|8-K||2018-10-29||Enter Agreement, Exhibits|
|ATLS||Atlas Energy Group||0|
|TCT||Teucrium Commodity Trust||0|
|NRU||National Rural Utilities Cooperative Finance||0|
|BCTCV||Boston Capital Tax Credit Fund V||0|
|NVGI||Noble Vici Group||0|
|Part I - Financial Information|
|Item 1. Financial Statements|
|Note 1-Nature of Business|
|Note 2 - Ability To Continue As A Going Concern|
|Note 3 - Summary of Significant Accounting Policies|
|Note 4-Stockholders' Equity|
|Note 5-Related Party Transactions|
|Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations|
|Item 3. Quantitative and Qualitative Disclosures About Market Risk|
|Item 4. Controls and Procedures|
|Part II &Mdash; 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|
|Balance Sheet||Income Statement||Cash Flow|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] quarterly REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2019
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 333-206963
Vigilant Diversified Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
(State or other Jurisdiction of
Incorporation or Organization)
620 Newport Center Drive, Suite 1100
Newport Beach, CA
|(Address of Principal Executive Offices)||(Zip Code)|
Registrant’s telephone number, including area code: (949) 538-2700
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 preceding12 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 [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|Large accelerated filer [ ]||Accelerated filer [ ]|
|Non-accelerated filer [ ] (Do not check if a smaller reporting company)||Smaller reporting company [X]|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of April 30, 2019, the number of shares outstanding of the issuer’s sole class of common stock, $0.0001 par value per share, is 16,398,400.
table of contents
|Part I – FINANCIAL INFORMATION||3|
|Item 1. Financial Statements||3|
|Condensed Balance Sheets||3|
|Condensed Statement of Operations||4|
|Condensed Statements of Cash Flows||6|
|Notes to the Condensed Financial Statements||7|
|Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations||10|
|Off-Balance Sheet Arrangements||15|
|Item 3. Quantitative and Qualitative Disclosures about Market Risk||15|
|Item 4. Controls and Procedures||15|
|PART II – OTHER INFORMATION||16|
|Item 1. Legal Proceedings||16|
|Item 1A. Risk Factors||16|
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds||16|
|Item 3. Defaults Upon Senior Securities||16|
|Item 4. Mine Safety Disclosures||16|
|Item 5. Other Information||16|
|Item 6. Exhibits||16|
Condensed Balance Sheets
|March 31, 2019||December 31, 2018|
|LIABILITIES AND STOCKHOLDERS’ DEFICIT|
|Accounts payable and accrued liabilities||89,097||78,094|
|Related party advances||36,466||24,125|
|Preferred Stock, Authorized 50,000,000 preferred shares, $0.0001 par, none outstanding on March 31, 2019 and December 31, 2018||-||-|
|Common Stock; Authorized 500,000,000 common shares, $0.0001 par, 16,398,400 issued and outstanding on March 31, 2019 and December 31, 2018||1,640||1,640|
|Additional paid-in capital||342,762||342,762|
|TOTAL STOCKHOLDERS’ DEFICIT||(112,586||)||(93,117||)|
|TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT||$||12,977||$||9,102|
The accompanying notes are an integral part of these condensed unaudited interim financial statements.
Condensed Statement of Operations
|For the three months ended|
|March 31, 2019||March 31, 2018|
|General and administrative expenses||$||961||$||1,342|
|Salaries, wages and benefits||-||1,729|
|Transfer agent and filings||377||1,776|
|Net Loss for the Period before income taxes||(17,838||)||(8,347||)|
|Income tax expense||(1,631||)||-|
|Net Loss for the period||$||(19,469||)||$||(8,347||)|
|Basic and diluted loss per common share||$||(0.00||)||$||(0.00||)|
|Weighted average number of common shares outstanding|
|Basic and diluted||16,398,400||16,398,400|
The accompanying notes are an integral part of these condensed unaudited interim financial statements.
Condensed Statements of Stockholders’ Deficit
|Common stock||Preferred Shares||Additional|
|Number of shares||Amount||Number of |
|Balance, December 31, 2016||15,156,000||$||1,516||540,000||$||54||$||167,232||$||(282,547||)||$||(113,745||)|
|Common shares issued on the conversion of preferred shares||540,000||54||(540,000||)||(54||)||-||-||-|
|Common shares issued for cash||60,000||6||14,994||15,000|
|Common shares issued on the settlement of debts||642,400||64||-||-||160,536||-||160,600|
|Balance, December 31, 2017||16,398,400||1,640||-||-||342,762||(375,600||)||$||(31,198||)|
|Net loss for the period||-||-||-||-||-||(61,919||)||(61,919||)|
|Balance, December 31, 2018||16,398,400||1,640||-||-||342,762||(437,519||)||(93,117||)|
|Net loss for the period||-||-||-||-||-||(19,469||)||(19,469||)|
|Balance, March 31, 2019||16,398,400||$||1,640||-||$||-||$||342,762||(456,988||)||$||(112,586||)|
The accompanying notes are an integral part of these condensed unaudited interim financial statements.
Condensed Statements of Cash Flows
|For the three months ended|
|March 31, 2019||March 31, 2018|
|Adjustments to reconcile net loss to net cash provided by operations:|
|Changes in operating assets and liabilities:|
|Accounts payable and accrued liabilities||11,003||3,527|
|Net cash used by operating activities||(8,466||)||(3,341||)|
|Related party advances||12,341||-|
|Net cash provided by financing activities||12,341||-|
|Net cash increase||3,875||(3,341||)|
|Supplemental cash flow information:|
|Cash paid of interest||$||-||$||-|
|Cash paid for income taxes||$||-||$||-|
Notes to the Condensed Financial Statements
March 31, 2019
NOTE 1-NATURE OF BUSINESS
Vigilant Diversified Holdings, Inc. (“the Company”) was incorporated in the State of Nevada as a for-profit company on June 30, 2015. On October 29, 2018, the Company entered into a Share Exchange Agreement (the “Agreement”) to acquire up to 100% of the issued and outstanding shares of the common stock of FUGA, Inc., a Wyoming corporation (“FUGA”) in exchange for 5,500,000 shares of the Company’s common stock. The closing of the transaction under the Agreement is subject to certain conditions including the customary board and shareholder approval of FUGA’s audit and the transaction.
Basis of presentation
The unaudited interim financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2018. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019, are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. For further information, these unaudited interim financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2018, included in the Company’s report on Form 10-K.
NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its obligations and commitments in the normal course of operations. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.
As of March 31, 2019, the Company had not yet achieved profitable operations, has incurred cumulative losses of $456,988 and expects to incur significant further losses in the development of its business, which casts substantial doubt about the Company’s ability to continue as a going concern. To remain a going concern, the Company will be required to obtain the necessary financing to pursue its plan of operation or complete an acquisition of a profitable company. Management plans to obtain the necessary financing through the issuance of equity and/or advances from related parties.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. As of March 31, 2019, and December 31, 2018, the Company had $12,977 and $9,102 in cash, respectively and did not have any cash equivalents.
Loss per Share
The Company’s basic earnings (loss) per share are calculated by dividing its net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s dilutive earnings (loss) per share is calculated by dividing its net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 4–STOCKHOLDERS’ EQUITY
The Company was formed with one class of common stock, $0.0001 par value and was originally authorized to issue 100,000,000 common shares and one class of preferred stock, $0.0001 par value and is authorized to issue 10,000,000 shares. On October 29, 2018, the Company amended its articles of incorporation and increased its one class of common stock, $0.0001 par value, to 500,000,000 common shares and its one class of preferred stock, $0.0001 par value, to 50,000,000 shares. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they chose to do so, elect all of the directors of the Company.
NOTE 5–RELATED PARTY TRANSACTIONS
The directors and officers of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, he may face a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for the resolution of such conflicts.
During the three months ended March 31, 2019, the Company charged professional fees in the amount of $14,500 (2018: $3,500) payable to a legal firm controlled by a major shareholder of the Company.
One of the Company’s major shareholder is owned by the Company’s legal counsel. As of March 31, 2019, the Company’s legal counsel is owed $64,850 and also advanced the Company $288.
One of the Company’s other major shareholder, MT Capital Partners, LLC, which is owned by one of the Company’s officer and director, has advanced the Company $36,178 as of March 31, 2019. This advance is unsecured and does not bear any terms of interest or repayment.
Forward Looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.
Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K.
Examples of forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our services, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:
|●||the risks of a start-up company;|
|●||management’s plans, objectives and budgets for its future operations and future economic performance;|
|●||capital budget and future capital requirements;|
|●||meeting future capital needs;|
|●||our dependence on management and the need to recruit additional personnel;|
|●||limited trading for our common stock, if listed or quoted|
|●||the level of future expenditures;|
|●||impact of recent accounting pronouncements;|
|●||the outcome of regulatory and litigation matters; and|
|●||the assumptions described in this report underlying such forward-looking statements. Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including:|
|●||those described in the context of such forward-looking statements;|
|●||the impact of competitive products and pricing;|
|●||the political, social and economic climate in which we conduct operations; and|
|●||the risk factors described in other documents and reports filed with the Securities and Exchange Commission, including our Registration Statement on Form S-1 (SEC File No. 333-206963).|
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all those risks, nor can we assess the impact of all those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them considering new information or future events.
The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited financial statements.
In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Vigilant Diversified Holdings, Inc., a Delaware corporation, unless the context requires otherwise.
We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three months ended March 31, 2019. You should refer to the Financial Statements and related Notes in conjunction with this discussion.
Results of Operations
We were formed and commenced operations on June 30, 2015. From June 30, 2015 until January 4, 2016, our activities were limited to organizational and business development activities related to providing advice to companies. We intended to assist companies that are involved in various aspects of the cannabis industry by providing consulting services focused on providing administrative and regulatory support functions. We also intended to market our services to other industries. Our original mission statement was to assist management of these companies with services designed to keep them focused on their core business ideas while provide the administrative support such as bookkeeping, payroll, website development and marketing strategies. We intended to use the Internet as well as the services of an independent sales representative to market our services to start-up companies in California and Colorado with our initial efforts focused in Denver. We also intended to market to service professionals. During this period, we have had limited operations and have limited financial resources. Our operations until January 4, 2016, were devoted primarily to start-up, development and operational activities, which included:
|1.||Formation of the Company;|
|2.||Development of our business plan;|
|3.||Evaluating various target companies to market our services;|
|4.||Research on marketing channels/strategies for our services;|
|5.||Secured our website domain www.vigilantdiversifiedholdings.com and beginning the development of our initial online website;|
|6.||Research on services and pricing of our services;|
|7.||Hiring our consultant to provide a variety of services to us.|
On July 22, 2015, we engaged a cannabis consulting firm to provide a variety of services to us, including, but not limited to, introducing us to various cannabis opportunities. Our agreement with them was for 6 months for a total fee of $25,000 payable as follows: (i) $10,000 upon execution, $7,500 thirty days thereafter and the balance of $7,500 ninety days thereafter.
On January 4, 2016, we made an investment in Curved Rolling Papers LLC (“Curved”). We entered into an agreement (the “Agreement”) with Curved that provided for the purchase of up to 5% ownership in Curved for $250,000 to be paid in installments. We anticipated funding the investment in the Agreement through unrelated equity funding. Curved was to receive $250,000 in consideration from January 4, 2016 through March 1, 2016. We invested $50,000 on January 4, 2016 and $50,000 on February 2, 2016. We were unable to fund the additional contributions to Curved since the additional equity we were seeking to raise did not materialize. Curved subsequently notified us that it was transferring its assets to a new entity and discontinuing Curved, thus, nullifying our investment. Our negotiations with Curved did not result in a satisfactory resolution.
We may file for binding mediation against Curved and its owners, in the State of New York, for rescission of the Agreement to return of our $100,000 investment in Curved or, we may assign the claim to the former majority shareholder to pursue. The Company decision on whether to file for binding mediation or to assign the causes of action will be evaluated on the resources it anticipates spending against the anticipated recovery. Our decision to consider filing for binding mediation is in response to Curved’s management’s unilateral communication that it was dissolving Curved and its relationship with us, leaving us with nothing and declining to return any of the $100,000 we invested in Curved.
On June 30, 2018, we effectuated a change of control and our new management’s goal was to pursue the acquisition of an operating company with revenues and the potential for growth. On October 29, 2018, we entered into a share exchange agreement (the “Share Exchange Agreement”) to acquire 100% of the issued and outstanding shares of FUGA, Inc., a Wyoming corporation (“FUGA”) that is in the private air charter and aircraft management business. Founded in 2007, FUGA owns an air carrier 135 certificate and currently manages a Gulfstream IV SP aircraft. FUGA’s certificate allows it to operate worldwide with aircraft that have seating capacity for up to 30 passengers. The Company intends to raise capital to expand FUGA’s operations by launching an air ambulance and government division as well as expand its fleet of managed aircraft. We will also seek financing to acquire aircraft, which we believe will provide us with increase profitability over managed aircraft. The closing of the transaction with FUGA, as set forth in the Share Exchange Agreement, is subject to various conditions, which FUGA must satisfy or the Company must waive. The Share Exchange Agreement is set forth as Exhibit 10.1 in the Company’s Form 8-K, which it filed on November 13, 2018. In the event that we do not proceed forward with the acquisition of FUGA, we have identified other acquisitions opportunities that we will pursue.
As of March 31, 2019, we had $12,977 cash on hand and in the bank. Management does not believe this amount will satisfy our cash requirements for the next twelve months. We plan to satisfy our future cash requirements - primarily the working capital required for operations by the sale of our common or preferred stock or with advances from one of our shareholders or third-party investors. The additional equity or debt financings will likely be in the form of private placements of common stock, preferred stock or convertible debt. As of March 31, 2019, the Company has $125,563 in current liabilities, which consist of $89,097 in accounts payable and accrued liabilities and $36,466 in related party advances.
Management does not plan to hire additional employees at this time. Our officers and directors, as well as independent contractors, will be responsible for providing consulting services.
Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Annual Report on Form 10-K.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements for the three months ended March 31, 2019, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.
Three months ended March 31, 2019 compared to the three months ended March 31, 2018.
Revenues. We did not have any revenues for the three months ended March 31, 2019 or 2018.
Operating expenses. Operating expenses included general and administrative expenses, professional fees, salaries, wages and benefits, and transfer agent and filings. In total, operating expenses increased $9,491, or 113.71% to $19,469 for the three months ended March 31, 2019 compared to $8,347 for the comparable period in 2018. The components of operating expenses are discussed below.
|●||General and administrative expenses decreased $381, or 28.39%, to $961 for the three months ended March 31, 2019 compared to $1,342 for the comparable period in 2018.|
|●||Professional fees increased $13,000, or 371.43%, to $16,500 for the three months ended March 31, 2019 compared to $3,500 for the comparable period in 2018. The increase is due to our accrual of legal and accounting fees for the year end and first quarter of 2019.|
|●||Salaries, wages and benefits decreased $1,729, or 100.00%, to $0 for the three months ended March 31, 2019 compared to $1,729 for the comparable period in 2018. The decrease is attributable to our elimination of the officer salary upon the change of control in June 2018.|
|●||Transfer agent and filing decreased $1,399, or 78.77%, to $377 for the three months ended March 31, 2019 compared to $1,776 for the comparable period in 2018. The decrease is due to a decrease in Edgar filing fees.|
Net Loss. Our net loss increased $11,122 or 133.22%, to $19,469 for the three months ended March 31, 2019 compared to $8,347 for the comparable period in 2018. The increase is due to the components discussed above.
Liquidity and Capital Resources. For the three-months ended March 31, 2019, we did not issue any shares of our common stock or preferred stock. We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.
Our total assets are $12,977 as of March 31, 2019, consisting of $12,977 in cash. Our working capital deficit was $112,586 as of March 31, 2019.
As of March 31, 2019, our total liabilities are $125,563 consisting of $89,097 in accounts payable and accrued liabilities and $36,466 in related party advances.
As of March 31, 2019, our total stockholders’ deficit was $112,586 and we had an accumulated deficit of $456,988.
We had $8,466 in net cash used in operating activities for the three months ended March 31, 2019, which included $19,469 in net loss, which amount was increased by $11,004 in accounts payable and accrued liabilities.
We had $0 in cash used by investing activities for the three months ended March 31, 2019.
We had $12,341 in cash provided by financing activities the three months ended March 31, 2019, which is from related party advances provided by 2 of our major shareholders.
We do not now have funds sufficient for pursuing our plan of operation, but we are in the process of trying to procure funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.
The Company had no formal long-term lines or credit or other bank financing arrangements as of March 31, 2019.
The Company has no current plans for the purchase or sale of any plant or equipment.
The Company has no current plans to make any changes in the number of employees.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry forward and startup costs that may offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past quarter.
The Company expended no amounts on capital expenditures for the three-months ended March 31, 2019.
Plan of Operation
We were incorporated in the State of Nevada on June 30, 2015. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. Since incorporation, we have not made any significant purchase or sale of assets except for our $100,000 investment in Curved as more fully explained in our Form 10-K for the year ended December 31, 2017. We have not generated any revenue and just recently changed our business strategy from offering consulting services to seeking an acquisition of an operating company with revenues. On October 29, 2018, we entered into the Share Exchange Agreement to acquire 100% of the issued and outstanding shares of FUGA from its shareholders. The transaction is set forth in our Form 8-K filed on November 13, 2018.
We may change our name in the second quarter of 2019 and, if so, will select a name that we believe will be indicative of the FUGA transaction and our future goals. Our current website (www.vigilantdiversifiedholdings.com) has ceased providing information on our prior business and is currently under construction. We intend to develop our new website in the first quarter of 2019.
On January 12, 2016, we amended our Articles of Incorporation to authorize up to 4,000,000 shares of a Series A Convertible Preferred Stock (the “Series A Stock”) issuable at $0.25 per share and convertible into its common stock on a 1 for 1 basis. From January 12, 2016 to June 30, 2016, we sold 540,000 shares of its Series A Stock for $135,000 in cash. These offerings were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. On April 11, 2017, we converted the 540,000 shares of Series A Stock to 540,000 shares of our $0.0001 par value common stock.
On October 29, 2018, we amended and restated our Articles of Incorporation to increase our authorized common stock, par value $0.0001, from 100,000,000 shares to 500,000,000 shares and our authorized preferred stock, par value $0.0001, from 10,000,000 shares to 50,000,000 shares. The details are set forth in our Form 8-K filed on November 13, 2018.
We do not expect to purchase or sell plant or significant equipment. Further we do not expect significant changes in the number of employees.
Our anticipated plan is as follows:
Raise Working Capital
Time Frame: Q1 & Q2 of 2019
We intend to concentrate our efforts on raising capital to provide the necessary working capital for our operations and to provide FUGA with the necessary capital to increase its operations of managed aircraft and owned aircraft. Our operations will be limited due to the limited amount of funds on hand. Our plan of operations is as follows:
Develop Our Website
Time Frame: Q2 2019.
Material costs: $3,000-$5,000.
We intend to completely revise our website and possibly change our URL. Our officer and director, Dennis Murchison, will be in charge of overseeing the revision of our website. We intend to hire a web designer to help us with the building and functionality of our website. We do not have any written agreements with any web designers at current time. We anticipate the website expansion costs, including enhanced site design and implementation will be approximately $3,000 to $5,000. Updating and improving our website will continue throughout the lifetime of our operations.
Assist FUGA with the completion of their audit and file our Form 8-K
Time Frame: Q1 & Q2 2019
We will assist FUGA with the audit of their financial statements and have agreed to pay for any costs in excess of $5,000. MT Capital Partners, LLC, one of our majority shareholders, has agreed to advance the necessary costs to accomplish this task.
Concurrently while FUGA’s financial statements are being audited, we will prepare our Form 8-K, which will contain Form 10 information to file with the SEC. This 8-K will contain the necessary information to enable us to close the transaction and will contain pro forma information on the Company going forward with FUGA as a subsidiary.
File an S-1 or Form 1-A
Time Frame: Q2 2019
Concurrently with the preparation of our Form 8-K containing Form 10 information, we intend to raise additional capital and either file a registration statement on either Form S-1 or 1-A. We will make that determination in Q2 2019.
Donald P. Hateley, our chief executive officer and Dennis Murchison, our vice president and secretary, will be devoting approximately ten hours per week to our operations. Once we complete the transaction contemplated by the Share Exchange Agreement, then our officers have orally agreed to commit more time as required.
Estimated Expenses for the Next Twelve Months
The following provides an overview of our estimated expenses to fund our plan of operation for the next twelve months. The amount may vary depending upon how much we spend on pursuing acquisition opportunities. We believe we would need a minimum of $100,000.
|SEC reporting and compliance||$||50,000|
|Establishing and office||5,000|
|Legal and accounting||30,000|
If we do not raise additional working capital, or if MT Capital Partners does not provide us with the necessary working capital, then our cash reserves will be not sufficient to meet our obligations for the next twelve-month period. We anticipate that the minimum additional capital necessary to fund our planned operations in this case for the 12-month period will be approximately $100,000 and will be needed for general administrative expenses, business development, and costs associated with being a publicly reporting company. As a result, we will need to seek additional funding in the near future. The source of this additional capital is through the sale of additional shares of common stock or advances from MT Capital Partners MT Capital Partners has agreed to advance or loan funds to working capital funds for this purpose and is obligated to under its stock purchase agreement with Intercap Partners.
Our management may hire full or part-time employees or independent contractors over the next six (6) months depending upon whether we are able to raise capital; however, at the present, the services provided by our officers and directors appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by these two individuals and can be supplemented by engaging independent contractors. Our management’s responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six (6) months, the professionals we plan to utilize may be independent contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.
Our management does not expect to incur any material research costs in the next twelve months; we currently do not own any plants or equipment that we would seek to sell soon; we do not have any off-balance sheet arrangements. Additionally, we believe that this fact shall not materially change. Donald P. Hateley, our Chairman, President and CEO is also our legal counsel and will provide legal services to us.
If we are able to successfully complete the above goals within the estimated timeframes set forth and are able to raise proceeds additional proceeds that may be needed to secure additional personnel and marketing funds, those funds would be allocated as follows:
Our management may hire full or part-time employees or independent contractors over the next six (6) months depending on the amount of proceeds we receive from the offering pursuant to our registration statement; however, at the present, the services provided by our officers and sole director appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by these two individuals and can be supplemented by engaging independent contractors. Our management’s responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six (6) months, the professionals we plan to utilize may be independent contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.
Our management does not expect to incur any material research costs in the next twelve months; we currently do not own any plants or equipment that we would seek to sell soon; we do not have any off-balance sheet arrangements; and we have not only paid for minimal business expenses on behalf of our officer or directors. Additionally, we believe that this fact shall not materially change.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Use of Estimates:
Areas where significant estimation judgments are made and where actual results could differ materially from these estimates are the carrying value of certain assets and liabilities which are not clear from other sources and the classification of net operating loss and tax credit carry forwards.
We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
|(a)||Evaluation of Disclosure Controls and Procedures|
We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q were not effective at a reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
|(b)||Changes in Internal Controls over Financial Reporting|
During the three-month period ended March 31, 2019, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
|(a)||The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference:|
|31.1||Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.|
|31.2||Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.|
|32.1||Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.|
|32.2||Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.|
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 thereunto duly authorized.
|VIGILANT DIVERSIFIED HOLDINGS, INC.|
|August 14, 2019||/s/ Donald P. Hateley|
Donald P. Hateley
Chairman and Chief Executive Officer (Principal Executive
Officer) and Chief Financial Officer (Principal Accounting and