Znergy, Inc. - Annual Report: 2015 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
o 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: 000-55152
MAZZAL HOLDING CORP.
(Exact Name of Registrant As Specified In Its Charter)
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Nevada
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46-1845946
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(State or other jurisdiction
of incorporation or organization)
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IRS I.D.
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6102 MacDill Avenue, Suite G
Tampa, Florida 33611
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(Address of principal executive offices)
(813) 902 9000
(Registrant’s telephone number, including area code)
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Securities registered under 12(b) of the Exchange Act:
None
Securities registered under 12(g) of the Exchange Act:
Common Stock, par value $0.0001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x
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 during the preceding 2 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
Indicated by check mark whether the registrant:(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o
Indicate by check mark if disclosure of delinquent filings pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer , an accelerated filer , a non-accelerated filer , or a smaller reporting company . See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2015, was $168,000. For purposes of the foregoing calculation only, directors and executive officers and holders of 10% or more of the issuer’s common capital stock have been deemed affiliates.
On April 18, 2016, 180,050,000 shares of the registrant's common stock were outstanding. (On February 4, 2015, Mazzal Holding Corp. filed an amendment to its Articles of Incorporation (as amended to date) to effectuate a 10-for-1 share forward stock split. All share totals listed in this Annual Report are given as post-stock-split totals, i.e. fully reflecting the effect of the stock split.)
TABLE OF CONTENTS
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PART I
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Item 1.
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3
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Item 1A.
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7
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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7
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Item 3.
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7
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Item 4.
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7
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PART II
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Item 5.
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8
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Item 6.
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9
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Item 7.
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10
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Item 7A.
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14
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Item 8.
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14
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Item 9.
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14
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Item 9A.
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15
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Item 9B.
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16
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PART III
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Item 10.
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17
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Item 11.
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18
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Item 12.
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19
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Item 13.
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20
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Item 14.
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20
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PART IV
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Item 15.
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22
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24
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PART I
Special Note Regarding Forward-Looking Statements
Information included or incorporated by reference in this Annual Report on Form 10-K 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,” “projects,” “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 Annual Report on Form 10-K 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 Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 1 0 -K. 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, 1 00 F. Street, NE, Washington, D.C. 2 0 549. 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 Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
ITEM 1. BUSINESS
Preliminary Note
On February 4, 2015, Mazzal Holding Corp. filed an amendment to its Articles of Incorporation (as amended to date) to effectuate a 10-for-1 share forward stock split. All share totals listed in this Annual Report are given as post-stock-split totals, i.e. fully reflecting the effect of the stock split.
General
Prior Business and Operations
Mazzal Holding Corp. (formerly Boston Investment and Development Corp), was formed in the state of Nevada on January 23, 2013. We were founded by Nissim Trabelsi, who, until February 2016, was the beneficial owner of a majority of our common stock.
The business and purpose of the Company previously was to purchase approved multi-family land, and then develop and build on said land for a profit.
On March 31 , 2013, the Company entered into a Standard Land Purchase and Sale Agreement (the “Purchase Agreement”) with the Mazzal Trust, pursuant to which the Company purchased property (the “Taunton Property”) consisting of “the land and all buildings thereon known as 171 Hart St ., Taunton MA 02780 .” The Taunton Property consists of approximately 25 acres. The Taunton Property is located in the Green Pines Townhomes subdivision, and the subdivision is managed by the Green Pines Townhomes Condominium Trust. (The manager of the Green Pines Townhomes Condominium Trust is Green Pines, LLC, a shareholder of the Company, the manager of which is Marty Trabelsi, the brother of Nissim Trabelsi, the Company’s President.) The purchase price for the Taunton Property was 1,500,000 shares of the Company’s common stock. On May 29, 2013, the purchase of the Taunton Property closed, and the seller delivered the deed, and the Company issued the shares.
Command Control Center Corp.
On October 23, 2014, the Company created a subsidiary company, Command Control Center Corp. (“Command Control”), and filed articles of incorporation for Command Control in the state of Nevada. Mr. Trabelsi served as the sole officer (CEO) and director of Command Control. From inception, Command Control worked to create a business plan that would meet the needs of the current online market. To help establish the new business, Mr. Trabelsi sought to prepare for development of a software platform and launch multiple marketing and advertising campaigns.
Additionally, on May 13, 2015, real property with a cost of approximately $800,000 was conveyed to Command Control for future development and expansion. Command Control planned to develop a hotel project on the property (the “Hotel Property”), but subsequently sold the Hotel Property, as discussed more below. The land was acquired with bank debt of $385,000 and a loan from a related party of $415,000.
Global ITS Transaction
On October 26, 2015, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with Global ITS, Inc.. (“Global”), a development stage company and the shareholders of Global, pursuant to which the Company exchanged 120,000,000 of its common shares (the “Company Shares”) for 24,000,000 Global common shares held by Global’s shareholders representing 100% of Global’s outstanding shares (the “Share Exchange”).
Pursuant to the Agreement, the Company became the sole shareholder of Global, and became obligated to issue 120,000,000 shares of the Company’s common stock. Global, a privately held Wyoming development stage corporation, is focused on marketing energy efficiency (“EE”) and commercial security (“CS”) products. Its wholly owned subsidiary, Znergy, Inc., a Florida corporation (“Znergy”), is focused on financing EE and CS projects for Global’s customers and for third party projects.
Global intends to grow organically by selling EE and CS products to municipal and state governments, universities and colleges, K-12 schools, and hospitals (the “MUSH” market). Strained government budgets have convinced state and local governments across the United States to embrace a new form of performance-based investments in energy efficiency offered by energy services companies, or ESCOs. An ESCO provides energy-efficiency-related and other value-added services and for which performance contracting is a core part of its energy-efficiency services business. In a performance contract, the ESCO guarantees energy or financial savings for the project, which means ESCOs only make money if the project performs as promised. The total energy management services market – which includes ESCOs – will approach $50 billion by 2017, according to a new research report by Verify Markets.
Znergy increases the Company’s competitive position by providing funding for EE projects in amounts ranging from $500,000 up to $50 million.
In addition, the Company will look for accretive acquisitions in the diverse and fragmented EE marketplace.
Recent Developments
Change in Control Transaction
On November 19, 2015, Mr. Trabelsi, who was serving at the time as the Company’s President and CEO, entered into a binding term sheet (the “Term Sheet”) to sell 100% of his shares of the Company’s common stock to Peter Peterson or entities designated by him for an aggregate purchase price of $500,000, minus certain expenses to be paid prior to closing. Additionally, the Mazzal Trust (the “Trust”), the Company’s largest shareholder, agreed to return to the Company 150,000,000 shares of the Company’s common stock, in exchange for which the Company will transfer all right, title, and interests in and to the Company’s real property located in Taunton, Massachusetts (the “Taunton Property”), to the Trust.
Subsequently, on February 9, 2016, following additional negotiations between the parties, the Company, Mr. Trabelsi; Shawn Telsi (a significant shareholder); the Mazzal Living Trust, the majority shareholder of the Company (the “Trust”); and B2 Opportunity Fund, LLC, a Nevada limited liability company (“B2”), entered into an Amended Master Stock Purchase Agreement (the “Master Agreement”).
Pursuant to the Master Agreement, Mr. Trabelsi and Mr. Telsi each agreed to sell 100% of the shares of the Company’s common stock owned by them to B2 or its designees. Mr. Trabelsi sold 45,800,000 shares of the Company’s common stock, and Mr. Telsi sold 9,500,000 shares of the Company’s common stock. The aggregate purchase price paid for the 55,300,000 shares was Three Hundred Fifteen Thousand Dollars ($315,000).
Sale of Real Property
In connection with the Master Agreement, the Company agreed to sell to the Trust, and the Trust agreed to purchase from the Company, real property which the Trust had previously sold to the Company, described above as the Taunton Property. Additionally the Company’s subsidiary, Command Control, sold the Hotel Property (collectively with the Taunton Property, the “Property”). As consideration for the purchase of the Property, the Trust returned to the Company 149,950,000 of the 150,000,000 shares of the Company’s common stock owned by the Trust, while retaining 50,000 of the shares.
In connection with the execution of the Master Agreement, the Company canceled the 149,950,000 shares of common stock conveyed by the Trust.
The foregoing description of the Master Agreement is qualified in its entirety with reference to the entire agreement, which was been filed as an exhibit to the Company’s Current Report on Form 8-K, filed with the SEC on February 12, 2016.
New Director; New Officer; Resignation of Mr. Trabelsi
In connection with his sale of his and Mr. Telsi’s shares, Mr. Trabelsi appointed Christopher J. Floyd to the Board of Directors of the Company and to the Board of Directors of Command Control Center Corp. (“CCC”), the Company’s wholly owned subsidiary. Mr. Trabelsi also appointed Mr. Floyd as the CEO, CFO, and Secretary of both the Company and of CCC. Following Mr. Trabelsi’s appointment of Mr. Floyd to the boards of directors and as an officer of the Company and CCC, Mr. Trabelsi resigned from all positions with the Company and with CCC, effective immediately. Mr. Floyd, as the Company’s remaining director, accepted the resignations.
There were no disagreements or disputes between Mr. Trabelsi and the Company or the Board of Directors.
A copy of Mr. Trabelsi’s notice of resignation was included as an exhibit to the Company’s Current Report filed on February 12, 2016. The Company provided to Mr. Trabelsi a copy of the Current Report for his review prior to filing.
Change in Control
In connection with the Master Agreement and the cancellation of the Trust’s shares in connection with the sale of the Property, a change of control of the Company occurred.
As noted above, in October 2015, the Company entered into a Share Exchange Agreement with Global and the shareholders of Global ITS, pursuant to which the Company acquired all of the outstanding shares of Global ITS. The Global ITS shareholders tendered their shares of Global ITS common stock in exchange for which the Company has a contractual obligation to issue 120,000,000 shares of its Common Stock to the shareholders of Global ITS. Following their issuance, the 120,000,000 shares represented in the aggregate approximately 36% of the issued and outstanding shares of the Company.
Immediately prior to the execution of the Master Agreement, the Company had 330,000,000 common shares issued and outstanding. Mr. Trabelsi, through his personal ownership and as Trustee of the Trust, beneficially owned approximately 60% of the outstanding shares.
As noted above, in connection with the Master Agreement discussed above, Mr. Trabelsi sold his shares of common stock to B2 or its designees, and the Trust agreed to purchase the Properties from the Company in exchange for 149,950,000 shares of the Company’s common stock, which were canceled by the Company following the closing of the transaction. As such, following the closing of the Master Agreement, the Company had 180,050,000 shares issued and outstanding. As of the date of this Report, to our knowledge, Mr. Trabelsi owned indirectly, through the Trust, 50,000 shares of the Company’s common stock.
The Global ITS holders, as a group, hold shares representing approximately 67% of the total issued and outstanding shares. B2’s designee, Lone Cypress LLC, owns shares representing approximately 25% of the outstanding common stock.
As such, a change of control of the Company occurred in connection with the execution of the Master Agreement and the cancellation of the Trust’s shares. As noted, the Global ITS shareholders tendered their shares of Global ITS common stock in exchange for the shares of the Company’s common stock.
Global ITS has approximately 50 shareholders, including Lone Cypress, LLC. Following the distribution of Company’s shares to the Global ITS shareholders, none of the former Global ITS shareholders owned 10% or more of the Company’s shares other than Lone Cypress, which received an aggregate of 41,137,120, which was equal to approximately 23% of the total outstanding shares of the Company.
Financing Strategy
The Company anticipates that it will finance its operations, at least initially, through the sale of its shares of common stock, which will result in dilution to the current owners of our shares of common stock, and through future business acquisitions. There can be no guarantee, however, that should we embark upon a strategy to sell our equity securities that such offering will be successful in providing the Company with sufficient capital to implement its business plan.
Competition
The clean-tech industry is highly competitive. The energy efficiency segment for small commercial businesses is also highly competitive. The Company competes with various types and sizes of companies ranging from local and national service providers.
The efficient lighting market, which is part of the clean-tech industry served by the Company is also highly competitive, with some of the largest suppliers of lighting components also serving many of the same markets and competing for the same customers. Competition is based on numerous factors, including features and benefits, brand name recognition, product quality, product and lighting system design, energy efficiency, customer relationships, service capabilities, and price. The Company’s largest competitors in the North American lighting market include the lighting divisions of Acuity Brands, Koninklijke Philips N.V., Eaton Corporation, Hubbell Incorporated, Schneider Electric, Cree, Inc., and General Electric Company. The Company estimates that the largest publicly traded manufacturers, which participate in varying degrees in the North American lighting market, have over half of the total market share. In addition to these large competitors, the Company also competes with hundreds of manufacturers of varying size.
Employees
As of the date of this Annual Report, we had one employee. The Company is currently in the development stage. During the development stage, we plan to rely substantially on the services of Mr. Floyd, our President, CEO, and CFO, to set up our business operations.
Employment Agreements
There are currently no employment agreements with management.
Board Committees
The Company has not yet implemented any board committees as of the date of this Report.
Directors
The maximum number of directors the Company is authorized to have is nine. However, in no event may the Company have fewer than one director. Although the Company anticipates appointing additional directors, as of the date of this Annual Report, it had not identified any such persons.
As of the date of this Annual Report, we had one director: Christopher J. Floyd.
Director Compensation
None.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
ITEM 1A. RISK FACTORS
Not required for Smaller Reporting Companies.
ITEM 2. PROPERTIES
Following the sale of the Taunton Property and the Hotel Property to the Trust, described above, as of the date of this Report, the Company owned no real property.
Company Offices
As of the date of this Report, the Company was using office space located at 6102 MacDill Avenue, Suite G, Tampa, Florida 33611 on a month to month basis. The Company’s management believes that the current office space is sufficient enough for the Company for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
There is only a very limited established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. A stockholder in all likelihood, therefore, will not be able to resell his or her securities should he or he desire to do so when eligible for public resale. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities.
In 2013, the Company filed a registration statement (the “Registration Statement”) to register the resale by certain selling shareholders of shares of the Company’s common stock. The Registration Statement was declared effective in February 2014. That Registration Statement was a step toward creating a public market for the Company’s common stock, which may enhance the liquidity of the Company’s shares. However, there can be no assurance that a meaningful trading market will develop. The Company and its management make no representation about the present or future value of the Company’s common stock.
As of April 18, 2016:
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There were no outstanding options or warrants to purchase, or other instruments convertible into, common equity of the Company; and
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There were 180,050,000 shares of the Company’s common stock held by approximately 47 shareholders of record.
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As of the date of this Annual Report, the Company was not classified as a “shell company” under Rule 405 of the Securities Act, and to the knowledge of the management of the Company, the Company has never been a shell company. As such, all restricted securities presently held by the founder and other officers or directors of the Company may be resold in reliance on Rule 144, once all requirements set forth in that Rule have been met.
Penny Stock Considerations
Our shares likely will be “penny stocks” as that term is generally defined in the Exchange Act and the rules and regulations promulgated thereunder to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker - dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker - dealer is required to:
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Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
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Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
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Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and
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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, prior to conducting any penny stock transaction in the customer’s account.
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Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of our stockholders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our stockholders will, in all likelihood, find it difficult to sell their securities.
Holders
As of the date of this Report, we had approximately 47 holders of record of our Common Stock.
Dividends
We have not declared any cash dividends on our Common Stock since our inception and do not anticipate paying such dividends in the foreseeable future. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
On January 15, 2015 Mazzal Holding Corp. adopted the 2015 Stock Option and Restricted Stock Plan (the “Plan”). In connection with adopting the Plan, the Voting Shareholders also approved a resolution that up to 45,000,000 shares of our common stock may be issued under the terms and conditions of the Plan. That is, at its discretion, the Board of Directors may elect to have issued to directors, employees and consultants it deems deserving, up to 45,000,000 newly issued shares of our common stock, options to purchase our common stock, or some combination thereof. If our Board of Directors decides to issue shares of common stock or options to purchase our common stock, the issuance of such securities would not affect the rights of the holders of our currently outstanding common stock, except for affects incidental to increasing the number of outstanding shares of our common stock, such as dilution of the earnings per share and voting rights of current holders of common stock.
Finally, to accommodate the future issuance of our Common Stock pursuant to the terms and conditions of the Plan, the Voting Stockholders approved a resolution amending our Articles of Incorporation to issue up to 500,000,000 shares of our Common Stock from its previous total of 20,000,000.
As of the date of this Report, the Company had issued 10,000,000 shares under the Plan.
Recent Sales of Unregistered Securities
As noted above, on October 26, 2015, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with Global ITS, Inc.. (“Global”), and the shareholders of Global, pursuant to which the Company issued 120,000,000 of its common shares (the “Company Shares”) in exchange for 24,000,000 Global common shares held by Global’s shareholders representing 100% of Global’s outstanding shares (the “Share Exchange”).
The Company’s issuance of the Company Shares in connection with the Share Exchange was made without registration under the securities Act of 1933 (the “1933 Act”) in reliance on Section 4(a)(2) of the 1933 Act and the rules and regulations promulgated thereunder.
ITEM 6. SELECTED FINANCIAL DATA
Because the Company is a “Smaller Reporting Company,” this information is not required to be provided.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to the audited financial statements included in this Annual Report on Form 10-K. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward- looking statements.
We are a development stage company and have not started operations or generated or realized any revenues from our business operations.
Our auditors have issued an explanatory note regarding our ability to continue as a going concern. This means that our auditors believe there is substantial doubt that we can continue as an on - going business for the next 12 months. Our auditor's opinion is based on our suffering initial losses, having no operations, and having a working capital deficiency. The opinion results from the fact that we have not generated any revenues and no revenues are anticipated until we acquire the required licenses and complete our initial development. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations.
We have one officer, Christopher Floyd, who is our President and only Director. He is responsible for our managerial and organizational structure, which includes preparation and implementation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. With these controls implemented, Mr. Floyd, together with any other executive officers in place at that time, is responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of implementing and updating the controls which may cause us to be subject to sanctions and fines by the Securities and Exchange Commission which ultimately could cause you to lose your investment.
We must raise cash to implement our business plan. The minimum amount of funds which the Company will need to raise that we feel will allow us to implement our business strategy is approximately $200,000. We feel if we cannot raise at least $200,000, the Company will not be able to accelerate the implementation of its business strategy and will be seriously curtailed. We will need to raise the funds through private offerings of our securities or through other means.
The Company was incorporated on January 23, 2013, under the laws of the State of Nevada. The Company is a startup and has not yet realized any revenues. Our efforts have focused primarily on the development and implementation of our business plan. No development related expenses have been or will be paid to affiliates of the Company.
Generating revenues in the next six to twelve months is important to support our planned ongoing operations. However, we cannot guarantee that we will generate such growth. If we do not generate sufficient cash flow to support our operations over the next 12 to 18 months, we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern.
Our management does not anticipate the need to hire additional full or part- time employees over the next six months, as the services provided by our officer and director and others appears sufficient at this time. We believe that our operations are currently on a small scale that is manageable by a few individuals. Our management's responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six months, the professionals we plan to utilize will be considered independent sub - contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.
Our management does not expect to incur research and development costs. We do not have any off-balance sheet arrangements.
We currently do not own any significant plants or equipment that we would seek to sell in the near future.
We have not paid for expenses on behalf of our director. Additionally, we believe that this fact shall not materially change.
Plan of Operation
The Company is focused on partnering with and acquiring energy efficiency companies. The Company’s anticipated plan of operation is to (1) seek out the best current and incipient solutions in the Energy Efficiency marketplace and become a reseller of those solutions, (2) develop our own solutions for the marketplace, and (3) seek to acquire other businesses in the market whose acquisition makes strategic sense and is accretive to earnings.
The Company continues to expand its solutions portfolio for both indoor and outdoor applications in an effort to capitalize on the evolving and growing market for intelligent networked systems that collect and exchange data to increase efficiency as well as provide a host of other economic benefits resulting from data analytics to better enable smart buildings and smart cities. The transition to solid-state lighting provides the opportunity for lighting to be integrated with other building automation systems to create an optimal platform for enabling the “Internet of Things” (IoT), which will support the advancement of smart buildings, smart cities, and the smart grid.
In order to execute this plan, the Company expects to engage as consultants or contractors a full time head of sales and two sales directors. Our initial focus will be on energy efficient lighting. Management anticipates that the Company will need to raise between $200,000 and $500,000 to execute its plan.
The Company’s ability to commence operations is entirely dependent upon its ability to raise additional capital, most likely through the sale of additional shares of the Company’s common stock or other securities. There can be no guarantee that the Company will be able raise additional capital on terms that are acceptable to the Company, or at all.
The realization of revenues in the next twelve months is important in the execution of the plan of operations. However, if the Company cannot raise additional capital by issuing capital stock in exchange for cash, or through obtaining commercial or bank financing, in order to continue as a going concern, the Company may have to curtail or cease its operations. As of the date of this Report, there were no formal or informal agreements to attain such financing. The Company cannot assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for operations to continue.
Forward Looking Statements.
Information in this Annual Report on Form 10-K contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933 , as amended , and Rule 3b-6 of the Securities Act of 1934 , as amended . When used in this Form 10-K , the words “expects,” “anticipates,” “believes,” “plans,” “forecasts, ” “projects,” “intends,” “strategy,” “may,” “will,” “will likely result,” and similar expressions are intended to identify forward-looking statements . These are statements that relate to future periods and include, but are not limited to , statements regarding the adequacy of cash , expectations regarding net losses and cash flow, statements regarding growth , the need for future financing , dependence on personnel , and operating expenses.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events , conditions or circumstances on which any such statement is based.
Critical Accounting Policies
The SEC has issued Financial Reporting Release No. 60,“Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates; (b) real estate assets; (c) impairment long lived assets; and (d) share based payments. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.
(a) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts or revenues and expenses during the reporting period. Actual results could differ from those estimates.
(b) Real estate assets
Real estate assets are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of properties are capitalized. Acquisition-related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development .
Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
The Company considers a construction project as substantially completed and held available for sale upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).
Depreciation is calculated using the straight-line method over the estimated useful lives of the properties. The estimated useful lives are as follows:
|
Buildings and improvements
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10 to 40 years
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|
Other building and land improvements
|
20 years
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|
Furniture, fixtures and equipment
|
5 to 10 years
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(c) Impairment Long-Lived Assets
For purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company assesses the impairment of long-lived assets (including identifiable intangible assets) annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
When management determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we test for any impairment based on a projected undiscounted cash flow method . Projected future operating results and cash flows of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long- lived and intangible assets. The Company estimates the future cash flows of the long-lived assets using current and long-term financial forecasts. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this were the case, an impairment loss would be recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.
(d) Real Estate Assets Held for Sale
The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after the approval of the Company’s board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying balance sheets. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated.
(e) Share based payments
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
JOBS Act
On April 5 , 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we have the option to delay adoption of new or revised accounting standards until those standards would otherwise apply to private companies, until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period for complying with such new or revised accounting standards. We have elected to opt out of this extended transition period. As noted, this election is irrevocable.
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.
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU No. 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. This Update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU No. 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
We believe that no other recently issued or proposed accounting standards will have a material effect on our financial statements.
Off-Balance Sheet Arrangements
None.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Audited financial statements as of and for the years ended December 31, 2015 and 2014, are presented in a separate section of this report following Item 15.
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F-2
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F-3
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F-4
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F-5
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F-6
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F-7
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On March 9, 2016, the Company’s Board of Directors approved the Company’s dismissal of Weinstein & Co. (“Weinstein”) as independent auditors for the Company and its subsidiaries.
Weinstein’s reports on the Company’s financial statements for the fiscal years ending December 31, 2014 and 2013, and through the date of dismissal did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. Weinstein’s reports for the years ended December 31, 2014 and 2013, were modified to include an emphasis regarding uncertainty about the Company’s ability to continue as a going concern.
There have been no disagreements with Weinstein on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Weinstein, would have caused it to make reference to the subject matter of the disagreement in connection with its report. None of the events described in Item 304(a)(1)(v) of Regulation S-K has occurred with respect to Weinstein.
The Company provided to Weinstein the disclosure contained in the Form 8-K and requested Weinstein to furnish a letter addressed to the Commission stating whether it agrees with the statements made by the Company herein and, if not, stating the respects in which it does not agree. A letter from Weinstein was attached as Exhibit 16.1 to the Form 8-K and incorporated herein by reference.
On March 9, 2016, the Board of Directors approved the Company’s engagement of Frazier & Deeter, LLC (“F&D”) as independent auditors for the Company and its subsidiaries. The Company engaged F&D on March 9, 2016.
Neither the Company nor anyone on its behalf during its two most recent fiscal years or during any subsequent interim period prior to F&D’s appointment as the Company’s independent registered public accounting firm consulted F&D regarding (i) the application of accounting principles to a specific completed or contemplated transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, or (iii) any matter that was the subject of a disagreement or event identified in response to Item 304(a)(2) of Regulation S-K (there being none).
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, to allow for timely decisions regarding required disclosure.
As of December 31, 2015, the end of our fiscal year covered by this report, we carried out an evaluation, under the supervision of our Chief Executive Officer and our principal financial officer, who is the same person, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, we concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report. Our board of directors has one member. We do not have a formal audit committee and there is a lack of segregation of duties.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended). In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, our management used the criteria set forth by the 2013 Committee of Sponsoring Organizations framework. Our management has concluded that, as of December 31, 2015, our internal control over financial reporting was not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There have been no significant changes in our internal controls over financial reporting that occurred during the year ended December 31, 2015, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B. OTHER ITEMS
Code of Ethics
As of the date of this Report, we had not adopted a formal, written code of conduct (“Code of Ethics”) within the specific guidelines promulgated by the SEC, although we intend to adopt a Code of Ethics during the second or third quarter of 2016.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE DIRECTORS AND EXECUTIVE OFFICERS
Directors are elected by the stockholders to a term of one year and serves until his or her successor is elected and qualified. Each of the officers is appointed by the Board of Directors to a term of one year and serves until her or her successor is duly elected and qualified, or until he or she is removed from office. The Board of Directors has no nominating, auditing or compensation committees.
Background of Directors, Executive Officers
Christopher J. Floyd, CEO, CFO, Director
Mr. Floyd has wide-ranging experience in public company reporting, fundraising, and transactions. He is currently the managing member for B2 Capital Partners, LLC, a boutique advisory and consulting firm. From 2011 until the present he has been an independent consultant for public and private companies. In 2010, Mr. Floyd was a turnaround specialist and CFO for Blackhawk Healthcare, LLC, in Austin, Texas, a $80 million revenue multi-hospital group. He successfully implementing a plan that restored the group to profitability and resulted in a sale of the business. From 2006 through 2009, Mr. Floyd was an independent consultant and acting CFO for a number of technology and healthcare companies. Previously, Mr. Floyd worked for Ernst & Young in Berlin, Germany, performing audit and privatization engagements. He received his Master of Business Administration from the Wharton School of the University of Pennsylvania in 1991 and his Bachelor of Science in Electrical Engineering from the University of South Florida, 1986.
Meetings of the Board of Directors
As noted above, the Company’s prior officer and director resigned in February 2016 and new board member replaced him.
The Board of Directors and Committees
As of the date of this Report, we had no independent directors. However, because we intend to list our stock for trading on the OTC Markets, which do not require independent directors, we are not required to have independent directors. We anticipate appointing independent directors as required in the future.
Audit Committee
As of the date of this Report, we did not have a standing Audit Committee. We intend to establish an Audit Committee of the Board of Directors, which will consist of independent directors, of which at least one director will qualify as a qualified financial expert as defined in the regulations of the SEC. The Audit Committee’s duties would be to recommend to our Board of Directors the engagement of independent auditors to audit our consolidated financial statements and to review our accounting and auditing principles. The Audit Committee would review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors, if any, and independent public accountants, including their recommendations to improve the system of accounting and internal control. The Audit Committee would at all times be composed exclusively of directors who are, in the opinion of our Board of Directors , free from any relationship that would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles. As of the date of this Report, we did not have an audit committee financial expert, in light of our size, although we intend to review this issue as the Company grows, especially as the Company implements a standing Audit Committee.
Compensation Committee
As of the date of this Report, we did not have a standing Compensation Committee. We intend to establish a Compensation Committee of the Board of Directors. The Compensation Committee would review and approve our salary and benefits policies, including compensation of executive officers. The Compensation Committee would also administer any stock option plans that we may adopt and recommend and approve grants of stock options under such plans.
Nominating and Corporate Governance Committee
As of the date of this Report, we did not have a standing Nominating and Corporate Governance Committee. We intend to establish a Nominating and Corporate Governance Committee of the Board of Directors to assist in the selection of director nominees, approve director nominations to be presented for stockholder approval at our annual meeting of stockholders and fill any vacancies on our Board of Directors, consider any nominations of director candidates validly made by stockholders, and review and consider developments in corporate governance practices .
Code of Ethics
As of the date of this Report, we had not adopted a formal, written code of conduct (“Code of Ethics”) within the specific guidelines promulgated by the SEC, although we intend to adopt a Code of Ethics during the second or third quarter of 2016.
Corporate Governance
As of the date of this Annual Report, we had one director and one officers. Once the Company is able to increase its number of directors and executive officers, the Company intends to approve an Internal Control Manual so that management has an organizational guide for the purpose of establishing policy toward Company-wide treatment of check writing and receiving, as well as the items relating to disclosure to shareholders and regulators.
Indemnification
Under our Articles of Incorporation and Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The Company was formed in January 2013. No officer or director has received any compensation from the Company since the inception of the Company. Until the Company acquires additional capital, it is not anticipated that any officer or director will receive compensation from the Company other than reimbursement for out - of-pocket expenses incurred on behalf of the Company.
On January 15, 2015 the Company adopted the 2015 Stock Option and Restricted Stock Plan. In connection with adopting the Plan, the Voting Shareholders also approved a resolution that up to 50,000,000 shares of our common stock may be issued under the terms and conditions of the Plan. That is, at its discretion, the Board of Directors may elect to have issued to directors, employees and consultants it deems deserving, up to 50,000,000 newly issued shares of our common stock, options to purchase our common stock, or some combination thereof. If our Board of Directors decides to issue shares of common stock or options to purchase our common stock, the issuance of such securities would not affect the rights of the holders of our currently outstanding common stock, except for affects incidental to increasing the number of outstanding shares of our common stock, such as dilution of the earnings per share and voting rights of current holders of common stock.
We have no employment agreement with our officer, although we may enter into such agreements following our receipt of additional capital.
The Company does not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions. We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors.
Directors' Compensation
Directors are entitled to receive reimbursement of out-of-pocket expenses.
There are no other formal or informal arrangements or agreements to compensate directors for services provided as directors.
Stock Option Grants
The Company has not granted any stock options.
Employment Agreements
There are no employment agreements.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to the Company to own more than 5% of the outstanding common stock as of April 18, 2016, and by the Officers and Directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
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Name and Address
of Beneficial Owner
|
Amount of
Beneficial Ownership
|
Percent of
Class*
|
||||||
|
C&M Baskin Investments, LLC
PO Box 329, Livingston, TX 77351
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16,348,335 | 9.08 | % | |||||
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B2 Opportunity Fund, LLC
606 South Ninth Street
Las Vegas, NV 89101
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12,500,000 | 6.94 | % | |||||
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Lone Cypress, LLC
6102 S. MacDill Avenue
Tampa, FL 33611
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65,150,000 | 36.18 | % | |||||
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Christopher J. Floyd, President and Chairman
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75,150,000 | (1) | 41.74 | % | ||||
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Officers and Directors as a Group (1 Person)
|
75,150,000 | (1) | 41.74 | % | ||||
*The percent of class is based on 180,050,000 shares of common stock issued and outstanding as of April 14, 2016.
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(1)
|
Includes 10,000,000 shares of common stock owned directly by Mr. Floyd, and 65,150,000 shares of common stock owned by Lone Cypress, an entity of which Mr. Floyd is an officer, and of which Mr. Floyd exercises voting and dispositive control. Mr. Floyd disclaims beneficial ownership of the shares owned of record by Lone Cypress.
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As noted above, on February 4, 2015, the Company effectuated a forward stock split at a ratio of ten new shares for each one existing share (10:1). The share totals given throughout this Annual Report reflect post-stock-split totals, i.e. fully reflecting the effect of the stock split.
As noted above, pursuant to the Master Agreement, Mr. Trabelsi and Mr. Telsi each agreed to sell 100% of the shares of the Company’s common stock owned by them to B2 or its designees. Mr. Trabelsi sold 45,800,000 shares of the Company’s common stock, and Mr. Telsi sold 9,500,000 shares of the Company’s common stock. The aggregate purchase price paid for the 55,300,000 shares was Three Hundred Fifteen Thousand Dollars ($315,000). B2’s designee, Lone Cypress LLC, owns shares representing approximately 25% of the outstanding common stock. Mr. Floyd is an officer of Lone Cypress LLC.
Command Control Center Corp.
The Company is the sole shareholder in Command Control Center Corp. (“Command Control”), a new development stage company of which Mr. Trabelsi was the Founder and Chief Executive Officer, until his resignation from all positions with the Company and with Command Control. As of the date of this Report, Mr. Floyd was the sole officer and director of Command Control. Command Control filed an S-1 registration statement in the first quarter of 2015 to register the sale by Command Control of up to 80,000,000 shares of its common stock in an initial public offering. As of the date of this Report, Command Control had received comments from the SEC on this registration statement and Command Control plans to reply to these comments and pursue this filing until it is declared effective. No shares of Command Control’s common stock have been sold under the registration statement as of the date of this Report. Following the resignation of Mr. Trabelsi from all positions with Command Control, the Company is evaluating various opportunities for Command Control.
Other than these, to the Company’s knowledge, no Selling Stockholder has, or had, any material relationship with our officers or directors.
Director Independence
As of the date of this Report, we had no independent directors as defined by the rules of the SEC or any securities exchange or inter-dealer quotation system. Our stock has been accepted for trading on the OTC Markets, which does not impose standards relating to director independence or the makeup of committees with independent directors, or provide definitions of independence.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the year ended December 31, 2015, the Company's executive officers, directors and 10% stockholders were required under Section 16 of the Securities Exchange Act of 1934, as amended, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Copies of these reports must also be furnished to the Company.
To the best knowledge of the Company’s current management, based solely on their review of the copies of the reports received by the Company and written representations from certain reporting persons, we note that all of our directors, executive officers, and greater than 10 percent shareholders filed all required reports during or with respect to the year ended December 31, 2015, on a timely basis.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
As noted above, on March 9, 2016, the Company’s Board of Directors approved the Company's dismissal of Weinstein & Co. (“Weinstein”) as independent auditors for the Company and its subsidiaries.
Weinstein was the Company’s independent registered public accounting firm through March 9, 2016.
Weinstein Audit Fees
The aggregate fees billed or to be billed by Weinstein for professional services rendered for the audit of our annual financial statements, review of our quarterly financial statements or services that are normally provided in connection with statutory and regulatory filings were $6,571 for the period ended December 31, 2015.
Weinstein Audit Related Fees
There were no fees billed by Weinstein for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for the year ended December 31, 2015.
Weinstein Tax Fees
There were no fees billed by Weinstein for professional services for tax compliance, tax advice, tax planning for the year ended December 31, 2015.
All Other Fees
There were no fees billed by Weinstein for other products and services for the year ended December 31, 2015.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
15(a)(1). Financial Statements.
The following financial statements, and related notes and Report of Independent Registered Public Accounting Firm are filed as part of this Annual Report.
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CONTENTS:
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F-2
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F-3
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F-4
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F-5
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F-6
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F-7
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Mazzal Holding Corp.
We have audited the accompanying consolidated balance sheets of Mazzal Holding Corp. (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to such consolidated financial statements, the Company has incurred recurring losses from operations, has negative working capital and has ongoing requirements for additional capital investment. These factors raise doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 11 the Company corrected an error related to the purchase of land in 2013. The land was originally been recorded at $1,500,000. This carrying amount was subsequently reduced to $1,072,000 to reflect the actual cost to the Mazzal Trust. The correction of the carrying value of $428,000 was recorded as an adjustment to the accumulated deficit on December 31, 2013.
/s/ Frazier & Deeter, LLC
Frazier & Deeter, LLC
April 18, 2016
Tampa, Florida
MAZZAL HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
|
December 31,
|
December 31,
|
|||||||
|
2015
|
2014
|
|||||||
|
(RESTATED)
|
||||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash
|
$
|
1,279
|
$
|
3,000
|
||||
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Prepaid expenses
|
-
|
300
|
||||||
|
Total current assets
|
1,279
|
3,300
|
||||||
|
Real estate held for sale
|
1,897,000
|
1,097,000
|
||||||
|
Deposit on property
|
-
|
25,000
|
||||||
|
Intangible assets
|
4,345
|
-
|
||||||
|
TOTAL ASSETS
|
$
|
1,902,624
|
$
|
1,125,300
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts payable
|
$ |
20,799
|
$ |
17,929
|
||||
|
Accrued expenses
|
61,354
|
-
|
||||||
|
Loan with related party
|
860,743
|
37,172
|
||||||
|
Total current liabilities
|
942,896
|
55,101
|
||||||
|
COMMITMENTS AND CONTINGENCIES
|
||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Preferred stock, $0.0001 par value, 100,000,000
authorized shares; no shares issued and outstanding
|
-
|
-
|
||||||
|
Common stock, $0.0001 par value; 500,000,000 shares
authorized; 330,000,000 and 200,000,000 shares issued
and outstanding at December 31, 2015 and 2014
|
33,000
|
20,000
|
||||||
|
Additional paid-in-capital
|
7,897,200
|
1,522,200
|
||||||
|
Accumulated deficit
|
(6,970,472
|
)
|
(472,001
|
)
|
||||
|
Total stockholders' equity
|
959,728
|
1,070,199
|
||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ |
1,902,624
|
$ |
1,125,300
|
||||
The accompanying notes are an integral part of these consolidated financial statements
MAZZAL HOLDING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
For the Years Ended
|
||||||||
|
December 31,
|
December 31,
|
|||||||
|
2015
|
2014
|
|||||||
|
Revenue
|
$
|
-
|
$
|
-
|
||||
|
Selling, general and administrative expenses
|
469,473
|
16,691
|
||||||
|
Loss from operations
|
(469,473
|
)
|
(16,691
|
)
|
||||
|
Other income (expense)
|
||||||||
|
Interest expense
|
(40,998
|
)
|
9
|
|||||
|
Purchased research and development
|
(5,988,000
|
)
|
-
|
|||||
|
Total other income (expense)
|
(6,028,998
|
)
|
9
|
|||||
|
Net loss
|
$
|
(6,498,471
|
)
|
$
|
(16,682
|
)
|
||
|
Net loss per common share - basic and diluted
|
$
|
(0.03
|
)
|
$
|
(0.00
|
)
|
||
|
Weighted average number of shares outstanding
during the year - basic and diluted
|
227,315,068
|
200,000,000
|
||||||
The accompanying notes are an integral part of these consolidated financial statements
MAZZAL HOLDING CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
|
Total
|
||||||||||||||||||||
|
Additional
|
Stockholders'
|
|||||||||||||||||||
|
Common Stock
|
Paid in
|
Accumulated
|
Equity
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Deficit
|
(Deficit)
|
||||||||||||||||
|
Balance at December 31, 2013 (RESTATED)
|
200,000,000
|
$
|
20,000
|
$
|
1,522,200
|
$
|
(455,319
|
)
|
$
|
1,086,881
|
||||||||||
|
Net loss
|
(16,682
|
)
|
||||||||||||||||||
|
Balance at December 31, 2014 (RESTATED)
|
200,000,000
|
20,000
|
1,522,200
|
(472,001
|
)
|
1,070,199
|
||||||||||||||
|
Common stock issued for services
at a price of $0.04 per share
|
10,000,000
|
1,000
|
399,000
|
-
|
400,000
|
|||||||||||||||
|
Common stock issued for acquisition
of Global ITS, Inc. at a price of $0.049 per share
|
120,000,000
|
12,000
|
5,976,000
|
-
|
5,988,000
|
|||||||||||||||
|
Net loss
|
-
|
-
|
-
|
(6,498,471
|
)
|
(6,498,471
|
)
|
|||||||||||||
|
Balance at December 31, 2015
|
330,000,000
|
$
|
33,000
|
$
|
7,897,200
|
$
|
(6,970,472
|
)
|
$
|
959,728
|
||||||||||
The accompanying notes are an integral part of these consolidated financial statements
MAZZAL HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Years Ended
|
||||||||
|
December 31,
|
December 31,
|
|||||||
|
2015
|
2014
|
|||||||
|
CASH FLOWS USED IN OPERATING ACTIVITIES:
|
||||||||
|
Net loss
|
$ | (6,498,471 | ) | (16,682 | ) | |||
|
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
|
Common stock issued for purchased research and development
|
5,988,000 | - | ||||||
|
Common stock issued for services
|
400,000 | - | ||||||
|
Bank fees and interest paid by related party
|
41,000 | - | ||||||
|
Depreciation and amortization
|
1,250 | - | ||||||
|
Prepaid expenses
|
300 | - | ||||||
|
Accounts payable and accrued expenses
|
58,529 | 11,129 | ||||||
|
Net cash used in operating activities
|
(9,392 | ) | (5,553 | ) | ||||
|
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||
|
Land Deposit
|
- | (25,000 | ) | |||||
|
Cash acquired with acquisition
|
100 | - | ||||||
|
Properties under development
|
- | (1,000 | ) | |||||
|
Net cash used in investing activities
|
100 | (26,000 | ) | |||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds from overdraft facilities
|
- | (2,623 | ) | |||||
|
Proceeds from advances from related party
|
7,571 | 37,172 | ||||||
|
Net cash provided by financing activities
|
7,571 | 34,549 | ||||||
|
INCREASE (DECREASE) IN CASH
|
(1,721 | ) | 2,996 | |||||
|
CASH, BEGINNING OF YEAR
|
3,000 | 4 | ||||||
|
CASH, END OF YEAR
|
$ | 1,279 | $ | 3,000 | ||||
|
Supplemental Disclosures
|
||||||||
|
Interest paid in cash for the period
|
$ | - | $ | - | ||||
|
Income taxes paid in cash for the period
|
$ | - | $ | - | ||||
|
Non-cash investing and financing activities:
|
||||||||
|
Net liabilities assumed in acquisition
|
$ | 1,527 | $ | - | ||||
|
Related party loans - direct payments for real property
|
$ | 415,000 | $ | - | ||||
|
Real property acquired with bank loan
|
$ | 385,000 | $ | - | ||||
|
Direct repayment of bank loan by related party
|
$ | 385,000 | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION
Mazzal Holding Corp (formerly Boston Investment and Development Corp.) is a Nevada corporation (the “Company”), incorporated under the laws of the State of Nevada on January 23, 2013. The original business plan of the Company was the construction and management of multi-family home developments and the subsequent sale thereof. On October 23, 2014 the Company incorporated Command Control Center Corp as a wholly-owned subsidiary. The Company and its subsidiary planned to establish a luxury boutique hotel catering to the local religious community and religious tourists in Boston and to create a multi-use software platform which can manage every aspect of a user’s online profile.
On October 26, 2015 the Company acquired Global ITS, Inc. and its wholly owned subsidiary, Znergy, Inc. in order to expand into the Energy Efficiency (EE) marketplace, focusing on commercial lighting and green project financing. On February 9, 2016, the Company agreed to sell to the Mazzal Trust the real property which the Trust had previously sold to the Company and the Trust returned to the Company 149,950,000 of the 150,000,000 shares of the Company’s common stock owned by the Trust. The Company is now focused solely on the EE marketplace.
Basis of Presentation
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts or revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation.
Revenue Recognition
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenue at the time for services is recognized when the services are rendered.
The Company has not yet generated any significant revenue.
Real estate assets
Real estate assets are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of properties are capitalized. Acquisition-related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.
Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The Company considers a construction project as substantially completed and held available for sale upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).
Depreciation is calculated using the straight-line method over the estimated useful lives of the properties. The estimated useful lives are as follows:
Buildings and improvements - 10 to 40 years
Other building and land improvements - 20 years
Furniture, fixtures and equipment - 5 to 10 years
As of December 31, 2015 and 2014, the Company’s real estate assets consist of land which is not subject to depreciation.
Impairment Long-Lived Assets
For purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company assesses the impairment of long-lived assets (including identifiable intangible assets) annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
When management determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we test for any impairment based on a projected undiscounted cash flow method. Projected future operating results and cash flows of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long-lived and intangible assets. The Company estimates the future cash flows of the long-lived assets using current and long-term financial forecasts. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this were the case, an impairment loss would be recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. At December 31, 2015, the Company believes that no impairment of its long-lived assets is required.
Real Estate Assets Held for Sale
Real estate is classified as held for sale after the approval of the Company’s board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying balance sheets. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated.
Accounts payable and accrued expenses
Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.
Loss per share
The Company computes net loss per share in accordance with ASC 260, "Earnings Per Share" ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all potential dilutive common shares, which comprise options granted to employees. As at December 31, 2014 and 2015, the Company had no potentially dilutive shares.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Share-Based Payments
ASC Topic 718, “Stock Compensation,” requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated income statements.
The Company recognizes compensation expense for the value of its awards on a straight-line basis over the requisite service period of each of the awards, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The Company applies ASC Topic 505-50, “Equity Based Payments to Non Employees,” with respect to options issued to non-employees.
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
As of December 31, 2015 and 2014, and the years then ended, no stock options are outstanding.
Income taxes
In accordance with FASB ASC 740, “Income Taxes” (“ASC 740”), deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. The Company has recorded a valuation allowance against its deferred tax assets based on the history of losses incurred.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. As of December 31, 2015, the Company does not have a liability for any unrecognized tax benefits.
All tax periods from inception remain open to examination by taxing authorities due to the net operating losses. To date the Company’s acquired subsidiaries have not filed the required income tax returns.
Recently Issued Accounting Pronouncements
In August 2014, the FASB issued ASU No. 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”. This Update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. We are currently assessing the impact of the adoption of ASU No. 2014-15, and we have not yet determined the effect of the standard on our ongoing financial reporting.
The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at December 31, 2015, the Company has a working capital deficit of $941,617, insufficient cash resources to meet its planned business objectives and accumulated losses from operations of $6,970,472. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2016.
The Company is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings. No assurances can be made that management will be successful in pursuing any of these strategies.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – INTANGIBLE ASSETS
The Company was granted a federally registered trademark for “ZNERGY”. The cost of applying for and prosecuting this trademark was $1,845 which cost was accounted for as an intangible asset.
On July 7, 2015 the Company entered into a contract with a financing and marketing company specializing in providing “white-label” platforms and programs for businesses such as the Company which platforms and programs facilitate the financing of EE projects for the Company’s prospective clients. The fee for entering this contract was $5,000 which costs was accounted for as an intangible asset. Through December 31, 2015, the Company has recorded $2,500 in amortization related to this contract of which $1,250 has been charged to operations subsequent to the acquisitions described in Note 10. These intangibles were acquired with the acquisition discussed in Note 10.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
NOTE 5 – REAL ESTATE HELD FOR SALE AND DEVELOPMENT
During March 2013, the Company entered into a standard Land Purchase and Sale Agreement with the Mazzal Trust, a related party, for the acquisition of land and buildings located in Taunton, MA for the purchase price of one hundred and fifty million shares of common stock in the Company. The land was originally been recorded at $1,500,000 by the Company. This carrying amount was subsequently reduced to $1,072,000 to reflect the actual cost to the Mazzal Trust (see Notes 11 and 12).
The property title was transferred on May 29, 2013, in accordance with the Land Purchase and Sale Agreement. This property had originally been classified as land held for development and was reclassified as held for sale upon our decision to sell it. Land under development includes costs attributable to the development activities; such as land, architect, engineering and construction costs. Architecture, Engineer and Construction fees amounting to $25,000 have been capitalized to the cost of the property.
During April, 2015, the Company acquired a parcel of land located in West Roxbury MA for the purchase of $800,000 from a third party. The purchase price was paid with a loan from a bank in the amount of $385,000 and a loan from a related party in the amount of $415,000. The bank loan was paid off on September 30, 2015, by the related party and the balance paid including accrued interest was added to his related party loan (see Notes 6 and 12). At December 31, 2015, all real estate held by the Company was classified as real estate held for sale.
NOTE 6 – LOAN WITH RELATED PARTY
|
December 31, 2015
|
December 31, 2014
|
|||||||
|
Loan with related party
|
$ | 860,743 | $ | 37,172 | ||||
The above loan is unsecured, bears no interest and is repayable on demand.
NOTE 7 – STOCKHOLDERS’ EQUITY
Common Stock
In 2013 the Company filed a registration statement to register the resale by certain selling shareholders shares of the Company’s common stock. The registration statement was declared effective in February 2014.
On January 23, 2015, the Company increased its authorized shares of common stock to 500,000,000.
On January 26, 2015, the Board authorized a 10 for 1 forward stock split. All share and per share data in the accompanying financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.
On April 7, 2015, the Company issued 10,000,000 shares of common stock for services registered on Form S-8. These shares were valued at the trading price of the shares on the date it was agreed that the shares would be issued of $400,000.
During September, 2015, the Company’s subsidiary Command Control Center Corp. filed a form S-1 registration statement to register up to 80,000,000 common shares for sale in an initial public offering. This filing has not yet become effective.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
On October 26, 2015, the Company entered into a Share Exchange Agreement with Global ITS, Inc. (Global), and the shareholders of Global, pursuant to which the Company exchanged 120,000,000 of its common shares for 24,000,000 Global common shares held by Global’s shareholders representing 100% of Global’s outstanding shares.
On February 9, 2016, the Company agreed to sell to the Mazzal Trust the real property which the Trust had previously sold to the Company and the Trust returned to the Company 149,950,000 of the 150,000,000 shares of the Company’s common stock owned by the Trust. These shares returned to the Company were canceled.
On January 15, 2015 Mazzal Holding Corp. adopted the 2015 Stock Option and Restricted Stock Plan (the “Plan”). In connection with adopting the Plan, the Voting Shareholders also approved a resolution that up to 4,500,000 shares of our common stock may be issued under the terms and conditions of the Plan (45,000,000 shares per the 10 new for 1 old forward stock split authorized on January 26, 2015).
Command Control Center Corp. (“Command Control”), the Company’s wholly-owned subsidiary, filed an S-1 registration statement in the first quarter of 2015 to register the sale by Command Control of up to 80,000,000 shares of its common stock in an initial public offering. As of the date of this Report, Command Control had received comments from the SEC on this registration statement and Command Control plans to reply to these comments and pursue this filing until it is declared effective. No shares of Command Control’s common stock have been sold under the registration statement as of the date of this Report.
NOTE 8 – RELATED PARTY TRANSACTIONS
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note. The following persons have been identified as related parties:
Mr. Nissim Trabelsi - Director and stockholder
The Mazzal Living Trust - Common director/trustee and majority stockholder
NOTE 9 – INCOME TAXES
No provision was made for federal income taxes since the Company has net operating losses for which the related deferred tax asset has been reserved. At December 31, 2015, the Company had operating loss carryforwards of approximately $150,000. The net operating loss carry-forwards may be used to reduce taxable income through the year 2035. The principal difference between the net operating loss for book purposes and income tax purposes results from non-cash charges to operations related to common shares issued for services and acquisitions that are not currently deductible for income tax purposes. The availability of the Company’s net operating loss carry-forwards are subject to significant limitation if there is more than 50% positive change in the ownership of the Company’s stock.
|
Income Tax at Statutory Rate
|
34
|
%
|
||
|
Effect of Operating Losses
|
(34
|
%)
|
||
|
-
|
NOTE 10 – ACQUISITION
On October 26, 2015, the Company entered into a Share Exchange Agreement (the Agreement) on October 26, 2015 with Global ITS, Inc. (Global), a Wyoming corporation and its wholly owned subsidiary Znergy, Inc (Znergey) a Florida corporation and the shareholders of Global, pursuant to which the Company exchanged 120,000,000 of our common shares (the Company Shares) for 24,000,000 Global common shares held by Global’s shareholders representing 100% of Global’s outstanding shares (the Share Exchange). Global’s financial results are consolidated with Mazzal’s as of the acquisition date. Global’s and Znergy’s operations were nominal since there inceptions. The transaction was accounted for as a business combination.
MAZZAL HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Fair values of the assets acquired and liabilities assumed in acquisition of Global are summarized below:
|
Current assets – cash
|
$
|
100
|
||
|
Intangible assets
|
5,595
|
|||
|
Total assets acquired
|
5,695
|
|||
|
Current liabilities
|
7,222
|
|||
|
Net liabilities assumed
|
1,527
|
|||
|
Purchased research and development
|
5,988,000
|
|||
|
Purchase price
|
$
|
5,989,527
|
The Consideration consisted of the issuance of 120,000,000 common shares with a fair value of $5,988,000.
The unaudited results of operations had the acquisition been made at the beginning of 2015 and 2014 would have been as follows:
| 2015: | ||||
|
Revenue
|
$
|
-
|
||
|
Net loss
|
$
|
(6,499,000)
|
||
|
Net loss per share
|
$
|
(0.03
|
)
|
|
| 2014: | ||||
|
Revenue
|
$
|
-
|
||
|
Net loss
|
$
|
(18,000)
|
||
|
Net loss per share
|
$
|
(0.00
|
)
|
NOTE 11 – CORRECTION OF AN ERROR
During March 2013, the Company entered into a standard Land Purchase and Sale Agreement with the Mazzal Trust, a related party, for the acquisition of land and buildings located in Taunton, MA for the purchase price of 150,000,000 shares of common stock in the Company. The land was originally recorded at $1,500,000. This carrying amount was subsequently reduced to $1,072,000 to reflect the actual cost to the Mazzal Trust. The correction of the carrying value of $428,000 was recorded as an adjustment to the accumulated deficit on December 31, 2013. The Consolidated Statement of Operations for the year ended December 31, 2013 has not been adjusted. In considering whether the Company should amend its previously filed Form 10-K for prior years, the Company’s evaluation of SAB 99 considered that the aggregate impact of the adjustment was not material to the Company’s financial statements in that the Company does not believe it is probable that the views of a reasonable investor would have been changed by the correction of this item in the 2013 financial statements in an amended Form 10-K. Accordingly, the correction of the error was made to the Consolidated Statement of Stockholders’ Equity as described above using the SAB 108 approach.
NOTE 12 – SUBSEQUENT EVENT
In connection with the Master Agreement, the Company agreed to sell to the Trust all of its real property with a carrying value of $1,897,000 and the trust assumed the related party loan with a carrying value of $860,743 and accounts payable and accrued expenses with a carrying value of $17,577. In exchange the Trust returned to the Company 149,950,000 of the 150,000,000 shares of the Company’s common stock owned by the Trust and the Company canceled the 149,950,000 shares of common stock conveyed by the Trust.
In connection with his sale of his and Mr. Telsi’s shares, Mr. Trabelsi appointed Christopher J. Floyd to the Board of Directors of the Company and to the Board of Directors of Command Control Center Corp. (“CCC”), the Company’s wholly owned subsidiary. Mr. Trabelsi also appointed Mr. Floyd as the CEO, CFO, and Secretary of both the Company and of CCC. Following Mr. Trabelsi’s appointment of Mr. Floyd to the boards of directors and as an officer of the Company and CCC, Mr. Trabelsi resigned from all positions with the Company and with CCC, effective immediately.
15(a)(2). Financial Statement Schedules.
None.
15(a)(3). Exhibits.
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Exhibit No.
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Description
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3.1
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Articles of Incorporation for BIDC (previously filed as an exhibit to the Company’s registration statement on Form S-1, filed with the Commission on June 10, 2013)
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3.2
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By laws of BIDC (previously filed as an exhibit to the Company’s registration statement on Form S-1, filed with the Commission on June 10, 2013)
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4
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2015 Incentive Stock Option and Restricted Stock Plan (previously filed as an exhibit to the Company’s Definitive Information Statement on Schedule 14C filed on March 3, 2015, and incorporated herein by reference)
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10.1
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Share Exchange Agreement, dated as of October 26, 2015 (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed October 27, 2015, and incorporated by reference)
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10.2
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Master Stock Purchase Agreement (previously filed as an exhibit to the Company’s Current Report on Form 8-K filed February 12, 2016, and incorporated by reference)
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31
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32
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101 INS
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XBRL Instance Document*
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101 SCH
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XBRL Schema Document*
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101 CAL
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XBRL Calculation Linkbase Document*
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101 DEF
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XBRL Definition Linkbase Document*
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101 LAB
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XBRL Labels Linkbase Document*
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101 PRE
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XBRL Presentation Linkbase Document*
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* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
Pursuant to the requirements of section 13 or 15 (d) 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.
MAZZAL HOLDING CORP.:
By: /s/ Christopher J. Floyd
Christopher J. Floyd
President, CEO, CFO, Director
(Principal Executive Officer, Principal Financial Officer)
Date: April 18, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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Dated: April 18, 2016
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By: /s/ Christopher J. Floyd
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Christopher J. Floyd
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President, CEO, CFO, Director
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(Principal Executive Officer, Principal Financial Officer)
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24