METAWORKS PLATFORMS, INC. - Quarter Report: 2017 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2017

 

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

For the transition period from __________ to ____________

Commission file number 000-55049

 

REDSTONE LITERARY AGENTS, INC.

(Exact name of registrant as specified in its charter)

Nevada		N/A
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.
3250 Oakland Hills Court, Fairfield, CA		94534
(Address of principal executive offices)		(Zip Code)

707.208.6368

 (Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 Web site, 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, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [X]
	Emerging growth company [  ]

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

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TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3. Quantitative and Qualitative Disclosures About Market Risk	13
Item 4. Controls and Procedures	13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	14
Item 1A. Risk Factors	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Mine Safety Disclosures	17
Item 5. Other Information	17
Item 6. Exhibits	17
SIGNATURES	19

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PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

 

It is the opinion of management that the unaudited interim financial statements for the quarter ended June 30, 2017 include all adjustments necessary in order to ensure that the unaudited interim financial statements are not misleading.

 

 

RedStone Literary Agents, Inc.

Condensed Balance Sheets

(Unaudited)

 

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

RedStone Literary Agents, Inc.

Condensed Statement of Operations

(Unaudited)

* Denotes a loss of less than $(0.01) per share.

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

RedStone Literary Agents, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

 

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

RedStone Literary Agents, Inc.

Notes to Condensed Unaudited Financial Statements

As of June 30, 2017 and for the six months ended June 30, 2017 and 2016

 

 

1. NATURE AND CONTINUANCE OF OPERATIONS

 

Redstone Literary Agents, Inc. (the “Company”) was incorporated under the laws of State of Nevada, U.S. on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001 per share. During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service business, focused on representing authors to publishers.

 

In November 2014, Ms. Wolf resigned as a director of the Company and the Company ceased pursuing the publishing service business and is now seeking new business opportunities with established business entities to effect a merger or other form of business combination with the Company. There can be no assurance, however, that the Company will be able to acquire the financing necessary to enable it to pursue its plan of operation and enter into such an agreement.

 

 

These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses since inception resulting in an accumulated deficit of $276,533 as at June 30, 2017 and further losses are anticipated in the pursuit of a new business opportunity, raising substantial doubt about the Company’s ability to continue as a going concern.  The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or the private placement of common stock.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

 

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

3. NOTES PAYABLE

 

On September 14, 2015, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “First Note”) in the principal amount of $73,825 to one subscriber.   The First Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the First Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.  As at June 30, 2017, the First Note had a balance outstanding of $99,500, comprised of a principal amount of $73,825 and accrued interest of $25,675.  The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Second Note”) in the principal amount of $50,000 to one subscriber.  The Second Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually.  The principal amount of the Second Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.  As at June 30, 2017, the Second Note had a balance outstanding of $54,487, comprised of a principal amount of $50,000 and accrued interest of $4,487.  The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.

 

On June 6, 2016, the Company issued an unsecured note (the “Unsecured Note”) in the principal amount of $20,000.  The Unsecured Note was unsecured, interest free, payable on demand and had no maturity date.  The Unsecured Note was repaid in full on December 31, 2016.

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Third Note”) in the principal amount of $21,500 to one subscriber.  The Third Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually.  The principal amount of the Third Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.  As at June 30, 2017, the Third Note had a balance outstanding of $23,430, comprised of a principal amount of $21,500 and accrued interest of $1,930.  The Third Note included repayment of the principal amount of $20,000 of the Unsecured Note plus a $1,500 restructuring fee.  The restructuring fee was included in bank charges and interest expense.  The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.

 

 

On March 2, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Fourth Note”) in the principal amount of $20,000 to one subscriber.  The Fourth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually.  The principal amount of the Fourth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.  As at June 30, 2017, the Fourth Note had a balance outstanding of $21,183, comprised of a principal amount of $20,000 and accrued interest of $1,183.  The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.

 

On June 8, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “Fifth Note”) in the principal amount of $20,000 to one subscriber.  The Fifth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually.  The principal amount of the Fifth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share.  As at June 30, 2017, the Fifth Note had a balance outstanding of $10,109, comprised of a principal amount of $10,000 and accrued interest of $109.  The Company has determined that no beneficial conversion feature exists due to the current share value on the date of issuance.

 

4. RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the Company can support its operations through revenue generation, or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities.

 

The Company’s office premises are provided to it at no cost by its sole director and officer. The Company’s sole director and officer did not take any fees for serving as director or officer during the interim three month periods ended June 30, 2017 and 2016.

 

5. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from June 30, 2017 to the date the financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

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

 

Forward-Looking Statements

 

This quarterly report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements regarding: the plans, strategies and objections of management for future operations; the future plans or business of our company; future economic conditions or performance; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe the expectations reflected in the forward-looking statements in this report are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

All financial information contained herein is shown in United States dollars unless otherwise stated. Our financial statements are prepared in accordance with United States generally accepted accounting principles.

 

In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.

 

As used in this quarterly report on Form 10-Q, the terms “we”, “us” “our” and “RedStone” refer to RedStone Literary Agents Inc., a Nevada corporation, unless otherwise specified.

 

Corporate Overview

 

We were incorporated under the laws of the State of Nevada on July 20, 2010 and are considered a development stage company.  Following incorporation, we commenced the business of representing authors to publishers.

 

 

On August 28, 2014, pursuant to a transfer agreement dated for reference August 28, 2014, Mary Wolf, our former sole director and officer, sold to James P. Geiskopf 3,000,000 shares of our common stock for total consideration of $20,000.

 

Effective August 28, 2014, Mr. Geiskopf was appointed as president, secretary, treasurer and a director of our company, and as a result, Mary Wolf resigned as president, secretary and treasurer.  Mary Wolf resigned as a director of our company on November 17, 2014.

 

The principal offices of our company are located at 3250 Oakland Hills Court, Fairfield, CA 94534. Our telephone number is 707.208.6368.

 

Our Current Business

 

Upon the resignation of Mary Wolf as an officer of our company, we ceased pursuing the business of representing authors to publishers and are now seeking new business opportunities with established business entities to effect a merger or other form of business combination with our company. We anticipate that any new acquisition or business opportunity that we may be party to will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation and enter into such an agreement.  If our company requires additional financing and we are unable to obtain such funds, our business will fail.

 

Even if we are able to commence a new business opportunity and obtain the necessary funding, there is no assurance that we will be able to generate any revenue, or that any revenue that may be generated will be sufficient to provide a return to our investors.

 

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or other business combination with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company. In addition, it is likely that some or all of our current management will resign and be replaced by one or more new officers or directors.

 

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success.  We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly reporting corporation.  Business opportunities may be available in many different industries and with businesses 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.  Business opportunities that we believe are in the best interests of our company to pursue may be scarce or we may be unable to obtain opportunities that we want.  We can provide no assurance that we will be able to locate compatible business opportunities.

 

As of the date hereof, we have not entered into any formal written agreements for a business combination or opportunity. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.

 

Currently, we do not have a source of revenue.  We are not able to fund our cash requirements through our current operations. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock or convertible debt, but we are uncertain about our continued ability to raise funds privately. Further, we believe that our company may have difficulties raising capital until we locate a prospective business through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail.

 

 

Results of Operations

 

Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016

 

Revenue

 

We had no revenue for the three months ended June 30, 2017 and 2016.

 

Operating Expenses

 

We incurred general and administrative expenses of $14,027 and $12,519 for the three months ended June 30, 2017 and 2016, respectively, representing an increase of $1,508 between the two periods. These expenses consisted primarily of professional fees, consulting fees, note interest and bank charges, filing and transfer fees.  The increase in professional fees between the two periods from $2,842 in 2016 to $4,583 in 2017 was primarily due to an increase in legal services related to the evaluation of potential business opportunities in 2017.  Accounting and audit fees remained consistent.  The increase in note interest and bank charges from $3,109 in 2016 to $8,124 in 2017 is due to the increase in notes payable in 2017.  The decrease in filing and transfer fees from $1,568 in 2016 to $720 in 2017 was due to decreases in the amount of transactions with the transfer agent.  The decrease in consulting fees from $5,000 in 2016 to $600 in 2017 was due to due diligence services undertaken in 2016 related to exploring new business opportunities.

 

Net Loss

 

We incurred net losses of $14,027 and $12,519 for the three months ended June 30, 2017 and 2016, respectively, representing an increase of $1,508, primarily attributable to the factors discussed above under the heading “Operating Expenses”.

 

Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

 

Revenue

 

We had no revenue for the six months ended June 30, 2017 and 2016.

 

Operating Expenses

 

We incurred general and administrative expenses of $50,583 and $21,380 for the six months ended June 30, 2017 and 2016, respectively, representing an increase of $29,203 between the two periods. The increase in operating expenses between the two periods related to an increase in note interest and bank charges from $6,589 in 2016 to $15,439 in 2016 is due to the increase in loans payable that bears interest of 18% per annum, an increase in consulting fees consulting fees from $5,450 in 2016 to $21,400 in 2017 due to the hiring of a new consultant and an increase in professional fees from $5,873 in 2016 to $11,784 in 2017 due to the evaluation of potential business opportunities in 2017.  These increases were offset by a decrease in filing and transfer fees between the two periods from $3,468 in 2016 to $1,960 in 2017 primarily due to decreases in the amount of transactions with the transfer agent.

 

Net Loss

 

We incurred net losses of $50,583 and $21,380 for the six months ended June 30, 2017 and 2016, respectively, representing an increase of $29,203, primarily attributable to the factors discussed above under the heading “Operating Expenses”.

 

 

Liquidity and Capital Resources

 

Working Capital

 

 

Current Assets

 

Current assets of $7,763 as at June 30, 2017 and $56,050 as at December 31, 2016 were comprised only of cash and cash equivalents.

 

Current Liabilities

 

Current liabilities as at June 30, 2017 were attributable to $5,870 in accounts payable and accrued expenses compared to $49,013 in accounts payable and accrued expenses as at December 31, 2016.

 

Cash Flow

 

 

Operating Activities

 

Net cash used in operating activities was $78,287 for the six month period ended June 30, 2017, as compared to $16,171 for the six month period ended June 30, 2016, an increase of $62,116. The increase in net cash used in operating activities was primarily due to the payment of accounts payable and an increase in operating expenses including an increase in the evaluation of potential business opportunities.

 

Investing Activities

 

Investing activities used cash of $nil for the six month periods ended June 30, 2017 and June 30, 2016.

 

Financing Activities

 

 

 

Plan of Operations

 

We expect that we will require $30,000 to $50,000, in addition to our current cash, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:

Operating expenditures
Evaluation of new business opportunities		$	10,000 to $20,000
General and administrative  (including professional fees)		$	20,000 to $30,000
Total		$	30,000 to $50,000

General and administrative expenses are expected to include the fees we expect to pay in connection with seeking out business opportunities, negotiating and executing definitive agreements for the new business acquisition.

 

Professional fees are expected to include fees related to complying with public reporting requirements, maintaining our quotation on the OTCQB, and work related to evaluating potential business opportunities, including due diligence work.

 

Cash Requirements

 

As we have no cash flow from operations, we will require additional cash resources, including from the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We estimate that our capital needs over the next 12 months will be $30,000 to $50,000. We expect to require additional cash for general and administrative expenses and to evaluate new business opportunities. We expect to derive such cash through the sale of additional equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.

 

Going Concern

 

Our financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $276,533 as at June 30, 2017 (December 31, 2016: $225,950).  Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

 

In its report on our financial statements for the year ended December 31, 2016, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

Off-Balance Sheet Arrangements

 

We have no 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

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item. 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

“Disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

 

Our principal executive officer and principal financial officer, who is the sole officer and director of our company, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2017.  Based on this evaluation, he concluded that, as of June 30, 2017, our disclosure controls and procedures were not effective such that the information relating to us that is required to be disclosed in our SEC reports: (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to our management, including our principal executive and financial officer, to allow timely decisions regarding required disclosure.

 

Internal Control over Financial Reporting

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our sole director and officer conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2017 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework.  Based upon such evaluation, our sole director and officer concluded that we did not maintain effective internal control over financial reporting as of June 30, 2017 based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee; (2) the fact that we only had a single director and officer, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our principal executive officer in connection with the review of our financial statements as of June 30, 2017.

 

 

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the fact that James Geiskopf is our sole director and officer results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2017, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

We know of no material pending legal proceedings to which our company is a party or of which any of our properties is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

 

We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or has a material interest adverse to our company.

 

ITEM 1A. RISK FACTORS.

 

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this report in evaluating our company before purchasing our securities. Our operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks.

 

Risks Related to Our Business

 

Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.

 

We are, and will continue to be, an insignificant participant in the number of companies seeking a suitable business opportunity or business combination. A large number of established and well-financed entities, including venture capital firms, are actively seeking suitable business opportunities or business combinations which may also be desirable target candidates for us. Virtually all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we do. We are, consequently, at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. We will also compete with numerous other small public companies seeking suitable business opportunities or business combinations.  If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may never recommence operations and will go out of business. If we go out of business, investors will lose their entire investment in our company.

 

 

The current state of capital markets, particularly for small companies, is expected to reduce our ability to obtain the financing necessary to continue our business. If we cannot raise the funds that we need to continue acquisitions and fund future business opportunities, we will go out of business and investors will lose their entire investment in our company.

 

Like other smaller companies, we face difficulties in raising capital for our continued operations and to consummate a business opportunity with a viable business. We may not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable.

 

We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.

 

We had cash and cash equivalents in the amount of $7,763 and a working capital deficit of $1,893 as of June 30, 2017. We anticipate that we will require additional financing while we are seeking a suitable business opportunity or business combination. Further, we anticipate that we will not have sufficient capital to fund our ongoing operations for the next twelve months. We would likely secure any additional financing necessary through a private placement of our common stock. There can be no assurance that any financing will be available to us, or, even if it is, if it will be offered on terms and conditions acceptable to us. Our inability to obtain additional financing in a sufficient amount when needed and upon terms and conditions acceptable to us, could have a material adverse effect upon our company. If additional funds are raised by issuing equity securities, dilution to existing or future shareholders will result. If adequate funds are not available on acceptable terms when needed, we may be required to delay, scale back or eliminate the development of any business opportunity that we may acquire.

 

We do not have any targets for a business combination or other transaction and we have no minimum standards for a business combination.

 

We have no arrangement, agreement, or understanding with respect to acquiring a business opportunity or engaging in a business combination with any private entity. There can be no assurance that we will successfully identify and evaluate suitable business opportunities or conclude a business combination. We have not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which we will require a target business opportunity to have achieved. Accordingly, we may enter into a business combination with a business opportunity having no significant operating history, losses, limited or no potential for earnings, limited assets, negative net worth or other negative characteristics.

 

Risks Associated with our Common Stock

 

Because James Geiskopf controls a large percentage of our voting stock, he has the ability to influence matters affecting our stockholders.

 

James Geiskopf, our president, secretary, treasurer and sole director, owns 3,000,000 shares of our common stock and controls a majority of the votes attached to our outstanding voting securities. As a result, he has the ability to influence matters affecting our stockholders, including the election of our directors, the acquisition of assets, and the issuance of securities. Because he controls a majority of votes, it would be very difficult for investors to replace our management if they disagree with the way our business is being operated. Because the influence by Mr. Geiskopf could result in management making decisions that are in the best interest of Mr. Geiskopf and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.

 

 

Because we can issue additional shares of common stock, our stockholders may experience dilution in the future.

 

We are authorized to issue up to 75,000,000 shares of common stock, of which 6,000,000 shares of common stock were issued and outstanding as of August t, 2017. Our board of directors has the authority to cause us to issue additional shares of common stock without consent of our stockholders. Consequently, stockholders may experience dilution in their ownership of our stock in the future.

 

There is currently no established public trading market for our common stock, which makes it difficult for our stockholders to resell their shares.

 

There is currently no established public trading market for our common stock. There is a limited public market for our common stock through its quotation on the OTCQB operated by the OTC Markets Group. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated or have little to do with a company's operations or business prospects. Moreover, the OTCQB is not a stock exchange, and trading of securities on the OTCQB is often more sporadic than the trading of securities listed on a national securities exchange like the NASDAQ or the NYSE. Accordingly, stockholders may have difficulty reselling any of our shares. We cannot assure you that there will be a market for our common stock in the future.

 

Because we do not intend to pay any cash dividends on our common stock in the near future, our stockholders will not be able to receive a return on their shares unless they sell them.

 

We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, our results of operations, cash flows and financial condition, operating and capital requirements, and other factors the board considers relevant. We may never pay any dividends. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

 

Our stock is a penny stock. Trading of our stock is restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.

 

Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined in Rule 15g-9) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

 

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

 

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

 

Since the beginning of the fiscal quarter ended June 30, 2017, we have not sold any equity securities that were not registered under the Securities Act of 1933, as amended, that were not previously reported in a quarterly report on Form 10-Q or a current report on Form 8-K.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

Since the beginning of the fiscal quarter ended June 30, 2017, we have had no senior securities issued and outstanding.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

Exhibit Number		Description
(3)		Articles of Incorporation and Bylaws
3.1(1)		Articles of Incorporation
3.2(2)		Bylaws
(10)		Material Contracts
10.1(1)		Form of Subscription Agreement
10.2(2)		Transfer Agreement
10.3(3)		Private Placement Subscription Agreement with Oceanside Strategies Inc. dated December 30, 2016
10.4(3)		18% Unsecured Convertible Note with Oceanside Strategies Inc. dated December 30, 2016
(31)		Rule 13a-14 Certifications
31.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32)		Section 1350 Certifications
32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(101)		Interactive Data File
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

*	Filed herewith.

 

(1)	Filed as an exhibit to our registration statement on Form S-1 on March 30, 2011 and incorporated herein by reference.

 

(2)	Filed as an exhibit to our current report on Form 8-K on September 2, 2014 and incorporated herein by reference.

 

(3)	Filed as an exhibit to our current report on Form 8-K on January 5, 2017 and incorporated herein by reference.

 

 

SIGNATURES

 

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

REDSTONE LITERARY AGENTS, INC.

 

 

/s/ James P. Geiskopf
James P. Geiskopf
President, Treasurer, Secretary and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Dated: August 8, 2017