Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Special
Note Regarding Forward-Looking Statements
Information
included or incorporated by reference in this Quarterly Report on Form 10-Q contains forward-looking statements. All forward-looking
statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future
performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only
predictions and speak only as of the date hereof. Forward-looking statements may contain the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “strategy,”
“plan,” “may,” “will,” “would,” “will be,” “will continue,”
“will likely result,” and similar expressions, and are subject to numerous known and unknown risks and uncertainties.
Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies,
capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements.
In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties
identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s
other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those
indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to
any forward-looking statements to reflect future events or developments.
Although
forward-looking statements in this Form 10-Q reflect the good faith judgment of our management, such statements can only be based
on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties,
and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking
statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those
specifically addressed under the heading “Risk Factors Related to Our Business” below, as well as those discussed
elsewhere in this Form 10-Q. Readers are urged not to place undue reliance on these forward-looking statements, which speak only
as of the date of this Form 10-Q. We file reports with the Securities and Exchange Commission (“SEC”). You can read
and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549.
You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, including us.
We
disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various
disclosures made throughout the entirety of this Quarterly Report, which attempt to advise interested parties of the risks and
factors that may affect our business, financial condition, results of operations and prospects.
General
Description of Business
The
Company was organized consistent with the Joint Venture Agreement and First Amendment between our majority and controlling shareholder
– AmericaTowne, Inc., a Delaware corporation (“AmericaTowne”), a reporting company with the United States Securities
and Exchange Commission (the “Commission”), and Nationwide Microfinance Limited, a Ghanaian corporation (“Nationwide”).
The Joint Venture Agreement was disclosed on AmericaTowne’s Form 8-K dated July 14, 2016 and was subsequently amended on
December 19, 2016 (the “First Amendment”). In the second quarter of 2018, AmericaTowne merged into AmericaTowne Holdings,
Inc., f/k/a ATI Modular Technology Corp., a Nevada corporation (“AmericaTowne Holdings”). As a result of the merger,
AmericaTowne Holdings acquired AmericaTowne’s interest in the Company. The merger was effective as of August 1, 2018.
The
Company is a holding company whose purpose is to develop into full-fledged national savings and loan operating in Ghana and elsewhere
internationally. The Company is exploring other business opportunities, such as microfinancing, in countries around the world.
There are no definitive plans to expand the Company’s objectives, however management will continue to analyze the market
to determine how the Company can achieve success in this competitive industry. As with any business plan that is aspirational
in nature, there is no assurance we will be able to accomplish all of our objective or that we will be able to meet our financing
needs to accomplish our objectives.
Our
principal business objective for the next twelve (12) months and beyond such time will be to achieve long-term growth potential
through the further development of those objectives set forth above, or through a combination with a business rather than relying
on short-term earnings. The Company will not restrict potential candidate target companies to any specific business, industry
or geographical location and, thus, may acquire any type of business.
The
Company does not currently engage in any business activities that provide cash flow. The costs of furthering our business objectives,
and/or in investigating and analyzing business combinations, maintaining the filing of Exchange Act reports, the investigation,
analyzing, and consummation of an acquisition for an unlimited period of time will be paid without recompense from additional
money contributed by AmericaTowne and/or Nationwide, or their respective affiliates, subsidiaries or control persons, or possibly
another source. These financial contributions for operations might take the form of a loan, which will result in additional debt
incurred by the Company.
Over
the following twelve (12) months of operations, we anticipate incurring costs related to the filing of Exchange Act reports and
in furthering our business objectives. We anticipate that these costs may be in the range of $10,000 to $20,000, and that we will
be able to meet these costs as necessary, to be loaned to or invested in us by our stockholders, management or other investors.
The
Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for
expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may
be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination
may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires
to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense,
and loss of voting control which may occur in a public offering.
Our
management has not had any preliminary contact or discussions with any representative of any other entity regarding a business
combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages
of development or growth, including entities without established records of sales or earnings. In that event, we will be subject
to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth
companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk,
and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance
that we will properly ascertain or assess all significant risks.
Our
management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing,
and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s
plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification
should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one
venture against gains from another.
The
Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes
that there are numerous firms seeking even the limited additional capital that we will have and/or the perceived benefits of becoming
a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things,
facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals
of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and
offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially
available business combinations may occur in many different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
Emerging
Growth Company
We
are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest
of:
(a)
the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount
is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
(b)
the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities
of the issuer pursuant to an effective IPO registration statement;
(c)
the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt;
or
(d)
the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title
17, Code of Federal Regulations, or any successor thereto.
As
an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information
in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting.
This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the
registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal
control structure and procedures for financial reporting.
As
an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require
the shareholder approval of executive compensation and golden parachutes. We have elected to use the extended transition period
for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption
of new or revised accounting standards that have different effective dates for public and private companies until those standards
apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply
with public company effective dates.
Results
of Operations for the Six Months Ended June 30, 2018 and 2017
Our
operating results for the six months ended June 30, 2018 and 2017 are summarized as follows:
|
|
Six
Months Ended
|
|
|
June
30, 2018
|
|
June
30, 2017
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost
of Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating
Expense
|
|
$
|
36,257
|
|
|
$
|
39,685
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
$
|
(36,257
|
)
|
|
$
|
(39,685
|
)
|
Revenues
During
the second quarter of 2018, the Company generated revenue of $0 in revenue compared to $0 in 2017. We can make no assurances that
we will find commercial success in any of our revenue generating contracts or endeavors. Our revenues, thus far, rely entirely
on related parties. We are a new company and thus have very limited experience in sales expectations and forecasting. We also
have not fully discovered any seasonality to our business as we began operations in the fourth quarter of 2017.
Operating
Expenses
Our
expenses for the six months ended June 30, 2018 and 2017 are outlined in the table below:
|
|
Six
Months Ended
|
|
|
June
30, 2018
|
|
June
30, 2017
|
General
and Administrative
|
|
$
|
16,840
|
|
|
$
|
15,045
|
|
Professional
Fees
|
|
$
|
19,417
|
|
|
$
|
24,640
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
$
|
36,257
|
|
|
$
|
39,685
|
|
Our
operating expenses are largely attributable to administrative and professional expenses related to our reporting requirements
as a public company and implementation of our business plan. This includes the retention of attorneys, accountants, and auditors
associated with our reporting obligations under the Securities Exchange Act.
Net
Income
As
a result of our operations, the Company reported net loss of $36,257 for the six months ended June 30 2018.
Liquidity
and Capital Resources
Working
Capital
|
June
30, 2018
|
|
December
31, 2017
|
Current
Assets
|
$
|
517
|
|
|
$
|
107
|
|
Current
Liabilities
|
$
|
51,841
|
|
|
$
|
15,173
|
|
|
|
|
|
|
|
|
|
Working
Capital (Deficit)
|
$
|
(51,324
|
)
|
|
$
|
(15,066
|
)
|
Cash
Flow
|
|
Six
Months Ended
|
|
|
June
30, 2018
|
|
June
30, 2017
|
Net
Cash Used In Operating Activities
|
|
$
|
33,757
|
|
|
$
|
39,685
|
|
Net
Cash Provided by Financing Activities
|
|
$
|
34,617
|
|
|
$
|
38,871
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Cash
|
|
$
|
410
|
|
|
$
|
(813
|
)
|
Cash
Used in Operating Activities
Decrease
in net loss were is main contributing factor for the decrease in the cash used in operating activities for the six months ended
June 30, 2018.
Cash
Provided by Financing Activities
We
received $34,167 and $38,871 from advances from related parties to cover operational costs in the six months ended June 30, 2018
and 2017, respectively.
Off-Balance
Sheet Arrangements
We
have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources.
Critical
Accounting Policies
Our
financial statements and related public financial information are based on the application of accounting principles generally
accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective
interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses 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.
We
believe the following is among the most critical accounting policies that impact our consolidated financial statements. 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.
Revenue
Recognition
The
Company recognizes revenue at the date of delivery to customers when a formal arrangement exists, the price is fixed or determinable,
the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The
Company's Revenue Recognition policy is provided in detail at Note 2 of the Financial Statements.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to
use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount
of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more
likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company's consolidated financial statements.
Recent
Accounting Pronouncements
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position, or cash flow.