLDER’S EQUITY
On August 7, 2013, the Company approved an increase in authorized capitalization from 300,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share, to 1,200,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.
On July 21, 2014, the Board of Directors and stockholders holding a majority of the Company’s outstanding shares of its common stock, respectively, approved an amendment and restatement of the Company’s Certificate of Incorporation to effectuate a 1-for-100 reverse stock split. The reverse stock split became effective on September 5, 2014 (“Effective Date”), after filing of the Company’s Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on August 8, 2014. On the Effective Date, the Company’s 42,865,074 outstanding shares of common stock were reduced to approximately 429,475 outstanding shares of common stock.
On August 21, 2015, HK Battery Technology Inc., a Delaware corporation (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Lianyungang HK New Energy Vehicle System Integration Corporation, a company organized under the laws of the People’s Republic of China (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser 132,000,000 shares of the Company’s common stock, at a per share price of $0.75, for aggregate proceeds of $99,000,000.
On March 15, 2016, the Company and the Stockholder entered into a Stock Cancellation Agreement and Release (the “Cancellation Agreement”), pursuant to which the parties agreed to cancel and terminate 5,333,333 shares of the common stock issued pursuant to the Purchase Agreement, including any and all of the Stockholder’s rights arising thereunder, in exchange for the Company’s payment of $4,000,000 to the Stockholder.
On March 23, 2016, the Company and the Stockholder entered into an Amendment to the Stock Cancellation Agreement (the “Amendment”), pursuant to which the parties agreed to increase the number of shares of common stock cancelled and terminated to 1,333,333 shares, in exchange for the Company’s payment of $10,000,000 to the Stockholder. Nothing in the Amendment shall affect the validity of the remaining 130,666,667 shares of common stock issued pursuant to the Purchase Agreement, or any of the Stockholder’s rights thereto. The Amendment was effective as of April 6, 2016.
On March 30, 2016, the Company filed a Form 25 Notification of Removal From Listing and/or Registration Under Section 12(b) of the Securities Exchange Act of 1934 pursuant to 17 CFR 240.12d2-(c) governing the voluntary withdrawal of its common stock from listing and registration on the Exchange. Such withdrawal from registration shall be effective ninety (90) days following the filing of the Form 25.
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As of March 31, 2016, the Company had 67,096,142 shares of common stock and zero share of preferred stock issued and outstanding, respectively.
NOTE 7 – ENTRY INTO MATERIAL DEFINITIVE AGREEMENT
Effective December 17, 2015, the Company entered into a Fuel Cell System Development Agreement (the “Agreement”) with Chimerica Investment LLC, a Nevada limited liability company (“Chimerica”). Pursuant to the Agreement, on December 28, 2015, the Company paid Chimerica Ten Million United States Dollars ($10,000,000) to design and develop a fuel cell system to be used in the development of the Company’s transit buses.
NOTE 8– COMMITMENTS AND CONTINGENCIES
The Company is not currently a party to any legal action.
The Company is in a lease agreement for its office space for a term of 69 months, beginning on May 1, 2011. Rent increases by 2.7% per year and is payable in installments. The lease will terminate on Jan 31, 2017.
|
|
|
|
Annual minimum lease commitment for 5 years:
|
|
|
|
12/31/2013
|
$
|
367,350
|
|
12/31/2014
|
$
|
377,269
|
|
12/31/2015
|
$
|
369,967
|
|
12/31/2016
|
$
|
397,916
|
|
12/31/2017
|
$
|
33,453
|
|
Total annual Lease commitments
|
$
|
1,545,955
|
NOTE 9 – PREPAYMENT TO LYG – RELATED PARTY
On March 23, 2015, the Company entered into a Securities Purchase Agreement (the “SPA”) with Apollo Acquisition Corporation, a Cayman Islands Exempted Company (“Apollo”). The SPA contemplated that the Company would sell Apollo ten million (10,000,000) shares of its common stock in exchange for a twenty (20) year exclusive license to certain inventions, technology, patents and other intellectual property rights regarding the production of materials for use in lithium batteries throughout the People’s Republic of China (the “License”). The terms of the License were memorialized in a Technology License Agreement (the “License Agreement”), which was executed by the Company and Apollo concurrently with the SPA. The transactions contemplated within the SPA have not closed and the parties have mutually agreed to cancel the SPA and License Agreement, pursuant to a Termination Agreement, dated as of June 26, 2015.
On March 23, 2015, the Company entered a joint venture agreement (the “JV Agreement”) with Jiangsu New Head Line Development Group Co. Ltd., a company established and existing under the laws of the People’s Republic of China. The JV Agreement provided that Lianyungang HK Battery Technology Co. LTD (the “JV Entity”) would be established for the purpose of building manufacturing plants in China to produce advanced materials and parts for new energy vehicles. Effective, as of June 24, 2015, the Company has assigned and transferred its sixty-two and one-half percent (62.5%) equity interest in the JV Entity to Delta Advanced Technology Corporation in exchange for Three Million Seven Hundred Fifty Thousand United States Dollars ($3,750,000.00).
NOTE 10 – SUBSEQUENT EVENTS
These financial statements were approved by management and available for issuance on May 23, 2016. Subsequent events have been evaluated through this date.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This report contains forward-looking statements. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties including those related to changes in economic conditions, new business opportunities and general financial and business conditions, actual results may differ materially from those expressed or implied by the forward-looking statements.
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of its public disclosure practices.
Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q
and with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and accompanying notes included our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC.
Unless the context otherwise requires, the terms the “Company,” “we,” “us” and “our” refer to HK Battery Technology Inc. (formerly Nevada Gold Holdings, Inc.)
OVERVIEW AND RECENT DEVELOPMENTS
During the fiscal year ended December 31, 2013, we engaged in limited oil and gas activities, had minimal operations, and generated no revenues. We did not pay to the Tempo property lessor, Gold Standard Royalty Corporation, an Advance Minimum Royalty Payment of approximately $150,000 that was due by January 15, 2013, and as of February 15, 2013, Gold Standard Royalty Corporation terminated our lease of the 206 contiguous unpatented lode claims on the Tempo Mineral Prospect. As a result, the Company does not hold any mineral lease or property, and our Board has determined that we will not in the future hold any mineral lease or property. Management, along with the Board of Directors, determined it was in the best interest of the Company and its stockholders to explore opportunities in the battery technology field. Current members of management and of the Board of Directors have experience in this field.
The Company at this time intends to seek a merger, combination or other business transaction with a company that develops and/or manufactures battery packs with advanced technologies, and believe that the change of our name will facilitate such efforts. However, the Company has not yet entered into any agreement, nor does it have any commitment to enter into or become engaged in such a transaction with any party.
Our Board of Directors may at any time determine to redirect the Company’s efforts to find a combination or acquisition target to another business or industry. We may not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. Further, we may acquire or combine with a venture that is in its preliminary or development stage, one that is already in operation or one that is in a more mature stage of its corporate existence. Accordingly, business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities difficult and complex. See Part I, Item 1, “Business—Our Business Plan,” and Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the SEC, for additional information and risks associated with our proposed business plan.
On July 21, 2014, the Board of Directors and stockholders holding a majority of the Company’s outstanding shares of its common stock, respectively, approved an amendment and restatement of the Company’s Certificate of Incorporation to effect a 1-for-100 reverse stock split. The reverse stock split became effective on September 5, 2014 (“Effective Date”), after filing of the Company’s Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on August 8, 2014. On the Effective Date, the Company’s 42,865,074 outstanding shares of common stock were reduced to approximately 429,475 outstanding shares of common stock.
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On June 21, 2015, we formed HK Battery Technology LLC, a Nevada limited liability company and our wholly-owned subsidiary, managed by Jianguo Xu, and HK System Integration LLC, a Nevada limited liability and our wholly-owned subsidiary, managed by Junwen Hou. As of March 31, 2016, neither these subsidiaries conducted any business, had any income or expenses nor had any bank accounts.
On August 21, 2015, HK Battery Technology Inc., a Delaware corporation (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Lianyungang HK New Energy Vehicle System Integration Corporation, a company organized under the laws of the People’s Republic of China (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser 132,000,000 shares of the Company’s common stock, at a per share price of $0.75, for aggregate proceeds of $99,000,000. In accordance of the SPA, on August 26, 2015, the Company issued 66,666,667 shares of common stock to the Purchaser.
We expect that we will need to raise funds in order to effectuate a business plan. We may seek additional investors to purchase our stock to provide us with working capital to fund our operations. Thereafter, we will seek to establish or acquire businesses or assets with additional funds raised either via the issuance of shares or debt. There can be no assurance that additional capital will be available to us at all or on acceptable terms. We may seek to raise the required capital by other means. We may have to issue debt or equity or enter into a strategic arrangement with a third party. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds will have a severe negative impact on our ability to remain a viable company. In pursuing the foregoing goals, we may seek to expand or change the composition of the Board or make changes to our current capital structure, including issuing additional shares or debt and adopting a stock option plan.
We do not expect to generate any revenues over the next twelve months. Our principal business objective for the next twelve months will be to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for our stockholders.
Results of Operations
For the Three Months Ended March 31, 2016 and 2015
Revenues and Other Income
During the three month period ended March 31, 2016, the Company did not realize any revenues from operations. Similarly, we have not realized any revenues from operations during the period from inception through March 31, 2016.
Expenses
Operating expenses, consisting entirely of general and administrative expenses, totaled $1,114,429 and $314,211 for the three month periods ended March 31, 2016 and 2015, respectively. The increase in operating expenses was primarily due to the expansion of our business and fees paid for our annual report audit service.
Net Loss
As a result of the foregoing, the Company incurred a net loss of $1,082,472 or ($0.02) per share, for the three month period ended March 31, 2016, compared to a net loss of $340,511, or ($0.79) per share (on a pre-reverse stock split basis), for the three month period ended March 31, 2015.
Liquidity and Capital Resources
As of March 31, 2016, we have $26,708,585 in cash on hand.
We may be unable to secure additional financing on terms acceptable to us, or at all, at times when we need such financing. Our inability to raise additional funds on a timely basis could prevent us from achieving our business objectives and could have a negative impact on our business, financial condition, results of operations and the value of our securities.
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If we raise additional funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders will be reduced and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our Common Stock. Such securities may also be issued at a discount to the market price of our Common Stock, resulting in possible further dilution to the book value per share of Common Stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility.