Company Quick10K Filing
Quick10K
Reliant Holdings
10-Q 2019-03-31 Quarter: 2019-03-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
8-K 2018-12-03 Other Events, Exhibits
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CRY Cryolife 1,170
VCYT Veracyte 942
CPSI Computer Programs & Systems 405
STKL Sunopta 369
LOGC LogicBio Therapeutics 317
GMO General Moly 24
SSY Sunlink Health Systems 11
XREE X Rail Entertainment 0
RHIS 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1. The Company and Summary of Significant Accounting Policies
Note 2. Accounts Receivable
Note 3. Contracts in Process
Note 4. Concentration of Risk
Note 5. Equity
Note 6. Commitments and Contingencies
Note 7. Related Party Transactions
Note 8. Note Payable
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information.
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-32.1 ex32-1.htm

Reliant Holdings Earnings 2019-03-31

RHIS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rhi-10q_033119.htm QUARTERLY REPORT

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal quarter ended March 31, 2019

 

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM _____________ TO _____________

 

Commission File Number 000-56012

 

RELIANT HOLDINGS, INC.

 (Exact name of registrant as specified in its charter)  

 

Nevada 47-2200506
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  
   

12343 Hymeadow Drive, Suite 3-A 

Austin, Texas 

78750
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (512) 407-2623

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   No     

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes   No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer   Accelerated filer  
Non-accelerated filer  Smaller reporting company  
Emerging growth    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes    No   

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading symbol(s) Name of each exchange on which registered
Common stock

 

 

State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 14,585,000 shares of common stock are issued and outstanding as of May 10, 2019.

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
PART I – FINANCIAL INFORMATION    
     
Item 1. Financial Statements  
       
  Consolidated Balance Sheets (unaudited)  
       
  Consolidated Statements of Operations (unaudited)  
       
  Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited)  
       
  Consolidated Statements of Cash Flows (unaudited)  
       
  Notes to Consolidated Financial Statements (unaudited)  
       
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations   10 
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   17 
       
Item 4. Controls and Procedures   17 
     
PART II – OTHER INFORMATION    
     
Item 1. Legal Proceedings   19 
       
Item 1A. Risk Factors   19 
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   19 
       
Item 3. Defaults Upon Senior Securities   20 
       
Item 4. Mine Safety Disclosures   20 
       
Item 5. Other Information   20 
       
Item 6. Exhibits   20 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements 

 

Reliant Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
         
   March 31,   December 31, 
   2019   2018 
ASSETS          
Current Assets          
Cash  $176,593   $181,093 
Federal income tax receivable   10,000    10,000 
Prepaid and other current assets   4,697    1,500 
Contract assets       9,776 
           
Total current assets   191,290    202,369 
           
Equipment, net of accumulated depreciation of $22,506 and $20,812 at March 31, 2019 and December 31, 2018, respectively   12,420    14,114 
           
Total Assets  $203,710   $216,483 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current Liabilities          
Accounts payable and accrued liabilities  $75,070   $56,859 
Contract liabilities   54,140    89,991 
Current portion of note payable   6,055    5,992 
Due to related party   5,000    5,000 
           
Total current liabilities   140,265    157,842 
           
Long-term note payable, net of current portion   5,720    7,256 
           
Total Liabilities   145,985    165,098 
           
Commitments          
           
Stockholders’ Equity          
Common stock, 70,000,000 shares authorized, $0.001 par value, 14,585,000 issued and outstanding as of March 31, 2019 and December 31, 2018   14,585    14,585 
Additional paid-in capital   43,365    43,365 
Accumulated deficit   (225)   (6,565)
           
Total Stockholders’ Equity   57,725    51,385 
           
Total Liabilities and Stockholders’ Equity  $203,710   $216,483 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

   

1

 

 

Reliant Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
         
   For the Three Months Ended 
   March 31, 
   2019   2018 
Revenue  $359,213   $229,514 
Cost of goods sold   (230,046)   (157,873)
Gross Margin   129,167    71,641 
           
Operating Expenses          
General and administrative   122,711    81,161 
           
Total Operating Expenses   (122,711)   (81,161)
           
Income (Loss) From Operations   6,456    (9,520)
           
Other income / (expense)          
Interest income   22    6 
Interest expense   (138)   (201)
           
Total other income (expense)   (116)   (195)
           
Income (Loss) before income taxes   6,340    (9,715)
           
Provision for Income Tax        
           
Net Income (Loss)  $6,340   $(9,715)
           
Net Income (Loss) Per Share - Basic and Diluted  $0.00   $0.00
           
Weighted Average Common Shares Outstanding   14,585,000    14,585,000 

                 

The accompanying notes are an integral part of these unaudited consolidated financial statements.  

                 

2

 

 

Reliant Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (Deficit)

For the three months ended March 31, 2019 and 2018 

(Unaudited) 

                             
                             
   Preferred Stock   Common Stock   Additional Paid in   Accumulated     
   Shares   Par Value   Shares   Par Value   Capital   Deficit   Total 
Balance December 31, 2018      $    14,585,000   $14,585   $43,365   $(6,565)  $51,385 
                                    
Net income                       6,340    6,340 
Balance March 31, 2019      $    14,585,000   $14,585   $43,365   $(225)  $57,725 
                                    
Balance December 31, 2017      $    14,585,000   $14,585   $43,365   $(94,843)  $(36,893)
                                    
Net income                       (9,715)   (9,715)
Balance March 31, 2018      $    14,585,000   $14,585   $43,365   $(104,558)  $(46,608)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

                                                         

3

 

 

Reliant Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
         
   For the Three Months Ended 
   March 31, 
   2019   2018 
Operating Activities          
Net income (loss)  $6,340   $(9,715)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   1,694    1,694 
Note receivable related party converted to compensation        
Changes in operating assets and liabilities:          
Accounts Receivable       200 
Prepaid and other current assets   (3,197)    
Contract assets   9,776    15,088 
Contract liabilities   (35,851)   52,445 
Accounts payable and accrued liabilities   18,211    27,848 
Net Cash Provided By (Used In) Operating Activities   (3,027)   87,560 
           
Financing Activities          
Payments on note payable   (1,473)   (1,411)
Net Cash Used In Financing Activities   (1,473)   (1,411)
           
Net change in Cash   (4,500)   86,149 
Cash - Beginning of Period   181,093    18,252 
Cash - End of Period  $176,593   $104,401 
           
Supplemental Disclosures          
Interest paid  $138   $956 
Income taxes paid  $   $ 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

                 

4

 

 

Reliant Holdings, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

 

Note 1. The Company and Summary of Significant Accounting Policies

 

The Company

 

Reliant Holdings, Inc. (the “Company”) was formed as a Nevada corporation on May 19, 2014. On May 23, 2014, Reliant Holdings, Inc., along with Reliant Pools, Inc., formerly Reliant Pools, G.P., which was formed in September 2013 (“Reliant Pools”) and the shareholders of Reliant Pools, entered into an Agreement for the Exchange of common stock whereby Reliant Pools, Inc. became a wholly-owned subsidiary of Reliant Holdings, Inc. Reliant Holdings, Inc. designs, and installs swimming pools. On October 10, 2018, the Company incorporated a new wholly-owned subsidiary in Texas, Reliant Custom Homes, Inc. The Company is headquartered in Austin, Texas.

 

Basis of Presentation

 

The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

 

The consolidated financial statements and related disclosures as of March 31, 2019 are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, these unaudited financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2018 and 2017 included in our Annual Report on Form 10-K, filed with the SEC. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year.

 

New Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public entity financial statements for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. ASU 2016-02 was further clarified and amended within ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20 which included provisions that would provide us with the option to adopt the provisions of the new guidance using a modified retrospective transition approach, without adjusting the comparative periods presented. We adopted the new standard on January 1, 2019 and used the effective date as our date of initial application under the modified retrospective approach. We elected the short-term lease recognition exemption for all of our leases that qualify. This means, for those leases we will not recognize right-of-use (RoU) assets or lease liabilities. The implementation of this new standard has no impact on our financial statements.

 

5

 

 

Note 2. Accounts Receivable

 

Accounts receivable consisted of the following:        
   March 31,   December 31, 
   2019   2018 
Contract receivables  $3,000   $3,000 
Less: Allowance for doubtful accounts
   (3,000)   (3,000)
   $   $ 

 

The Company recognized bad debt expense of $0 and $0 respectively, during the three months ended March 31, 2019 and 2018.

 

Note 3. Contracts in Process

 

The net asset (liability) position for contracts in process consisted of the following:

 

   March 31,   December 31, 
   2019   2018 
Costs on uncompleted contracts  $78,509   $169,683 
Estimated earnings   38,668    76,486 
    117,177    246,169 
Less: Progress billings   171,317    326,384 
   $(54,140)  $(80,215)

 

The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as follows:

 

  

March 31,
2019

  

December 31,

2018

 
Costs and estimated earnings in excess of billings on uncompleted contracts  $   $9,776 
Billings in excess of costs and estimated earnings on uncompleted contracts   54,140    (89,991)
   $(54,140)  $(80,215)

 

Note 4. Concentration of Risk

 

The Company had gross revenue of $359,213 and $229,514 for the three months ended March 31, 2019 and 2018, respectively. The Company had four customers representing more than 10% of gross revenue, and combined 89% of revenue for the three months ended March 31, 2019. The Company had three customers representing more than 10% of gross revenue, and combined 96% of revenue for the three months ended March 31, 2018.

 

Note 5. Equity

 

From January 2016 to September 2016, the Company sold 885,000 shares of restricted common stock for $44,250, or $0.05 per share in a private offering pursuant to a private placement memorandum. Purchasers in the offering included Lilia Chavez, the mother of Michael Chavez, the Company’s then President and then sole director (10,000 shares for $500), Alexander Spohn, the adult son of Becky Spohn, the Company’s then Controller (5,000 shares for $250), and Phyllis Laws, the mother of Becky Spohn, the Company’s then Controller (5,000 shares for $250).

 

6

 

 

In September 2016, the Company discovered that the investors in the January 2016 to September 2016 offering may not have been provided all of the information and materials (including current audited financial statements), as is required under the Securities Act in order to claim an exemption from registration pursuant to Rule 506 of the Securities Act. The Company believes that all such transactions still complied with, and were exempt from registration under Section 4(a)(2) of the Securities Act because the recipients acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof; the securities were offered without any general solicitation by the Company or the Company’s representatives; no underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions; the securities sold are subject to transfer restrictions, and the certificates evidencing the securities (or book entry issuances) contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom; and the securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

 

Nevertheless, based on the above, the Company offered the January 2016 to September 2016 purchasers of the Company’s common stock the right to rescind their previous common stock acquisitions and receive, in exchange for any shares relinquished to the Company, a payment equal to their original purchase price plus interest at the applicable statutory rate in the state in which they reside. The rescission offer expired at 5:00 pm (CST) on October 26, 2016. None of the prior purchasers opted to rescind their prior purchases in connection with the rescission offer.

 

During the first quarter of fiscal 2017, the Company learned that Michael Chavez, the former President and former sole director, was barred from association with any FINRA member in any capability. Mr. Chavez similarly became aware of the FINRA bar at the same time. Pursuant to Rule 506(d), Rule 506 of the Securities Act, is not available for a sale of securities if among other persons, any director or executive officer of an issuer has been subject to certain disqualifying events after September 23, 2013, including suspension or expulsion from membership in a self-regulatory organization (SRO), such as FINRA. However, in the event the disqualifying event occurred prior to September 23, 2013, the issuer is not prohibited from relying on Rule 506, provided that pursuant to Rule 506(e) of the Securities Act, an issuer is required to furnish to each purchaser, a reasonable time prior to sale, a description in writing of any matters that would have triggered disqualification under Rule 506(d)(1), but occurred before September 23, 2013.

 

As Mr. Chavez’s FINRA bar constituted a disqualifying event under Rule 506(d), the Company was required to furnish to each purchaser of shares of the Company, a reasonable time prior to sale, a description in writing of such event. The Company did not do that, because as described above, the Company and Mr. Chavez only became aware of the FINRA bar after the close of the offering. Notwithstanding the fact that the Company was not aware of Mr. Chavez’s FINRA bar, the Company determined that the failure to provide such information may prohibit the Company from relying on a Rule 506 exemption for the prior issuances and sales of shares. The Company believes that all such transactions still complied with, and were exempt from registration under Section 4(a)(2) of the Securities Act, because the recipients acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof; the securities were offered without any general solicitation by us or the Company’s representatives; no underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions, the securities sold/issued were subject to transfer restrictions, and the certificates evidencing the securities (or book entry issuances) contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom; and the securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

 

7

 

 

Nevertheless, management determined that the Company would offer rescission to all of its stockholders in April 2017. In connection therewith, in April 2017, the Company offered every stockholder of the Company’s common stock the right to rescind their previous purchases and acquisitions and to receive, in exchange for any shares relinquished to us, a payment equal to their original purchase price or consideration provided, plus interest at the applicable statutory rate in the state in which they reside. The rescission offer expired at 5:00 pm (CST) on April 29, 2017. None of the Company’s stockholders opted to rescind their prior purchase/acquisitions in connection with the rescission offer.

 

The federal securities laws and certain state securities laws do not expressly provide that a rescission offer will terminate a purchaser’s right to rescind a sale of securities that was not registered under the relevant securities laws as required. Accordingly, the Company may continue to be potentially liable under certain securities laws for the offer and sale of the shares sold and issued between May 2014 and September 2016, totaling $57,950 of securities in aggregate, along with statutory interest on such shares, even after the Company completed the rescission offers.

 

This amount is recorded in equity in the accompanying March 31, 2019 and December 31, 2018 balance sheets. This will be evaluated at each reporting period for reclassification to a liability if a rescission request is made.

 

Effective on November 3, 2017, Michael Chavez, the Company’s former sole director, Chief Executive Officer and President of the Company, entered into a Voting Agreement with Elijah May, the Company’s then Chief Operating Officer (COO), and current sole director, Chief Executive Officer and President as well as the Company’s COO (the “Voting Agreement”), resulting in a change in control of the Company.

 

Pursuant to the Voting Agreement, Mr. Chavez provided complete authority to Mr. May to vote the 4,000,000 shares of common stock which Mr. Chavez then held (and any other securities of the Company obtained by Mr. Chavez in the future) at any and all meetings of stockholders of the Company and via any written consents. Those 4,000,000 shares represented 27.4% of the Company’s common stock as of the parties’ entry into the Voting Agreement and together with the 4,500,000 shares held by Mr. May prior to the parties’ entry into the Voting Agreement, constitute 58.3% of the Company’s total outstanding shares of common stock. The Voting Agreement has a term of ten years, through November 3, 2027, but can be terminated at any time by Mr. May and terminates automatically upon the death of Mr. May. In connection with his entry into the Voting Agreement, Mr. Chavez provided Mr. May an irrevocable voting proxy to vote the shares covered by the Voting Agreement. Additionally, during the term of such agreement, Mr. Chavez agreed not to transfer the shares covered by the Voting Agreement except pursuant to certain limited exceptions. Due to the Voting Agreement, Mr. May holds voting control over the Company due to his ability to vote 58.3% of the Company’s total outstanding shares of voting stock.

 

Effective on November 3, 2017, the Board of Directors of the Company and the Board of Directors of Reliant Pools Inc., the Company’s wholly-owned subsidiary, each then consisting solely of Mr. Chavez, increased the number of members of the Board of Directors of each company from one to two and appointed Mr. May as a member of the Board of Directors of each company to fill the vacancy created by such vacancy.

 

Note 6. Commitments and Contingencies

 

The Company leases approximately 1,000 square feet of office space in Austin, Texas. The lease was to expire in September 2017 with a monthly rent of $1,695. On September 5, 2017 and effective on September 30, 2017, the Company extended its office space lease from October 1, 2017 to September 30, 2018. In connection with the extension, the Company agreed to a rental increase to $1,745 per month. On October 15, 2018, the Company extended the office space lease from October 1, 2018 through September 30, 2019 for a rental rate of $1,795 per month.

 

Lease expense was $5,715 and $5,565 for the three months ended March 31, 2019 and 2018, respectively.

 

8

 

 

On October 19, 2018, a former client, Paul T. Denucci filed an Original Petition naming the Company, Elijah May, our sole officer and director and Michael Chavez, our prior Chief Executive Officer and former sole director, as defendants. The Original Petition was originally filed in Williamson County, Texas, provided the proceeding was subsequently moved to the County Court of Travis County, Texas (County Court 2 – Cause No. C-1-CV-18-011465). The Original Petition alleged breach of contract and alleged defects in the pool which the Company built on Mr. Denucci’s behalf. The Original Petition seeks damages in an amount sufficient to allow Mr. Denucci to repair the alleged defects in the pool. We deny Mr. Denucci’s claims and intend to vigorously defend ourselves and our current and former officers against such claims. We are currently in the process of drafting responses to the allegations in the Original Petition.

 

On December 21, 2018, a former client, Brian Moats filed an Original Petition naming Reliant Pools as a defendant in a suit filed in the County Court at Law No. 2 for Travis County, Texas (Cause No. C-1-CV-18-012062). The suit alleges that the Company failed to install a French drain under the pool as required by the terms of the contract, alleges causes of action of breach of express warranty and breach of contract and seeks damages of between $100,000 and $200,000. We deny Mr. Moats’ claims and intend to vigorously defend ourselves against such claims.

 

Note 7. Related Party Transactions

 

As of March 31, 2019 and December 31, 2018, Mr. Chavez was owed $5,000 from the Company. The advance is due on demand, unsecured and has no stated interest rate.

 

Note 8. Note Payable

 

   March 31,
2019
   December 31,
2018
 
Term note with a bank secured by truck, payable in monthly installments of $537, including interest at 4.35% through February 11, 2021  $11,775   $13,248 
Total long-term debt   11,775    13,248 
Less: current portion   (6,055)   (5,992)
Long-term debt net of current portion  $5,720   $7,256 

 

9

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:

 

  the need for additional funding;
  our lack of a significant operating history;
  the fact that our sole officer and director has significant control over our voting stock;
  the loss of key personnel or failure to attract, integrate and retain additional personnel;
  corporate governance risks;
  economic downturns;
  the level of competition in our industry and our ability to compete;
  our ability to respond to changes in our industry;
  our ability to protect our intellectual property and not infringe on others’ intellectual property;
  our ability to scale our business;
  our ability to maintain supplier relationships;
  our ability to obtain and retain customers;
  our ability to execute our business strategy in a very competitive environment;
  trends in and the market for recreational pools and services;
  lack of insurance policies;
  dependence on a small number of customers;
  changes in laws and regulations;
  the market for our common stock;
  our ability to effectively manage our growth;
  dilution to existing stockholders;
  costs and expenses associated with being a public company;
  economic downturns both in the United States and globally;
  risk of increased regulation of our operations; and
  other risk factors included under “Risk Factors” below and in our latest Annual Report on Form 10-K.

 

You should read the matters described and incorporated by reference in “Risk Factors” and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

 

This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on April 1, 2019 (the “Annual Report”). 

 

10

 

 

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our consolidated financial statements included above under “Part I - Financial Information” – “Item 1. Financial Statements”.

 

In this Quarterly Report on Form 10-Q, we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information.  Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.

 

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Reliant”, “Reliant Holdings” and “Reliant Holdings, Inc.” refer specifically to Reliant Holdings, Inc. and its consolidated subsidiary.

 

In addition, unless the context otherwise requires and for the purposes of this Report only:     

 

  Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
     
  SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and
     
  Securities Act” refers to the Securities Act of 1933, as amended.

 

Where You Can Find Other Information

 

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at http://www.sec.gov. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. Our website address is www.reliantholdingsinc.com. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.

 

Corporate Information

 

Our principal executive offices are located at 12343 Hymeadow Drive, Suite 3-A, Austin, Texas 78750, and our telephone number is (512) 407-2623. Our website address is www.reliantholdingsinc.com. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.

 

Organizational History

 

We were formed as a Nevada corporation on May 19, 2014.

 

On May 23, 2014, we, along with Reliant Pools, Inc. (“Reliant Pools”) and the stockholders of Reliant Pools, entered into an Agreement for the Exchange of Common Stock (the “Exchange Agreement”). Pursuant to the Exchange Agreement, the stockholders of Reliant Pools exchanged 2.1 million shares of common stock, representing 100% of the outstanding common stock of Reliant Pools, for 2.1 million shares of our common stock (the “Exchange”). As a result of the Exchange, Reliant Pools became our wholly-owned subsidiary. The President of Reliant Pools, and its largest stockholder at the time of the Exchange was Michael Chavez, our then President, then Chief Executive Officer and then sole director. The following shares of restricted common stock were issued in connection with the Exchange: 900,000 shares of common stock to Michael Chavez, our then President, then Chief Executive Officer and then sole director; 750,000 shares of common stock to Elijah May, our current Chief Executive Officer and sole director; and 450,000 shares of common stock to Becky Spohn, our former Controller.

 

11

 

 

Reliant Pools was originally formed as a Texas General Partnership (Reliant Pools, G.P.) in September 2013, and was owned by Mr. Chavez, Mr. May, Ms. Spohn, and a third party, who subsequently was unable to perform the services required for him to vest his interest, which interest was subsequently terminated, leaving Mr. Chavez, Mr. May and Ms. Spohn as the sole owners of Reliant Pools, G.P. In May 2014, Reliant Pools, G.P. was converted from a Texas General Partnership to a Nevada corporation, Reliant Pools, Inc., with the same ownership as described above at the time of the Exchange. On October 10, 2018, the Company incorporated a new wholly-owned subsidiary in Texas, Reliant Custom Homes, Inc. The Company is exploring opportunities to expand operations in the Austin, Texas area as a custom home builder. To date, the Company has engaged a consultant in connection with custom home builder services, but as of the date of this filing the Company has no planned start date for such services.

 

Description of Business Operations

 

We, through our wholly-owned subsidiary, Reliant Pools (which has been in operation since September 2013), are an award winning, custom, swimming pool construction company located in the greater Austin, Texas market. In the future we also plan to offer residential swimming pool maintenance services. We assist customers with the design of, and then construct, recreational pools which blend in with the surroundings, geometric pools which complement the home’s architecture and water features (e.g., waterfalls and negative edge pools) which provide the relaxing sounds of moving water. We won four Association of Pool & Spa Professionals (ARSP) Region 3 Design Awards for our designs in 2016 and one award in 2017. Moving forward, we plan on expanding our operations through an accretive business model in which we plan to acquire competitors in both the custom pool construction and pool maintenance/service industries locally, regionally, and nationally.

 

To date, the majority of our growth has been through referral business. We offer a wide variety of pool projects based upon price and the desires of the client. When our sales personnel meet with a prospective customer, we provide them with an array of projects from the basic pool building to more high-end projects that may include waterfalls, mason work, backyard lighting and in-ground spas to highlight the outdoor living experience.

 

Plan of Operations

 

We had working capital of $51,025 as of March 31, 2019. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we do not anticipate the need for additional funding in order to continue our operations at their current levels, and to pay the costs associated with being a public company, for the next 12 months. We may require additional funding in the future to expand or complete acquisitions. The sources of this capital are expected to be equity investments and notes payable. Our plan for the next twelve months is to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand our operations organically or through acquisitions as funding and opportunities arise. As our business continues to grow, customer feedback will be integral in making small adjustments to improve the product and overall customer experience. In the event we require additional funding, we plan to raise that through the sale of debt or equity, in a public or private offering, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. We may also use stock as consideration for acquisitions in the future, which may cause dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues. 

 

RESULTS OF OPERATIONS

 

For the Three Months Ended March 31, 2019 Compared to the Three Months Ended March 31, 2018

 

We had revenue of $359,213 for the three months ended March 31, 2019, compared to revenue of $229,514 for the three months ended March 31, 2018, an increase of $129,699 or 57% from the prior period. Revenue increased mainly due to larger pools being completed during the current period compared to the prior period. We completed 3 pools during the three months ended March 31, 2019 compared to completing 1 pool and 2 remodels during the three months ended March 31, 2018.  We recognize revenue based on the percentage that a job is complete rather than upon completion. As such total revenue recognized for each period may be different than the product of total completed pools during each period multiplied by the average pool contract price of each pool during such period, as the construction of certain pools may have started in one period and ended in another.

 

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We had cost of goods sold of $230,046 for the three months ended March 31, 2019, compared to cost of goods sold of $157,873 for the three months ended March 31, 2018, an increase of $72,173 or 46% from the prior period, mainly due to the increase in revenues.

 

Cost of goods sold increased mainly due to the number of pools completed combined with the increase in steel cost. The expenses which attributed to the increase in cost of goods sold for the three months ended March 31, 2019, compared to the three months ended March 31, 2018, included: 

 

Cost of Goods Sold Expense  For the
Three
Months
Ended
March 31,
2019
   For the
Three
Months
Ended
March 31,
2018
   Increase /
(Decrease)
   Percentage
Change
 
Cost of decking  $54,358   $13,966   $40,392    289%
Plaster used in the construction of pools   21,151    4,941    16,210    328%
Gunite used in the construction of pools   16,311    28,968    (12,657)   (44)%
Pool equipment used to filter and circulate the water used in our pools   31,220    43,281    (12,061)   (28)%
Masonry, stone and tile installed in and around our pools and coping expenses associated therewith   37,456    24,986    12,470    50%
Excavation and steel expenses   19,408    21,477    (2,069)   (10)%
Other, including labor   50,142    20,254    29,888    148%
Total  $230,046   $157,873   $72,173    46%

 

Cost of goods sold represent our pool construction costs, including raw materials, outsourced labor, installed equipment, tile and coping expenses, excavation costs and permit expenses. We anticipate our cost of goods sold increasing in approximate proportion to increases in revenue and decreasing in approximate proportion to decreases in revenue, moving forward, as our cost of goods sold are factored into the price we charge for our pools and represent the cost of pool construction, the majority of which is not fixed and varies depending on the total number of pools and construction projects we complete during each period and the size and complexity of such projects. Labor costs associated with the cost of labor used in construction of pools increased due to the general timing of plumbing and electrical services.

 

We had a gross margin of $129,167 for the three months ended March 31, 2019, compared to a gross margin of $71,641 for the three months ended March 31, 2018, an increase of $57,526 or 80% from the prior period due to the reasons described above. Gross margin as a percentage of revenue increased to 36% for the three months ended March 31, 2019, compared to 31% for the three months ended March 31, 2018. The increase in gross margin as a percentage of revenue was mainly due to the sale of more complex pools which result in an improved gross margin. 

 

We had operating expenses consisting solely of general and administrative expenses of $122,711 for the three months ended March 31, 2019, compared to operating expenses consisting solely of general and administrative expenses of $81,161 for the three months ended March 31, 2018. Operating expenses increased $41,550 or 51% from the prior period mainly due to increases in wages and professional fees. General and administrative expenses include the salaries of our employees, commissions and the fees paid to contract employees.

 

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We had interest income of $22 for the three months ended March 31, 2019, compared to interest income of $6 for the three months ended March 31, 2018. Interest income was in connection with interest generated by funds the Company maintained in its savings account.

 

We had interest expense of $138 and $201, for the three months ended March 31, 2019 and 2018, respectively, due to interest paid in connection with the purchase of a truck used in our business, as described in greater detail under “Liquidity and Capital Resources” below.

 

We had net income of $6,340 for the three months ended March 31, 2019, compared to a net loss of $9,715 for the three months ended March 31, 2018, an increase of $16,055 or 165%, mainly due to the decrease in general and administrative expenses and the increase in revenues, offset by the increase in cost of goods sold, each as described above.

 

Liquidity and Capital Resources

 

We had total assets of $203,710 as of March 31, 2019, consisting of total current assets of $191,290, which included cash of $176,593, federal income tax receivable of $10,000, $4,697 of prepaid and other current assets, and equipment, net of accumulated depreciation of $12,420. Federal income tax receivable relates to a $10,000 payment made by the Company to the United States Treasury in March 2016, in anticipation of Federal income tax the Company estimated would be owed at the end of the 2016 calendar year. There was no tax due for the three months ended March 31, 2019, due to the utilization of a net loss carryforward. The Company currently estimates that it will not owe regular federal income tax for the year ended December 31, 2019 and has recorded the payment as an asset as of March 31, 2019.

 

We had total liabilities of $145,985 as of March 31, 2019, which included total current liabilities of $140,265, consisting of accounts payable and accrued liabilities of $75,070, contract liabilities, relating to billings in excess of costs and estimated earnings on uncompleted jobs of $54,140, current portion of long-term note payable of $6,055 and $5,000 of related party advances relating to amounts advanced to the Company by Michael Chavez, the Company’s former Chief Executive Officer, which amount is due on demand, unsecured and has no stated interest rate, and long-term liabilities consisting of long-term note payable of $5,720, representing amounts owed in connection with the purchase of a truck used in our business. 

 

We had working capital of $51,025 as of March 31, 2019, compared to working capital of $44,527 as of December 31, 2018.

 

We had $3,027 of net cash used in operating activities for the three months ended March 31, 2019, which was mainly due to a decrease in contract liabilities of $35,851 and an increase in prepaid and other current assets of $3,197, offset by $6,340 of net income, an increase of $18,211 of accounts payable and accrued liabilities and a decrease of $9,776 in contract assets.

 

We had $1,473 of net cash used in financing activities for the three months ended March 31, 2019, which was due to payments on note payable.

 

As of March 31, 2019, we owed $6,055 in current portion of, and $5,720 of long-term portion of, note payable, in connection with our purchase of a Ford F-150 truck for work purposes. The note payable accrues interest at the rate of 4.35% per annum and requires that we pay $537 per month until February 2021.

 

We do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority stockholders. Additional financing may not be available on favorable terms, if at all.

 

In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.

 

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 Critical Accounting Policies:

 

Emerging Growth CompanySection 107 of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

Revenue Recognition

 

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“new revenue standard”) to all contracts using the modified retrospective method. The adoption of the new revenue standard had no material impact on our consolidated financial statements as it did not require a change in revenue recognition. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.  

 

Performance Obligations

 

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.

 

Performance Obligations Satisfied Over Time

 

Revenue for our contracts that satisfy the criteria for over time recognition is recognized as the work progresses. The majority of our revenue is derived from construction contracts and projects that typically span between 4 to 12 months. Our construction contracts will continue to be recognized over time because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. Contract costs include labor, material, and indirect costs.

 

Performance Obligations Satisfied at a Point in Time

 

Revenue for our contracts that do not satisfy the criteria for over time recognition is recognized at a point in time. Substantially all of our revenue recognized at a point in time is for work performed for pool maintenance or repairs. Unlike our construction contracts that use a cost-to-cost input measure for performance, the pool maintenance or repairs utilize an output measure for performance based on the completion of a unit of work. The typical time frame for completion of these services is less than one month. Upon fulfillment of the performance obligation, the customer is provided an invoice (or equivalent) demonstrating transfer of control or completion of service to the customer. We believe that point in time recognition remains appropriate for these contracts and will continue to recognize revenues upon completion of the performance obligation and issuance of an invoice.

 

Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.

 

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Backlog

 

On March 31, 2019, we had approximately $336,000 of remaining performance obligations on our construction contracts, which we also refer to as backlog. We expect to recognize our backlog as revenue during 2019.

 

Contract Estimates

 

Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.

 

Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors.   

 

Variable Consideration

 

Transaction price for our contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. We estimate variable consideration for a performance obligation at the most likely amount to which we expect to be entitled (or the most likely amount we expect to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the case of liquidated damages). We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in our favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. No adjustment on any one contract was material to our consolidated financial statements for the three months ended March 31, 2019.  

 

Contract Balances

 

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the consolidated balance sheet. On our construction contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs prior to revenue recognition, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. 

 

The Company recognizes revenue from the design and installation of swimming pools.

 

Accounts Receivable and Allowances. The Company does not charge interest to its customers and carries its customers’ receivables at their face amounts, less an allowance for doubtful accounts. Included in accounts receivable are balances billed to customers pursuant to retainage provisions in certain contracts that are due upon completion of the contract and acceptance by the customer, or earlier as provided by the contract. Based on the Company’s experience in recent years, the majority of customer balances at each balance sheet date are collected within twelve months. As is common practice in the industry, the Company classifies all accounts receivable, including retainage, as current assets. The contracting cycle for certain long-term contracts may extend beyond one year, and accordingly, collection of retainage on those contracts may extend beyond one year.

 

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The Company grants trade credit, on a non-collateralized basis (with the exception of lien rights against the property in certain cases), to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Company analyzes specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible, the account balance is written-off against the allowance for doubtful accounts.

 

Classification of Construction Contract-related Assets and Liabilities. Costs and estimated earnings in excess of billings on uncompleted contracts are presented as a current asset in the accompanying consolidated balance sheets, and billings in excess of costs and estimated earnings on uncompleted contracts are presented as a current liability in the accompanying consolidated balance sheets. The Company’s contracts vary in duration, with the duration of some larger contracts exceeding one year. Consistent with industry practices, the Company includes the amounts realizable and payable under contracts, which may extend beyond one year, in current assets and current liabilities. The vast majority of these balances are settled within one year.

 

Equipment. Equipment, consisting mainly of a truck, is stated at cost. The Company depreciates the cost of equipment using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations for the period. The cost of maintenance and repairs is charged to operations as incurred; significant renewals improvements are capitalized. Depreciation expense was approximately $1,694 for the three months ended March 31, 2019 and 2018, respectively. The estimated useful life of the truck is five years.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).  

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding required disclosures.  

 

Management, consisting of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. As of March 31, 2019, based on the evaluation of these disclosure controls and procedures, our CEO and CFO has concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

 

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Changes in Internal Control Over Financial Reporting

 

We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding, except as set forth below. In addition, we are not aware of any material legal or governmental proceedings against us, or contemplated to be brought against us, except as set forth below.

 

On October 19, 2018, a former client, Paul T. Denucci filed an Original Petition naming the Company, Elijah May, our sole officer and director and Michael Chavez, our prior Chief Executive Officer and former sole director, as defendants. The Original Petition was originally filed in Williamson County, Texas, provided the proceeding was subsequently moved to the County Court of Travis County, Texas (County Court 2 – Cause No. C-1-CV-18-011465). The Original Petition alleged breach of contract and alleged defects in the pool which the Company built on Mr. Denucci’s behalf. The Original Petition seeks damages in an amount sufficient to allow Mr. Denucci to repair the alleged defects in the pool. We deny Mr. Denucci’s claims and intend to vigorously defend ourselves and our current and former officers against such claims. We are currently in the process of drafting responses to the allegations in the Original Petition.

 

On December 21, 2018, a former client, Brian Moats, filed an Original Petition naming Reliant Pools as a defendant in a suit filed in the County Court at Law No. 2 for Travis County, Texas (Cause No. C-1-CV-18-012062). The suit alleges that the Company failed to install a French drain under the pool as required by the terms of the contract, alleges causes of action of breach of express warranty and breach of contract and seeks damages of between $100,000 and $200,000. We deny Mr. Moats’ claims and intend to vigorously defend ourselves against such claims.

 

The Company is unable to determine the estimate of the probable or reasonable possible loss or range of losses arising from the above legal proceedings.

 

Item 1A. Risk Factors

 

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on April 1, 2019, under the heading “Item 1A. Risk Factors”, and investors should review the risks provided in the Annual Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Annual Report, under “Item 1A. Risk Factors”, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Use of Proceeds From Sale of Registered Securities

 

None.

 

Issuer Purchases of Equity Securities

 

None.

 

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Item 3. Defaults Upon Senior Securities        

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  RELIANT HOLDINGS, INC.
   
Date: May 10, 2019 By: /s/ Elijah May
  Elijah May
  Chief Executive Officer and President
  (Principal Executive Officer and Principal Financial/Accounting Officer)

 

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EXHIBIT INDEX

 

            Incorporated by Reference
Exhibit Number   Description of Exhibit   Filed/
Furnished
Herewith
  Form   Exhibit   Filing
Date/Period
End Date
File 
Number
2.1   Agreement for the Exchange of Common Stock dated May 23, 2014, by and between Reliant Holdings, Inc., Reliant Pools, Inc. and the stockholders of Reliant Pools, Inc.       S-1   2.1   10/27/16 333-214274
3.1   Articles of Incorporation as amended and restated       S-1   3.1   10/27/16 333-214274
3.2   Amended and Restated Bylaws       S-1   3.2   10/27/16 333-214274
10.1   Standard Form of Construction Contract       S-1   10.1   10/27/16 333-214274
10.2   Voting Agreement, dated as of November 3, 2017, by and among Michael Chavez and Elijah May       8-K   10.1   11/7/17 333-214274
10.3   Lock-Up Agreement dated November 7, 2017, between Reliant Holdings, Inc. and the stockholders name therein       8-K   10.2   11/7/17 333-214274
10.4   First Amendment to Lock-Up Agreement dated December 5, 2017 and effective November 7, 2017, between Reliant Holdings, Inc. and the stockholders name therein       8-K   10.2   12/17/18 333-214274
10.5   Second Amendment to Lock-Up Agreement dated December 3, 2018 and effective November 7, 2017, between Reliant Holdings, Inc. and the stockholders name therein       8-K   10.3   12/17/18 333-214274
10.6   Lock-Up Agreement dated December 3, 2018, between Reliant Holdings, Inc. and the stockholders name therein       8-K   10.5   12/17/18 333-214274
14.1   Code of Ethics and Code of Conduct       S-1   14.1   10/27/16 333-214274
31.1*   Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act   X              
32.1**   Certification of Principal Executive and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act   X              
101.INS*   XBRL Instance Document   X              
101.SCH*   XBRL Taxonomy Extension Schema Document   X              
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document   X              
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document   X              
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document   X              
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document   X              

 

* Filed herewith.

** Furnished Herewith.


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