Readers should refer to a description of the Net Asset Sale described in Note 1
to the condensed financial statements included in this Form 10-Q. As described
therein, the net assets and industrial controls businesses of the Company were
sold effective as of the close of business on March 31, 2004. Since April 1,
2004, the Company has not engaged in any revenue generating activities, although
it has considered various investment opportunities and it has incurred
administrative expenses related to accounting, auditing, legal and other
administrative activities. The Company has had no employees since that date. The
administrative activities of the Company are performed by the Chairman, who also
serves as the CEO, President, and Principal Financial Officer.
Three Month Periods Ended September 30, 2022 and 2021
Direct administrative expenses of the Company totaled $7,566 for the three month
period ended September 30, 2022, an increase of $2,155, or 39.8% over the $5,411
of expenses incurred in the comparable 2021 period. The increase is attributable
to an increase in administrative fees charged by the Company's service providers
in the 2022 period.
Nine Month Periods Ended September 30, 2022 and 2021
Direct administrative expenses of the Company totaled $27,374 for the nine month
period ended September 30, 2022, an increase of $5,930, or 27.7%, over the
$21,444 of expenses incurred in the comparable 2021 period. The increase is
attributable to an increase in administrative fees charged by the Company's
service providers in the 2022 period.
Liquidity and Capital Resources
Primary sources of liquidity for the Company following the March 31, 2004 Net
Asset Sale have been cash balances that have been used to pay administrative
expenses. Operating expenses of the Company have been funded with a) $30,000
cash retained from the businesses that were sold, b) $50,000 of proceeds from
the sale of common stock on April 1, 2004 to Dorman Industries, c) $120,000 of
proceeds from the sale of stock on December 21, 2006 to certain accredited
investors, and d) $246,329 of proceeds from sale of stock between 2010 and 2022
to Dorman Industries.
As reflected in the accompanying balance sheet at September 30, 2022, cash
totals $55. Based on such balance and management's forecast of activity levels
during the period that it may remain a "public shell" corporation, management
believes that it will have to again sell through private placement a number of
additional shares of common stock to generate sufficient cash to pay its current
liabilities and its administrative expenses as such expenses become due in 2022.
The Company will need to obtain additional funds to maintain its administrative
activities as a public shell company, and management intends to obtain such
funds from Dorman Industries in the form of loans or through equity sales in an
amount sufficient to sustain operations at their current level. There can be no
assurance that Dorman Industries, which currently owns 69.27% of the Company's
outstanding stock, or any other party, will advance needed funds on any terms.
The Company has not identified as yet potential acquisition candidates, the
acquisition of which would mean that the Company would cease being a "public
shell" and begin operating activities.
While it is the Company's objective to ultimately be able to use the securities
of the Company as a currency in the acquisition of portfolio businesses, the
initial acquisitions of portfolio businesses may require the Company to be
infused with additional capital thereby diluting the Company's shareholders,
including Dorman Industries to the extent that it does not participate in the
capital infusion.
Uncertainties Relating to Forward Looking Statements
Information regarding Risk Factors appears in Part I, Item 1A. Risk Factors of
the 2021 Form 10-K. Except as set forth below, there have been no material
changes to the risk factors previously disclosed in the 2021 Form 10-K.
The continuing effects of the novel coronavirus ("COVID-19") may adversely
affect the Company's ability to identify acquisition targets and, if identified,
to evaluate, negotiate, and close on any acquisition. The worldwide COVID-19
pandemic has
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negatively affected the global economy, and it is likely to continue to do so.
Since the beginning of January 2020, the outbreak has caused volatility and
disruption in the financial markets both globally and in the United States. If
COVID-19, or another highly infectious or contagious disease, continues to
spread or the response to contain it is unsuccessful, the Company could
experience material adverse effects on its business. The extent of such effects
will depend on future developments that are highly uncertain and cannot be
predicted, including the geographic spread of the virus, the overall severity of
the disease, the duration of the outbreak, the measures that have be taken, or
future measures, by various governmental authorities in response to the outbreak
(such as quarantines, shelter-in-place orders and travel restrictions) and the
possible further impacts on the global economy.
The impact of the COVID-19 pandemic depends on factors beyond management's
knowledge or control, including the duration and severity of the outbreak,
whether there are additional significant increases in the number of cases in
future periods, and actions taken to contain its spread and mitigate the public
health effects.
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