Kingfish Holding Corp - Quarter Report: 2016 March (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2016

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

Commission File Number 000-52375

(941) 870-2986 

(Registrant's Telephone Number, Including Area Code)

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  x No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes  x No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

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

KINGFISH HOLDING CORPORATION

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying notes are an integral part of these statements.

KINGFISH HOLDING CORPORATION

NOTES TO FINANCIAL STATEMENTS

March 31, 2016

(unaudited)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this quarterly report. Historical results and trends which might appear should not be taken as indicative of future operations. Our results of operations and financial condition, as reflected in the accompanying statements and related notes, are subject to management's evaluation and interpretations of business conditions, changing market conditions and other factors.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (including the exhibits hereto) contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), such as statements relating to our financial condition, results of operations, plans, objectives, future performance or expectations, and business operations. These statements relate to expectations concerning matters that are not historical fact. Accordingly, statements that are based on management's projections, estimates, assumptions, and judgments constitute forward-looking statements. These forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "plan," "estimate," "approximately," "intend," "objective," "goal," "project," and other similar words and expressions, or future or conditional verbs such as "will," "should," "would," "could," and "may." These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and such statements involve inherent risks and uncertainties. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) which may cause actual results, performance, or achievements to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will in fact occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements.

These potential risks and uncertainties include, but are not limited to, our ability to identify, secure and obtain suitable and sufficient financing to continue as a going concern; our ability to identify, enter into and close an appropriate a merger, acquisition, or other combination transaction with a business prospect; economic, political and market conditions; the general scrutiny and limitations placed on "blank check" and "shell" companies under applicable governmental regulatory oversight; interest rate risk; government and industry regulation that might affect future operations; potential change of control transactions resulting from merger, acquisition, or combination with a business prospect; the potential dilution in our equity (both economically and in voting power) that might result from future financing or from merger, acquisition, or combination activities; and other factors.

All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016 (this "Form 10-Q"). We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  

Overview

Operations. Historically, we were engaged in the business of homebuilding and restoration operations in central Florida and in the manufacture of building products from operations located in the State of Washington. During the fiscal year ended September 30, 2010, the Company defaulted on its loan agreements with AMI Holdings, Inc. ("AMI") and on May 24, 2010 AMI foreclosed on and took possession of all of the Company's then-existing operating entities. Following the foreclosure, the Company has not engaged in any business activities and has conducted only minimal operations.

On September 16, 2011, the Company, having only 69 holders of record and no significant assets, filed a Form 15 with the U.S. Securities and Exchange Commission (the "Commission") to terminate the registration of its common stock under Section 12 of the Exchange Act and to suspend its reporting obligations under Section 15(d) of the Exchange Act.

Subsequently, our remaining management concluded that it may be feasible to acquire a target company or business seeking the perceived advantages of being a publicly held corporation and, as a result, our management determined that it should explore opportunities to acquire other assets or business operations that will maximize shareholder value. In order to move this plan forward, management determined that, prior to undertaking a search for any such acquisition opportunities, the Company should take the steps necessary to (a) reconstitute a full board of directors, (b) update and complete its corporate records and corporate governance documents, including the payment of any franchise fees and taxes owed to the State of Delaware, (c) satisfy all its obligations owed to its transfer agent, (d) obtain an audit of its financial statements by independent registered public accountants, and (e) reactivate its suspended reporting obligations under Section 15(d) of the Exchange Act which had been suspended since 2011 (all such actions, collectively, the "Reactivation Activities"). On December 17, 2014, the Company completed its Reactivation Activities and is filing obligations under the Exchange Act (the "Reactivation Date").

Business Strategy and Activities. Our business strategy is to seek a business venture that can be acquired by the Company with the goal of maximizing shareholder value. The selection of an appropriate business opportunity is complex and extremely risky. We have been pursuing our search for business opportunities primarily through our officers and directors, although other sources, such as professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others, may present unsolicited proposals. It is likely that any such transaction also would require the participation of a financing partner that would acquire a significant equity position in connection with any such transaction. Our activities are subject to several significant risks that arise primarily as a result of the fact that we may acquire or participate in a business opportunity based on the decision of management which will be made in the exercise of its business judgment, and, in all probability, without the consent, vote, or approval of our shareholders. Further, the participation of a financing partner may further dilute the holdings of our current shareholders. For a more detailed discussion of the manner in which we are pursuing the search for and participation in a business venture, please see "Item 1: Business" of our Form 10-K filed the fiscal year ended September 30, 2015.

Based on our search, the Company has identified several potential opportunities with parties that have indicated some level of interest in considering a potential transaction with the Company that management believes would be appropriate and suitable for the Company to pursue. Management has commenced preliminary discussions with one of those parties to further explore the level of interest and to determine whether an appropriate financing partner can be identified to participate in any such potential transaction. Although the Company currently is engaged in preliminary discussions, the Company has not received any letter of intent, proposal, or formal offer from this party relating to any potential transaction, nor has any financing partner committed to, or has formally offered to participate in, any such transaction. There is no assurance that this or any other party will make a formal offer or otherwise provide a proposal to enter into a transaction with the Company. Further, even if the Company receives a formal offer or other such proposal, there is no assurance that: (a) a financing partner will agree to participate in any such transaction, (b) the Company will be able tosuccessfully negotiate definitive agreements with any such party or financing partners, on terms acceptable to the Company or, (c) if successfully negotiated, that the Company will be able to close and consummate any such transaction. 

Additionally, no assurance can be given that the Company will be able to identify other suitable opportunities if no agreement can be reached with the party currently identified by the Company or if no financing partner agrees to participate in any such transaction.

Financial Condition. We have not recorded revenues from operations during the fiscal quarter covered by our financial statements included in this Form 10-Q and are not currently engaged in any business activities that provide cash flows. We do not expect to generate any revenues during the current fiscal year. Our principal business objective for the current fiscal year and beyond such time will be to achieve long-term growth potential through a combination with a business. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. During the remainder of this fiscal year and the next fiscal year we anticipate incurring costs related to: (i) investigating and analyzing potential business combination transactions; (ii) the preparation and filing of Exchange Act reports, and (iii) consummating an acquisition, if any. We believe we will be able to meet these costs through use of funds in our treasury and additional amounts, as necessary, to be loaned by or invested in us by our shareholders, management or other investors.

We have no specific plans, understandings or agreements with respect to the raising of such funds, and we may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since we have no such arrangements or plans currently in effect, our inability to raise funds for the consummation of an acquisition may have a severe negative impact on our ability to become a viable company. We estimate that the level of working capital needed for these general and administrative costs for fiscal year ending September 30, 2016 will be approximately $60,000.

We have negative working capital, negative shareholders' equity and have not earned any revenues from operations since September 16, 2011. James K. Toomey, the Company's principal stockholder and a director ("Mr. Toomey"), has loaned the Company monies in the past to cover our operations and Reactivation Activities. However, we have no formal commitment that he will continue to provide the Company with working capital sufficient until we consummate a merger or other business combination with a target company or business operation. We are currently devoting our efforts to locating such targets. Our ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve profitable operations. Our historical operating results disclosed in this Form 10-Q are not meaningful to our future results.

Going Concern Issues

In its report dated December 22, 2015, our auditors, Warren Averett, LLC expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. We have generated no operating revenues for the fiscal year ended September 30, 2015 or during the six-months ended March 31, 2016, and we had an accumulated deficit of $154,712 as of March 31, 2016. Furthermore, at March 31, 2016, we had a retained deficit of $4,515,529 and a working capital deficit of $94,712. As a result of our working capital deficit and anticipated operating costs for the next 12 months, we do not have sufficient funds available to sustain our operations for a reasonable period without additional financing. Our continuation as a going concern is dependent upon future events, including our ability to raise additional capital and to generate positive cash flows.

Results of Operations

Comparison of Three Months Ended March 31, 2016 and 2015

Revenues. Because we currently do not have any business operations, we have not had any revenues during the three months ended March 31, 2016 and March 31, 2015.

General and Administrative Expenses. We had operating expenses of $17,115 and $17,609 for the three months ended March 31, 2016 and March 31, 2015, respectively. These expenses consisted of general and administrative expenses which were primarily comprised of professional fees associated with various corporate and accounting matters. The decrease in such expenses for the three months ended March 31, 2016 as compared to the same period ended March 31, 2015 was due to a decrease in professional fees. Our general and administrative expenses decreased following the completion of our Reactivation Activities in December 2014 and are anticipated to remain relatively low until such time as we effect a merger or other business combination with an operating business, if at all.

Net Income (Loss). We incurred net losses for the three months ended March 31, 2016 and March 31, 2015 of $17,115 and $17,609, respectively. The decrease in net loss was directly attributable to a decrease in professional fees.

Comparison of Six Months Ended March 31, 2016 and 2015

Revenues. Because we currently do not have any business operations, we have not had any revenues during the six months ended March 31, 2016 and March 31, 2015.

General and Administrative Expenses. We had operating expenses of $71,618 and $115,877 for the six months ended March 31, 2016 and March 31, 2015, respectively. These expenses consisted of general and administrative expenses which were primarily comprised of professional fees associated with various corporate and accounting matters. In addition, during the quarter ended December 31, 2015, the Company approved and issued 2 million shares of its common stock to each of Ted Sparling and James LaManna, for an aggregate of 4 million shares, for their service to the Company over the past two years, resulting in the recording of $9,200 in stock based compensation. The decrease in such expenses for the six months ended March 31, 2016, as compared to the same period ended March 31, 2015, was due to the increased level of Reactivation Activities undertaken in the first quarter of 2015 to reactivate the Company's suspended reporting obligations under Section 15(d) of the Exchange Act. Following the Reactivation Date, our general and administrative expenses have decreased and are anticipated to remain relatively low until such time as we effect a merger or other business combination with an operating business, if at all.

Net Income (Loss). We incurred net losses for the six months ended March 31, 2016 and March 31, 2015 of $71,618 and $91,442, respectively. The decrease in net loss was directly attributable to a decrease in general and administrative expenses following the Reactivation Date.

Liquidity and Capital Resources

At March 31, 2016, we had a working capital deficit of $94,712 compared to a working capital deficit of $72,294 at September 30, 2015. Current liabilities increased to $100,017 at March 31, 2016 from $81,667 at September 30, 2015 due to an increase in accounts payable, primarily for professional fees. Total assets decreased from $9,373 at September 30, 2015 to $5,305 at March 31, 2016 due to a decrease in cash.

During six months ended March 31, 2016, we received the following financings:

These funds were used to pay for the Company's ongoing business operations, consisting primarily of professional fees. The funds advanced to the Company on December 7, 2015 were acknowledged and formalized by the parties pursuant to a Convertible Promissory Note Purchase Agreement, effective as of December 15, 2015 (the "December 2015 Note Agreement"), by and between the Company and Mr. Toomey, and the issuance of a convertible promissory note in favor of Mr. Toomey in aggregate principal amount of $20,000 bearing interest at a fixed rate of 3.5% per annum, payable from December 7, 2015, the date that the actual loan was provided to the Company (the "December 2015 Promissory Note"). The December 2015 Promissory Note is convertible into shares of our common stock by Mr. Toomey at a fixed conversion price equal to $1.00 per share (subject to anti-dilution adjustments).

The funds advanced to the Company on March 3, 2016 were acknowledged and formalized by the parties pursuant to a Convertible Promissory Note Purchase Agreement, effective as of May 18, 2016 (the "May 2016 Note Agreement"), by and between the Company and Mr. Toomey, and the issuance of a convertible promissory note in favor of Mr. Toomey in aggregate principal amount of $20,000 bearing interest at a fixed rate of 3.5% per annum, payable from March 3, 2016, the date that the actual loan was provided to the Company (the "May 2016 Promissory Note"). The May 2016 Promissory Note is convertible into shares of our common stock by Mr. Toomey at a fixed conversion price equal to $1.00 per share (subject to anti-dilution adjustments).

On December 15, 2015, the Company and Mr. Toomey agreed to amend certain outstanding note purchase agreements and the related notes to change the conversion rates under these agreements from $0.01 per share to $1.00 per share and to clarify that each of the outstanding promissory notes were immediately convertible. On December 31, 2015, Mr. Toomey elected to convert, at a conversion rate of $1.00 per share, the outstanding principal and accrued interest on all of the outstanding convertible notes issued to him at that time, other than the December 2015 Promissory Note. As a result of these conversions, an aggregate of 244,946 shares of common stock of the Company issued were issued to Mr. Toomey, effective on December 31, 2015. The only remaining outstanding convertible promissory notes issued to Mr. Toomey in exchange for loans made by him to the Company are the December 2015 Promissory Note and the May 2016 Promissory Note. For detailed discussion of these amendments and the conversion election, please see our Form 10-Q for the fiscal quarter ended December 31, 2015.

Mr. Toomey has historically converted past promissory notes. However, he has not yet executed his conversion rights under the December 2015 Promissory Note or the May 2016 Promissory Note and there is no assurance that he will exercise such rights.

Because the Company has reactivated its suspended reporting obligations under the Exchange Act, former shareholders, officers, employees, creditors, or others may approach the Company and allege that there are outstanding claims for which the Company is responsible. In fact, the Company was contacted in 2015 by one shareholder suggesting that the Company may owe certain contractual obligations to that shareholder. However, the Company is unclear as to the nature of any such obligation and, in any event, does not believe that any obligations are owed to that shareholder. In view of the Company's extremely limited resources, any such claims, if formally made, and/or proceedings commenced with respect thereto by such shareholder or any other third party or parties against the Company, would have a material adverse impact on the Company and may cause the Company to cease as a going concern. In such event, it is unlikely that the Company would be able to obtain any future financings from Mr. Toomey or others in order to maintain its current operations and it also would render unlikely that the Company would be able to pursue its business plan or that it will continue to be a reporting company under the Exchange Act.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "Smaller Reporting Company", the Company is not required to provide the information required by this Item

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedure

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our management concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2016 as a result of the material weakness in internal control over financial reporting because of inadequate segregation of duties over authorization, review and recording of transactions, as well as the financial reporting of such transactions. Although financial resources are limited, management continues to evaluate opportunities to mitigate the above material weaknesses. Despite the existence of these material weaknesses, we believe the financial information presented herein is materially correct and in accordance with generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls or in other factors that could significantly affect our disclosure controls and procedures subsequent to the date of the above referenced evaluation. Furthermore, there was no change in our internal control over financial reporting or in other factors during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

PART II

ITEM 1. LEGAL PROCEEDINGS

There are presently no pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

As a "Smaller Reporting Company", the Company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended March 31, 2016, Mr. Toomey advanced the Company $20,000 on March 3, 2016 in exchange for the May 2016 Promissory Note, bearing interest at a fixed rate of 3.5% per annum, payable from March 3, 2016, the date that the actual loan was provided to the Company. The May 2016 Promissory Note is convertible into the common stock of the Company by Mr. Toomey at a fixed conversion price equal to $1.00 per share (subject to anti-dilution adjustments). These funds advanced by Mr. Toomey during the quarter ended March 31, 2016, were used by the Company to pay for the Company's ongoing business operations, consisting primarily of professional fees.

ITEM 3. DEFAULTS ON SECURITIES

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INDEX TO EXHIBITS

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* Exhibit Filed Herewith

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