ATYG.OTC.PinkSaxon Capital Group, Inc/de
10-Q: Saxon Capital Group Reports Continued Losses and Going Concern Uncertainty in Q3 2024
Sentiment:
Quarterly Report
Saxon Capital Group reported a net loss of $57,640 for the nine months ended September 30, 2024, and continues to face substantial doubt about its ability to continue as a going concern.
Capital raiseThe company's ability to continue as a going concern is dependent on raising additional debt or equity funding.The company is reliant on advances from its principal shareholders or its directors and officers.The company may face challenges in raising funding due to its status as a penny stock and a blank check company.
Worse than expectedThe company's financial results are worse than expected due to continued losses, lack of revenue, and a growing shareholders' deficit.The company's internal control weaknesses and going concern issues further contribute to the worse than expected results.
Summary
- Saxon Capital Group, a shell company, reported a net loss of $16,710 for the three months ended September 30, 2024, and a net loss of $57,640 for the nine months ended September 30, 2024.
- The company has no revenue-generating activities and is focused on relisting its shares on the Pink Sheets and merging with another entity.
- As of September 30, 2024, the company had no cash and a shareholders' deficit of $397,746.
- The company's ability to continue as a going concern is dependent on raising additional debt or equity funding and successfully merging with another entity.
- The company's financial statements have been prepared on a going concern basis, despite the substantial doubt about its ability to continue as such.
- The company has identified material weaknesses in its internal control over financial reporting.
Sentiment
Score: 2
Explanation: The document paints a very negative picture of the company's financial health and future prospects. The lack of revenue, significant losses, going concern issues, and internal control weaknesses all contribute to a very low sentiment score.
Positives
- General and administrative expenses decreased in both the three and nine month periods compared to the previous year.
- The company's net loss decreased in both the three and nine month periods compared to the previous year.
Negatives
- The company has no revenue-generating activities.
- The company has no cash on hand.
- The company has a significant accumulated deficit of $31,203,495.
- The company has a shareholders' deficit of $397,746.
- The company is dependent on related party funding.
- The company has material weaknesses in its internal control over financial reporting.
- There is substantial doubt about the company's ability to continue as a going concern.
Risks
- The company's ability to continue as a going concern is dependent on raising additional debt or equity funding and successfully merging with another entity.
- There is no guarantee that the company will be successful in relisting on the Pink Sheets or finding a suitable merger candidate.
- Any merger or acquisition is expected to have a significant dilutive effect on the percentage of shares held by current stockholders.
- The company is a penny stock company, which carries inherent risks.
- The company is subject to Rule 419, which makes it difficult to raise funds.
- The company has material weaknesses in its internal control over financial reporting, which could lead to errors in financial statements.
- The company is dependent on its principal shareholder for funding, and there is no guarantee that this funding will continue.
Future Outlook
The company intends to seek approval for its shares to be traded on the Pink Sheets again and then merge with an entity with experienced management and opportunities for growth. The company's ability to continue as a going concern is dependent on raising additional debt or equity funding and successfully merging with another entity.
Management Comments
- Management believes that the conflicts involving Ukraine and Israel do not have any direct impact on our operations, financial condition, or financial reporting.
- Management has concluded that the company's disclosure controls and procedures were not effective as of September 30, 2024, due to material weaknesses and significant deficiencies in internal control over financial reporting.
- Management does not expect that the company's disclosure controls and procedures or internal controls will prevent all error and all fraud.
Industry Context
The company operates as a shell company, which is a common structure for companies seeking to merge with or acquire other businesses. The challenges faced by Saxon Capital Group, such as the lack of revenue and the need for additional funding, are typical for shell companies. The company's plan to relist on the Pink Sheets and merge with another entity is a common strategy for shell companies seeking to create value for shareholders.
Comparison to Industry Standards
- Saxon Capital Group's financial performance is significantly below industry standards for operating companies, as it has no revenue and is incurring losses.
- The company's reliance on related party funding is not uncommon for shell companies, but it highlights the company's financial vulnerability.
- The material weaknesses in internal control over financial reporting are a significant concern and indicate a lack of proper governance and oversight, which is not typical for well-managed public companies.
- The company's lack of cash and significant accumulated deficit are indicative of a company facing severe financial distress, which is not typical for established operating companies.
- The company's plan to merge with another entity is a common strategy for shell companies, but the success of such mergers is highly variable and dependent on the quality of the target company.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Weaknesses | The company identified material weaknesses and significant deficiencies in its internal control over financial reporting, including lack of a functioning audit committee, inadequate segregation of duties, insufficient written policies and procedures, and ineffective controls over period-end financial disclosure and reporting processes. | 2024-09-30 | These weaknesses could lead to errors in the financial statements and a restatement of those financial statements. |
Legal Proceedings
- There are no material pending legal proceedings to which the Company is a party.
Related Party Transactions
- Accruals to related parties totaled $279,000 as of September 30, 2024.
- The company's note payable to a related party was $112,776 as of September 30, 2024.
- The company received $8,270 by way of loan from its chief financial officer, director and controlling shareholder during the nine months ended September 30, 2024.
Stakeholder Impact
- Shareholders face significant risks due to the company's financial instability and the potential for dilution from future capital raises or mergers.
- Employees are not directly impacted as the company has no operations, but their future employment prospects are tied to the company's ability to merge with another entity.
- Customers and suppliers are not directly impacted as the company has no operations.
- Creditors face the risk of non-payment due to the company's financial instability.
Next Steps
- The company intends to seek approval for its shares to be traded on the Pink Sheets again.
- The company intends to seek a merger with an entity with experienced management and opportunities for growth.
Key Dates
| Date | Description |
|---|---|
| 2015-07-27 | 1 share of Series A Preferred Stock and 24,999,999 shares of Series B Preferred Stock were designated. |
| 2021-05-29 | A new share of Series A Preferred Stock was issued to Mr. Cutler, making him the controlling shareholder. |
| 2021-11-10 | The Board of directors recommended, and the holder of a majority of the voting power of our outstanding common stock voted, to approve a reverse split of the common stock issued and outstanding on a one new share for one million (1,000,000) old shares basis as of November 10, 2021, followed by a forward split of the common stock issued and outstanding as of November 10, 2021. |
| 2022-08-30 | Atlas Technology Group, Inc. merged into Saxon Capital Group, Inc. |
| 2022-11-17 | Board of Director approved the cancellation of all 24,999,999 shares of authorized unissued shares of Series B Preferred Stock, increase the number of shares authorized Series A Preferred Stock from 1 to 1,000, forward split each share of issued and outstanding Series A Preferred Stock as of record date November 25, 2022 in the ratio of 1:1,000, and convert 499 post-split shares of Series A Preferred Stock into 9,130,995,911 shares of our common stock. |
| 2022-11-25 | Forward split of Series A Preferred Stock and conversion of 499 shares into common stock. |
| 2024-09-30 | End of the reporting period for the quarterly report. |
| 2024-11-20 | Date of the quarterly report filing. |
Keywords
shell company, merger, acquisition, penny stock, going concern, financial reporting, internal control, related party, Pink Sheets, debt financing, equity financing
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