10-Q: UbuyHoldings Reports Q1 2024 Results: No Revenue, Focus on Reverse Merger

UbuyHoldings, a dormant company under new custodianship, reports no revenue and a net loss for the quarter ended August 31, 2023, while seeking a business opportunity through a reverse merger.

Summary

• UbuyHoldings, Inc., formerly E-Pawn.Com, Inc., has been dormant since 2001 and is currently under the custodianship of Custodian Ventures LLC.
• For the three months ended August 31, 2023, the company reported no revenue and a net loss of $18,361.
• The company's accumulated deficit as of August 31, 2023, was $13,947,819.
• As of August 31, 2023, the company had no cash on hand and negative working capital of $33,361.
• Management intends to explore business opportunities, including a potential acquisition through a reverse merger.
• The company's ability to execute its plan is subject to risks and uncertainties, including the impact of the coronavirus pandemic.
• Custodian Ventures advanced $33,310 to the company in the form of an interest-free demand loan.
• On December 6, 2023, the company awarded Custodian Ventures shares of Class A Preferred Stock and Series A-1 Preferred Stock for services performed and to cancel advances.
• On January 5, 2024, Custodian Ventures converted its 55,000,000 Class A shares to 55,000,000 common shares, and another holder converted 50,000,000 Class A shares to 50,000,000 common shares.

Sentiment

Score: 3

Explanation: The sentiment is low due to the company's lack of operations, net losses, accumulated deficit, and weak internal controls. The only slightly positive aspect is the new custodianship and the intention to seek a reverse merger.

Positives

• The company has a new custodian, Custodian Ventures LLC, which has a track record of funding custodianships.
• Custodian Ventures provided an interest-free demand loan to cover operating expenses.
• The company is actively seeking a business opportunity through a reverse merger.

Negatives

• The company has no current operations and no revenue.
• The company reported a net loss of $18,361 for the three months ended August 31, 2023.
• The company has a significant accumulated deficit of $13,947,819.
• The company has no cash on hand and negative working capital.
• The company's disclosure controls and procedures were not effective as of August 31, 2023.
• The company's internal control over financial reporting was not effective as of August 31, 2023.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt.
• The company's plan to identify and implement a viable business strategy may be hindered by risks and uncertainties.
• The company may face competition in seeking business opportunities.
• The company's limited capital resources may restrict its business operations.
• Additional issuances of equity or convertible debt securities will result in dilution to current shareholders.
• The company's management has limited experience in some industries.
• The company's internal controls are weak.

Future Outlook

Management intends to explore and identify business opportunities within the U.S., including a potential acquisition of an operating entity through a reverse merger, asset purchase, or similar transaction.

Management Comments

• Our Chief Executive Officer has experience in business consulting, although no assurances can be given that he can identify and implement a viable business strategy or that any such strategy will result in profits.

Industry Context

The company's strategy of seeking a reverse merger is a common approach for dormant companies to re-enter the market, but it carries inherent risks and uncertainties.

Comparison to Industry Standards

• Given the company's dormant status and lack of operations, it's difficult to compare its performance to industry standards.
• Companies in a similar situation often face challenges in securing funding and identifying suitable merger targets.
• The success of a reverse merger depends heavily on the quality of the target company and the management's ability to integrate the operations.

Management Changes

Related Party Transactions

• Custodian Ventures, the company's Custodian, had advanced $33,310 in the form of an interest-free demand loan.
• On December 6, 2023 the Company awarded Custodian Ventures 55,000,000 shares of Class A Preferred Stock, and 10,000,000 shares of newly designated Series A-1 Preferred Stock with a par value of $ 0.001 for services performed and to cancel all advances made by the Custodian to the Company to enable the Company to pay for its operating expenses.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial condition and the potential for dilution.
• The company's employees (if any) are impacted by the lack of operations and the uncertainty surrounding the company's future.
• Creditors face risk due to the company's limited ability to repay debts.

Next Steps

• Management intends to explore and identify business opportunities within the U.S.
• Management intends to fund working capital requirements through a combination of existing funds and future issuances of debt or equity securities.
• The company plans to rectify internal control weaknesses by implementing an independent board of directors, establishing written policies and procedures, and hiring additional accounting personnel.

Key Dates

Keywords

reverse merger, custodianship, financial statements, UbuyHoldings, deficit, operations, debt