10-K: UbuyHoldings Inc. Files 10-K Annual Report, Outlines Plans for Business Combination

UbuyHoldings Inc., a dormant company, filed its annual report outlining its intent to acquire an operating business and detailing its current financial status.

Summary

• UbuyHoldings Inc., formerly E-Pawn.Com, Inc., has been dormant since 2001 but is now under new custodianship.
• The company's fiscal year ends on May 31st.
• As of March 7, 2024, the company had 284,367,820 shares of common stock issued and outstanding.
• The company currently has no operations and is seeking a merger or acquisition to generate revenue.
• The company's financial statements for the year ended May 31, 2023, show a net loss of $15,000 and an accumulated deficit of $13,929,458.
• The company has no cash on hand and is reliant on its custodian for funding.
• The company's management intends to explore business opportunities within the U.S., including a potential reverse merger.
• The company anticipates incurring operating losses in the next 12 months, primarily due to SEC reporting obligations.
• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has one employee, David Lazar, who is also the CEO, President, Secretary, CFO, and Chairman of the Board.

Sentiment

Score: 2

Explanation: The sentiment is very negative due to the company's lack of operations, significant accumulated deficit, going concern warning, and reliance on a single individual. The company is essentially a shell with significant risks and uncertainties.

Positives

• The company has a new custodian and management team in place.
• The company is actively seeking a business combination to generate revenue.
• The company's CEO has experience in business consulting and public company management.
• The company is exploring various business opportunities, including a potential reverse merger.

Negatives

• The company has no current operations and has been dormant for an extended period.
• The company has a significant accumulated deficit of $13,929,458.
• The company has no cash on hand and is reliant on related party loans.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has limited capital and may need to raise additional funds.
• The company's internal controls are not effective due to limited resources and lack of segregation of duties.
• The company has only one employee, who is also the sole officer and director.

Risks

• The company's future prospects are uncertain due to its lack of operations.
• The company may not be able to complete a business combination in a reasonable timeframe or at all.
• The company may face difficulties in identifying a viable business opportunity.
• The company may not have access to sufficient capital to consummate a business combination.
• The company's stock price may be volatile due to limited trading volume.
• The company's management has limited experience in some industries.
• The company may be affected by numerous risks inherent in the operations of any business it acquires.
• The company's lack of diversification may expose it to risks associated with dependence on a single industry or region.
• The company's internal controls are not effective, which could lead to misstatements in financial reporting.
• The company's reliance on a single individual for all key roles poses a risk.

Future Outlook

The company intends to explore and identify viable business opportunities within the U.S., including seeking to acquire a business in a reverse merger. The company anticipates incurring operating losses in the next 12 months, principally costs related to its being obligated to file reports with the S.E.C.

Management Comments

• 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.
• 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.
• Management believes that there are a number of firms seeking business opportunities at this time at discounted rates with which we will compete.

Industry Context

This announcement reflects a trend of dormant or distressed companies seeking to revitalize through mergers or acquisitions, often involving reverse mergers with private entities. The company's strategy is not unique, as many microcap companies explore similar paths to gain access to capital markets and generate revenue.

Comparison to Industry Standards

• The company's financial situation is significantly weaker than most public companies, as it has no revenue, a substantial accumulated deficit, and no cash on hand.
• The company's reliance on a single individual for all key roles is not typical for public companies and indicates a lack of corporate governance structure.
• The company's lack of operations and reliance on a future business combination is similar to a blank check company or special purpose acquisition company (SPAC), but without the initial capital raise.
• The company's auditor's going concern opinion is a significant red flag, indicating a high risk of failure.
• The company's internal control weaknesses are not uncommon for small, early-stage companies, but they need to be addressed to ensure reliable financial reporting.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently involved in any legal proceedings and is not aware of any pending or potential legal actions.

Related Party Transactions

• As of May 31, 2023, Custodian Ventures, the company's Custodian, had advanced $5,000 in the form of an interest-free demand loan.
• On December 6, 2023, the Company awarded Custodian Ventures 55,000,000 Class A Preferred Stock and 10,000,000 shares of newly designated Series A-1 Preferred Stock for services performed and to cancel all advances made by the Custodian to the Company.

Stakeholder Impact

• Shareholders face a high risk of losing their investment due to the company's financial condition and uncertainties.
• Employees are limited to one individual, David Lazar, who is also the sole officer and director.
• Customers and suppliers are not currently impacted as the company has no operations.
• Creditors face a high risk of non-payment due to the company's financial condition and going concern warning.

Next Steps

• The company will continue to explore and identify viable business opportunities within the U.S.
• The company will seek to acquire a business through a reverse merger, asset purchase, or similar transaction.
• The company will need to raise additional capital to fund its operations and any potential acquisition.
• The company will need to implement an independent board of directors and establish written policies and procedures for internal control of financial reporting.

Key Dates

Keywords

business combination, reverse merger, acquisition, custodianship, dormant company, financial statements, SEC reporting, going concern, David Lazar, operating losses