10-Q: My City Builders Faces Going Concern Doubt Amidst Pivot

My City Builders, Inc. reports a strategic pivot to multifamily housing development in Glencoe, Alabama, while facing significant liquidity challenges and internal control weaknesses.

Summary

• My City Builders, Inc. (MYCB) has strategically shifted its business focus from operating rental real estate properties to developing multifamily housing projects.
• The company acquired 4 acres of land in Glencoe, Alabama, on October 31, 2025, for $350,000, financed by a secured promissory note from a related party.
• Plans are underway to construct up to 25 multi-family units in three phases, starting with an 8-unit duplex development.
• The City of Glencoe approved the rezoning of the acquired land on December 16, 2025, facilitating the planned residential development.
• For the six months ended January 31, 2026, the company reported a net loss from continuing operations of $94,244 and an accumulated deficit of $4,987,576.
• Cash on hand increased to $14,823 as of January 31, 2026, from $2,189 on July 31, 2025, primarily due to financing activities.
• A private offering closed on December 1, 2025, raising $82,500 in cash from the issuance of 1,650,000 common shares to two accredited investors.
• The company faces substantial doubt about its ability to continue as a going concern due to limited cash, a working capital deficit of $7,275, and dependence on external and related-party financing.
• Disclosure controls and procedures were deemed ineffective as of January 31, 2026, due to material weaknesses including lack of segregation of duties and insufficient accounting expertise.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing with significant caution due to the company's going concern doubt, lack of revenue, substantial reliance on related-party financing, and critical internal control weaknesses, despite the strategic pivot and land acquisition.

Positives

• Successfully acquired 4 acres of land in Glencoe, Alabama, providing a tangible asset for future development.
• Secured rezoning approval from the City of Glencoe on December 16, 2025, a critical step for the planned multifamily development.
• Raised $82,500 in cash through a private offering of common stock, providing some working capital.
• Net cash used in operating activities significantly decreased to $39,767 for the six months ended January 31, 2026, compared to $415,348 in the prior year.
• The overall net loss for the six months ended January 31, 2026, decreased to $94,244 from $152,784 in the prior year, primarily due to the sale of discontinued operations.

Negatives

• The company incurred a net loss from continuing operations of $94,244 for the six months ended January 31, 2026, and has an accumulated deficit of $4,987,576.
• A working capital deficit of $7,275 as of January 31, 2026, indicates insufficient current assets to cover current liabilities.
• The company currently generates no revenue from continuing operations.
• Significant dependence on related-party financing, including a $350,000 promissory note for land acquisition and advances for operating expenses, which are unsecured and may be withdrawn.
• Disclosure controls and procedures were deemed ineffective due to material weaknesses, including a lack of segregation of duties and insufficient accounting resources.
• The company needs to raise approximately $1,250,000 in equity over the next twelve months to qualify for and support a construction loan, with no current commitments for financing.
• Failure to begin construction on the Glencoe duplex development by October 31, 2026, will trigger an Event of Default on the $350,000 promissory note, potentially requiring immediate repayment or return of the land.

Risks

• **Going Concern Risk:** Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses, accumulated deficit, and dependence on external financing.
• **Financing Risk:** The company's ability to initiate development of the Glencoe project is entirely dependent on securing construction financing and raising an estimated $1,250,000 in additional equity capital, for which there are no current commitments.
• **Default Risk on Promissory Note:** Failure to commence construction on the Glencoe duplex development within one year of October 31, 2025 (i.e., by October 31, 2026) will constitute an Event of Default, potentially leading to the acceleration of the $350,000 promissory note or the requirement to return the land. The company currently lacks resources to repay the note if accelerated.
• **Related-Party Dependence Risk:** Heavy reliance on related-party advances for operating expenses, which are unsecured, lack specified repayment terms, and may be withdrawn at any time, poses significant liquidity risk.
• **Operational Risk (No Revenue):** The company currently generates no revenues from continuing operations, and future revenue generation is uncertain until development activities commence and units are sold or rented.
• **Project-Specific Risk:** Reliance on a single development project (Glencoe) exposes the company to project-specific risks, including construction timelines, costs, contractor availability, material costs, and permitting.
• **Market and Interest Rate Risk:** Potential market, interest rate, and permitting risks could affect the feasibility and timing of construction and the profitability of the project.
• **Internal Control Weaknesses:** Material weaknesses in internal control over financial reporting (lack of segregation of duties, insufficient accounting expertise, reliance on external consultants) increase the risk of material financial misstatements.

Future Outlook

My City Builders intends to advance its multifamily development activities during the year ended July 31, 2026, including securing necessary permits, finalizing construction budgets, engaging additional contractors, and preparing the Glencoe property for site work and vertical construction. Management expects these activities to increase operating expenditures and believes successful execution will lead to future revenue generation through rental income or unit sales, depending on market conditions and financing availability. However, the ability to achieve these goals is highly dependent on securing significant additional financing.

Management Comments

• Management is pursuing a new business strategy focused on the development of multifamily housing on the Glencoe, Alabama property.
• Management expects construction efforts for Phase I to begin prior to July 31, 2026, consistent with the development schedule tied to the land acquisition.
• Management estimates that the Company will require approximately $125,000 over the next twelve months for legal, accounting, audit, and general corporate expenses.
• Management expects that it will need to raise approximately $1,250,000 in equity over the next twelve months in order to qualify for and support a construction loan for the initial phases of development.
• If it is unable to obtain a construction loan or raise additional equity, management does not believe that development of the project can begin.
• Management expects that related parties may continue to provide operational support; however, there is no assurance that such support will continue, and the Company's dependence on related-party funding presents risks to its financial condition and operating strategy.
• Management believes that successful execution of the development plan will result in the Company generating future revenue either through rental income or through sales of completed units, depending on market conditions and financing availability.
• Management has identified several material weaknesses in the Company's internal control over financial reporting, including (i) a lack of segregation of duties due to the limited number of personnel involved in accounting and financial reporting functions, (ii) insufficient accounting resources with appropriate technical expertise in U.S. GAAP and SEC reporting requirements, and (iii) reliance on external consultants to assist with financial reporting and related accounting functions.
• Due to resource constraints, management cannot currently estimate the timeframe for full remediation [of internal control weaknesses].

Industry Context

StockSavvy.ai notes that My City Builders' pivot to multifamily housing development in Glencoe, Alabama, aligns with broader trends in the real estate sector, particularly the demand for affordable housing. However, the company's reliance on a single project and significant external financing needs, especially from related parties, introduces substantial execution risk compared to established developers with diversified portfolios and robust capital structures. The focus on low-income housing could potentially benefit from government incentives or programs, but the filing does not detail such plans.

Comparison to Industry Standards

• My City Builders' current financial position, with an accumulated deficit of $4,987,576 and a working capital deficit of $7,275, is significantly below industry standards for established real estate developers, which typically maintain strong balance sheets and positive working capital to fund projects.
• The company's complete absence of revenue from continuing operations contrasts sharply with revenue-generating peers in the real estate development sector, indicating a very early-stage or transitional business model.
• The reliance on related-party financing for a substantial portion of its asset acquisition ($350,000 promissory note) and operating expenses is not typical for publicly traded companies seeking to establish independent financial viability, unlike larger developers such as Lennar Corporation or D.R. Horton, which access diverse capital markets.
• The identified material weaknesses in internal controls, including lack of segregation of duties and insufficient accounting expertise, fall short of corporate governance best practices and regulatory expectations for public companies, unlike well-resourced industry leaders.
• The requirement to raise $1,250,000 in equity to secure a construction loan, without current commitments, highlights a significant funding gap that would be unusual for a project of this scale in a more mature, well-capitalized development firm.

Management Changes

Corporate Governance

Related Party Transactions

• On July 8, 2025, the company sold 100% of RAC Real Estate Acquisition Corp. to RAC Merger LLC (majority shareholder) for $2,374,896. The majority of the purchase price was satisfied by assigning RAC shares to RAC Merger LLC, while minority shareholders received $35,623.44 cash.
• On October 31, 2025, the company acquired 4 acres of land in Glencoe, Alabama, from RAC Gadsden, LLC (wholly owned by RAC Real Estate Acquisition, Corp., which is wholly owned by RAC Merger LLC) in exchange for a $350,000 secured promissory note.
• The $350,000 promissory note has a 3-year term, 9.5% interest, with principal and interest due on October 30, 2028, and is secured by the acquired land.
• RAC Merger LLC owed the company $34,463 as of January 31, 2026, representing a dividend payable to minority shareholders.
• During the six months ended January 31, 2026, related parties advanced $1,160 by paying operating expenses on behalf of the company.
• During the six months ended January 31, 2026, related parties advanced $10,000 to the company, and the company repaid $30,240 to related parties.
• As of January 31, 2026, the company had $12,890 due to related parties.
• In the prior period (six months ended January 31, 2025), related parties advanced $835,000, and the company settled $1,716,000 due to one related party by issuing 4,290,000 shares of common stock.

Stakeholder Impact

• **Shareholders:** Existing shareholders face significant dilution risk from future equity raises and uncertainty regarding the company's ability to generate future returns given the going concern doubt and lack of current revenue. The Series A Preferred Stock holders have liquidation preference and enhanced voting rights.
• **Creditors (Related Party):** The related-party lender for the $350,000 promissory note has significant leverage, with the ability to accelerate the note or reclaim the land if construction milestones are not met. Other related-party advances are unsecured and due on demand, posing risk to the company's liquidity if withdrawn.
• **Employees:** The company's limited personnel and financial constraints suggest a lean operational structure, with potential for instability if financing is not secured.
• **Customers (Future):** Potential future customers for the Glencoe multifamily units may benefit from the development of low-income housing, assuming the project proceeds as planned.

Next Steps

• Secure necessary permits for the Glencoe multifamily development.
• Finalize construction budgets for the Glencoe project.
• Engage additional contractors for the Glencoe project.
• Prepare the Glencoe property for site work and vertical construction.
• Obtain construction financing for the Glencoe project.
• Raise approximately $1,250,000 in equity over the next twelve months to support the construction loan.
• Remediate identified material weaknesses in internal control over financial reporting.
• Begin construction of the 8-unit multi-family duplex development (Phase I) prior to July 31, 2026, and by October 31, 2026, to avoid default.

Key Dates

Recommendation

The filing presents a highly concerning financial picture for My City Builders, Inc. The company faces substantial doubt about its ability to continue as a going concern, evidenced by recurring losses, a significant accumulated deficit, and a working capital deficit. It generates no revenue from continuing operations and is entirely dependent on securing substantial, uncommitted external financing ($1.25 million in equity) to even begin its sole development project. The risk of default on a $350,000 related-party promissory note, which could lead to the loss of its primary asset, is imminent if construction does not commence by October 31, 2026. Furthermore, severe material weaknesses in internal controls indicate significant governance and operational deficiencies. These factors collectively point to extreme financial instability and high investment risk, making a strong sell recommendation appropriate for any existing holdings.

Keywords

My City Builders, MYCB, real estate development, multifamily housing, Glencoe Alabama, SEC filing, 10-Q, financial reporting, going concern, construction financing, related party transactions, internal controls, equity raise, promissory note, land acquisition, low-income housing