Znergy, Inc. - FORM 10-Q - August 14, 2014

Attached files

file	filename
EX-10.2 - EXHIBIT 10.2 - Znergy, Inc.	exhibit10-2.pdf
EXCEL - IDEA: XBRL DOCUMENT - Znergy, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Znergy, Inc.	exhibit32-1.htm
EX-10.2 - EXHIBIT 10.2 - Znergy, Inc.	exhibit10-2.htm
EX-31.1 - EXHIBIT 31.1 - Znergy, Inc.	exhibit31-1.htm
EX-99 - PRO FORMA FINANCIAL STATEMENTS, ACQUIRED PROPERTY - Znergy, Inc.	exhibit99.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

xQuarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2014

oTransition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to _______

000-54732

(Commission file number)

MAZZAL HOLDING CORP

(Exact name of registrant as specified in its charter)

Nevada		46-1845946
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11 PERELL CHIAM BENY-BERAK, ISRAEL		5130153
(Address of principal executive offices)		(Zip Code)

800-488-2760

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No 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.

Large accelerated filer o Accelerated filer o

Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

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

On August 12, 2014, 20,000,000 shares of the registrant's common stock were outstanding. (On March 24, 2014, 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 Quarterly Report are given as post-stock-split totals, i.e. fully reflecting the effect of the stock split.)

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION			3
	Item 1.	Financial Statements	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
	Item 4.	Controls and Procedures	20
Part II.	OTHER INFORMATION		21
	Item 1.	Legal Proceedings	21
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
	Item 6.	Exhibits	22
SIGNATURES			23

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MAZZAL HOLDING CORP

(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS (unaudited)

for the six months ended June 30, 2014

CONTENTS:

Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013	4

Statements of Operations for the three months ended June 30, 2014 and 2013, and the six months ended June 30, 2014, and the five months ended June 30, 2013, and for the period from January 23, 2013 (date of inception) to June 30, 2014 (unaudited)	5

Statements of Stockholder's Equity for the period from January 23, 2013 (date of inception) to June 30, 2014 (unaudited)	6

Statements of Cash Flows for the six months ended June 30, 2014, and the five months ended June 30, 2013, and for the period from January 23, 2013 (date of inception), to June 30, 2014 (unaudited)	7

Notes to Unaudited Interim Financial Statements	8

MAZZAL HOLDING CORP

(A Development Stage Company)

BALANCE SHEETS

(in U.S. Dollars)

ASSETS	June 30 2014	December 31 2013
	$	$
	(unaudited)

Current Assets:
Cash and cash equivalents	3,234	4
Total current assets	3,234	4

Real estate assets, at cost:
Land held for development	1,525,000	1,524,000
Total real estate assets	1,525,000	1,524,000

Land deposit	25,000	-


TOTAL ASSETS	1,553,234	1,524,004



LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	7,000	6,500
Bank overdrafts	-	2,623
Loan from related party	34,621	-
Total liabilities	41,621	9,123


Stockholders’ Equity
Preferred stock, $0.0001 par value, 100,000,000 authorized shares; no shares issued and outstanding	-	-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 20,000,000 shares issued and outstanding at June 30, 2014 and December 31, 2013	2,000	2,000
Additional paid-in capital	1,540,200	1,540,200
Deficit accumulated during development stage	(30,587)	(27,319)

Total Stockholders’ Equity	1,511,613	1,514,881

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	1,553,234	1,524,004

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

MAZZAL HOLDING CORP

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(in U.S. Dollars)

(unaudited)

	Three Months Ended June 30,						Six months ended June 30,			Five months ended June 30,				January 23, 2013 (Inception) to June 30,
	2014			2013			2014				2013			2014

Revenue		-			-			-				-			-

Operating expenses:
General and administrative:-
Filing fees		-			300			-				300			458
Management fees		-			-			-				-			3,000
Other costs		1,029			1,205			1,029				1,205			8,690
Professional fees
- Auditors fees		1,500			3,500			1,500				3,500			8,000
- Legal fees		500			1,840			500				1,840			3,340
Repairs and maintenance		242			761			242				761			7,106

Total operating expenses		(3,271	)		(7,606	)		(3,271	)			(7,606	)		(30,594	)

Loss from operations		(3,271	)		(7,606	)		(3,271	)			(7,606	)		(30,594	)

Other income
Interest income		3			2			3				3			7

Net loss		(3,268	)		(7,604	)		(3,268	)			(7,603	)		(30,587	)



Net loss per common share - basic and diluted:

Net loss per share attributable to common stockholders		-			-			-				-

Weighted-average number of common shares outstanding		20,000,000			20,000,000			20,000,000				15,410,222

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

MAZZAL HOLDING CORP

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' EQUITY

for the period of JANUARY 23, 2013 (INCEPTION) to JUNE 30, 2014

(in U.S. Dollars)

(unaudited)

	Common Stock		Additional Paid-in Capital	Accumulated Deficit During Development Stage	Total Stockholders’ Equity
	Shares	Amount
		$	$	$	$

Inception (January 23, 2013)	-	-	-	-	-

Common stock issued for cash at $0.0042 per share	4,780,000	480	19,720	-	20,200

Common stock issued for cash at $0.1 per share	220,000	20	21,980	-	22,000

Common stock issued at $0.1 per share, for acquisition of 175 Hart Street property	15,000,000	1,500	1,498,500	-	1,500,000

Loss for the period	-	-	-	(27,319)	(27,319)

Balance at December 31, 2013	20,000,000	2,000	1,540,200	(27,319)	1,514,881

Loss for the period	-	-	-	(3,268)	(3,268)

Balance at June 30, 2014	20,000,000	2,000	1,540,200	(30,587)	1,511,613

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

MAZZAL HOLDING CORP

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(in U.S. Dollars)

(unaudited)

	Six months ended June 30,	Five months ended June 30,	January 23, 2013 (Inception) to June 30,
	2014	2013	2014
	$	$	$
Cash Flows from Operating Activities

Net income	(3,268)	(7,603)	(30,587)

Changes in operating assets and liabilities
Accounts payable and accrued expenses	500	3,500	7,000

Net cash provided by operating activities	(2,768)	(4,103)	(23,587)


Cash Flows from Investing Activities
Land deposit	(25,000)	-	(25,000)
Development and capital improvements	(1,000)	(9,000)	(25,000)
Net cash used in investing activities	(26,000)	(9,000)	(50,000)


Cash Flows from Financing Activities
Proceeds from issuance of common stock	-	42,200	42,200
Repayment of bank overdrafts	(2,623)	-	-
Loan from related party	34,621	-	34,621
Net cash provided by financing activities	31,998	42,200	76,821


Increase in cash and cash equivalents	3,230	29,097	3,234

Cash and cash equivalents at beginning of the period	4	-	-

Cash and cash equivalents at end of the period	3,234	29,097	3,234

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

MAZZAL HOLDING CORP

(A Development Stage Company)

NOTES TO INTERIM FINANCIAL STATEMENTS

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Mazzal Holding Corp is a Nevada corporation (the “Company”), incorporated under the laws of the State of Nevada on January 23, 2013. The Company is in the development stage as defined by Accounting Standards Codification 915 (ASC 915), “Accounting and Reporting by Development Stage Enterprises.” The Company is devoting substantially all of its efforts to the implementation of its business plan. The business plan of the Company is the construction and management of multi-family home developments and the subsequent sale thereof.

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”).

These financial statements are presented in US dollars.

Fiscal Year End

The Corporation has adopted a fiscal year end of December 31.

Unaudited Interim Financial Statements

The interim financial statements of the Company as of June 30, 2014, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2014, and the results of its operations and its cash flows for the periods ended June 30, 2014, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2014. The accompanying financial statements and notes thereto do not reflect all disclosures required under U.S. GAAP. Refer to the Company’s audited financial statements as of December 31, 2013, filed with the SEC, for additional information, including significant accounting policies.

Going concern

The accompanying 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 June 30, 2014, the Company has negative working capital and has an accumulated deficit of $30,587 and has earned no revenues since inception. 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, 2014.

The ability of the Company to emerge from the development stage 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.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies are set out below, these policies have been consistently applied to the period presented, unless otherwise stated:

Cash and cash equivalents

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 ("FDIC") up to $250,000.

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		- 10 to 40 years
	Other building and land improvements		- 20 years
	Furniture, fixtures and equipment		- 5 to 10 years

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.

Real Estate Assets Held for Sale and Discontinued Operations

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.

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.

Earnings 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 June 30, 2014, the Company had no potentially dilutive shares.

Income taxes

Income taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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 Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the Financial Accounting Standards Board (“FASB”). 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.

NOTE 3 – LAND HELD FOR DEVELOPMENT

On March 13, 2013, the Company entered into a standard Land Purchase and Sale Agreement with the Mazzal Trust for the acquisition of land and buildings know as 171 Hart Street, Taunton, MA, 02780 for the purchase price of fifteen million (post-split) shares in the Company.

The property title was transferred on May 29, 2013, in accordance with the Land Purchase and Sale Agreement. This property has been classified as land held for development. 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.

NOTE 4 – LAND DEPOSIT

On June 18, 2014, the Company deposited $25,000 into escrow, towards a standard purchase and sale agreement, signed on July 1, 2014, with the Heather Realty Trust, for the purchase of vacant land more fully described as Lots 21 and 25, better known as 1625 VFW Parkway, West Roxbury, MA 02132 for a purchase price of $800,000.

NOTE 5 – LOAN FROM RELATED PARTY

	June 30	December 31
	2014	2013
	$	$

Loan from related party	34,621	-

The above loan is unsecured, bears no interest and is repayable on demand.

NOTE 6 – STOCKHOLDER’S EQUITY

Common Stock

On January 13, 2013, the Company issued 4,780,000 shares of common stock to the director and officer of the Corporation at a price of $0.0042 per share for cash, for $20,200.

Between February 28, 2013, and March 13, 2013, the Company issued 220,000 shares to a total of 44 various individuals at a price of $0.10 per share for cash, for $22,000.

On March 13, 2013, the Company issued 15,000,000 shares of common stock at $0.10 per share to The Mazzal Trust for the purchase of land and buildings better known as 171 Hart Street, Taunton, MA as described in note 3.

On March 24, 2014, the Board authorized a 10 new for 1 old 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.

NOTE 7 – RELATED PARTY TRANSACTIONS

Details of transactions between the Company and related parties are disclosed below:

The following entities have been identified as related parties:

Mr. Nissim Trabelsi - Director and greater than 10% stockholder

	June 30	December 31
	2014	2013
	$	$
Balance sheets:
Loan from related party	34,621	-

From time to time, the president and a stockholder of the Company provides advances to the Company for its working capital purposes. These advances bear no interest and are due on demand.

NOTE 8 – INCOME TAXES

The provision (benefit) for income taxes for the periods ended June 30, 2014 and 2013 were as follows (assuming a 15% effective tax rate):	June 30	June 30
	2014	2013
	$	$

Current Tax Provision
Federal-
Taxable income
Total current tax provision	-	-
	-	-

Deferred Tax Provision
Federal-
Loss carry forwards	490	1,140
Change in valuation allowance	(490)	(1,140)
Total deferred tax provision	-	-

The Company had deferred income tax assets as of June 30, 2014 and December 31, 2013 as follows:	June 30	December 31
	2014	2013
	$	$

Loss carry forwards	4,588	4,098
Less - Valuation allowance	(4,588)	(4,098)
	-	-

The Company provided a valuation allowance equal to the deferred income tax assets for periods ended June 30, 2014, and December 31, 2013, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

As of June 30, 2014, the Company had approximately $30,587 in tax loss carryforwards that can be utilized future periods to reduce taxable income, and expire by the year 2034.

The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.

The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

NOTE 9 - FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements.” The objective of SFAS 157 (ASC 820) is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS 157 (ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 (ASC 820) applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements.

The Company measures its options and warrants at fair value in accordance with SFAS 157 (ASC 820). SFAS 157 (ASC 820) specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions. These two types of inputs have created the following fair value hierarchy:

	- Level 1: Quoted prices in active markets for identical instruments;
	- Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments);
	- Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments).

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value. The fair value of cash and cash equivalents at June 30, 2014, and December 31, 2013, were as follows:

	Fair Value at June 30, 2014
	Level 1	Level 2	Level 3	Total
	$	$	$	$

Cash and cash equivalents	3,234	-	-	3,234
Total financial assets carried at fair value	3,234	-	-	3,234

	Fair Value at December 31, 2013
	Level 1	Level 2	Level 3	Total
	$	$	$	$

Cash and cash equivalents	4	-	-	4
Bank overdrafts	(2,623)	-	-	(2,623)
Total financial assets carried at fair value	(2,619)	-	-	(2,619)

NOTE 10 – RECENT ACCOUNTING STANDARDS UPDATES

There are no new accounting pronouncements expected to have any impact on the Company’s financial statements.

NOTE 11 – SUBSEQUENT EVENTS

On July 1, 2014, the Company entered into a standard purchase and sale agreement with the Heather Realty Trust, for the purchase of vacant land more fully described as Lots 21 and 25, better known as 1625 VFW Parkway, West Roxbury, MA 02132 for a purchase price of $800,000.

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no additional material subsequent events to report.

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events, and they are applicable on as of the dates of such statement. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “forecast,” “expect,” “plan,” anticipate,” believe,” estimate,” continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “Risk Factors” and those listed in our other SEC filings. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. Throughout this Quarterly Report on Form 10-Q we will refer to Mazzal Holding Corp, together with its subsidiaries, as “MHC,” the “Company,” “we,” “us,” and “our.”

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations.

(a) Revenue

The Company has earned no revenues since inception.

(b) General and Administrative Expenses

The Company had general and administrative expenses of $3,271 for the three and six months ended June 30, 2014 compared to $7,606 for the three and five months ended June 30, 2013, a decrease of $4,335 or approximately 57%. The decrease in general and administrative expenses were mainly due to a decrease in professional fees.

The Company had general and administrative expenses of $30,594 for the period of January 23, 2013 (date of inception) through June 30, 2014.

(3) Net Loss

The Company had a net loss of $3,268 for the three months and six months ended June 30, 2014 compared to a net loss of $7,604 and $7,603 for the three and five months ended June 30, 2013 respectively, a decrease of $4,335. The decrease in net loss is the result primarily due to a decrease in professional fees.

The Company had a net loss of $30,587 for the period of January 23, 2013 (date of inception) through June 30, 2014.

Operating Activities

Net cash used by operating activities was $2,768 for the six months ended June 30, 2014 compared to net cash used in operating activities of $4,103 for the five months ended June 30, 2013, a decrease of $1,335. This change was the result of a decrease in professional fees.

The net cash used in operating activities was $23,587 for the period of January 23, 2013 (date of inception) through June 30, 2014.

Investing Activities

Net cash used in investing activities was $26,000 for the six months ended June 30, 2014 and $9,000 for the five months ended June 30, 2013, an increase of $17,000. This increase was primarily from payment of a deposit relating to the acquisition of vacant land better known as 1625 VFW Roxbury, MA.

Net cash used in investing activities was $50,000 for the period of January 23, 2013 (date of inception) through June 30, 2014, relating to costs capitalized to property held under development and deposit paid towards the acquisition of vacant property, known as 1625 VFW Roxbury, MA.

Financing Activities

Net cash provided by financing activities was $31,998 for the six months ended June 30, 2014 and $42,200 for the five months ended June 30, 2013. A decrease of $10,202 due to proceeds from the issuance of common stock in the previous year and repayment of bank overdrafts.

Net cash provided in financing activities was $76,821 for the period of January 23, 2013 (date of inception) through June 30, 2014, which was mainly from issuance of common stock and proceeds from a related party loan.

Liquidity and Capital Resources

As of June 30, 2014, the Company had total current assets of $3,234 and total current liabilities of $41,621 resulting in a working capital deficit of $38,387. The cash and cash equivalents was $3,234 as of June 30, 2014 and $4 as of June 30, 2013.

Overview

We are a development stage company and have not started operations or generated or realized any revenues from our business operations.

Recent Developments

Resignation of Chairman of Company

On August 13, 2014, Harold Fisher resigned as the Chairman of the Company to pursue other interests. His resignation was not due to any disagreement with management or the Company. As of the date of this Report, the Board of Directors had not appointed a replacement Chairman.

Property Purchase

On July 1, 2014, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) whereby the Company agreed to purchase from the Heather Realty Trust (“Seller”) a parcel of property in West Roxbury, Massachusets (the “Property”). The Company agreed to pay a purchase price of $800,000, with $25,000 paid upon execution of the Agreement, and the balance to be paid at the time of the delivery by the Seller of the deed to the Property, which is to be delivered on or before the fifteenth day following the expiration of an approvals period, which is deemed to run through October 1, 2014. During the approvals period, the Company is required to obtain certain approvals, permits, services, all as set forth in the Purchase Agreement.

In connection with the purchase of the Property, the Company has announced that it plans to build a hotel complex which will include 52 hotel rooms, a wedding hall, and a restaurant. The Company anticipates that work will commence at the building site during the third or fourth quarters of 2014. The Company announced that the planned hotel will be the first of several hotels to be built. Management also noted that the restaurant at the hotel will provide 100% Glatt kosher dishes and will include a synagogue Shomer Shabbat.

DTC Eligibility

On July 9, 2014, the Company’s common stock, which had been approved for trading by FINRA in May 2014 under the ticker symbol “MZZL,” obtained was declared DTC eligible by the Depository Trust and Clearing Corporation.

Discussion

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, Nissim Trabelsi, President and Director. He is responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, Mr. Trabelsi, together with any other executive officers in place at that time, will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing 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 amount of funds which the Company will need to raise that we feel will allow us to implement our business strategy is approximately $800,000. We feel if we cannot raise at least $500,000, the Company will not be able to accelerate the implementation of its business strategy and will be seriously curtailed.

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 officers and directors 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’s anticipated plan of operation is to construct multi-family dwellings in Massachusetts, both on the Property owned by the Company, and on additional parcels of property which the Company may purchase in the future.

Under the Company’s plan, each subdivision takes approximately 3 years to complete, from purchase of the land, through development of the property, through construction of the units, and through sales of the units.

Management anticipates that the Company will need to raise between $500,000 and $800,000 to start and begin construction of one third of the units, approximately 15 units, which could be completed within approximately 12 months from start of construction. Once the first units are completed, from each unit that is sold in the first year, the revenues will be used to finance construction of the next phases and units. Management anticipates that at the end of the second year of operation, the Company will be able to complete an additional 15 units. Finally, management anticipates that the remaining 17 units will be built on during the third year, to meet the planned completion of 47 units in three years from commencement of construction.

Upon completing this offering, we intend to commence development of our Property, provide infrastructure, and manage the process, within the state of Massachusetts. To begin these developments we will need to acquire the correct licenses to begin producing our homes. Mr. Trabelsi currently has all licenses that would be required to successfully engage in all activities envisioned in our business plan.

Management anticipates that the average construction price for the town homes will be approximately $180,000-$200,000, and the average selling price will be approximately $250,000, although there can be no guarantee that the Company will be able to construct all the town homes at this cost, or sell any or all of the town homes for the anticipated selling price.

As noted above, third-party lenders generally provide consumer financing for multi-family dwelling purchases. Our sales will depend in large part on the availability and cost of financing for multi-family home purchasers. The availability and cost of such financing is further dependent on the number of financial institutions participating in the industry, the departure of financial institutions from the industry, the financial institutions' lending practices, and the strength of the credit markets generally, governmental policies and other conditions, all of which are beyond our control. If additional third-party financing for the purchases of our Company’s homes does not become available, our operations could be negatively affected.

Management anticipates that each unit will be approximately 1500 ft.², and that the Company’s building cost is roughly $100 for each square foot, for a total of $150,000 costs to build each unit. Additionally, the costs associated with the land are approximately $32,000 for each lot. Also, Management anticipates approximately $18,000 in commissions and soft costs for an approximate total cost of $200,000 to complete each unit. As noted above, the figures in the preceding sentences relating to construction costs are only estimates made by management, and are not based on surveys, third-party valuations, or other outside sources. These estimates are based on management’s prior history and experience in construction in Massachusetts, and there can be no guarantee that the Company will be able to construct any of the units for the costs and amounts indicated.

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. As noted above, Management anticipates that the Company will need approximately $500,000 - $800,000 over the next twelve months to implement the Company’s business plan and commence construction of multi-family dwellings.

Management believes that if the Company cannot raise the funds needed through equity offerings of the Company’s securities, the Company likely will look to commercial or bank financing of its project for the capital needed. There can be no guarantee that the Company will be able to obtain such bank or commercial financing 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.

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; (d) Real Estate Assets Held for Sale and Discontinued Operations; and (e) 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

(b) Real estate assets

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

(d) Real Estate Assets Held for Sale and Discontinued Operations

(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 Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. 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.

To date, we have not earned any revenue from operations. Accordingly, our activities have been accounted for as those of a “Development Stage Company” as set forth in Financial Accounting Standards Board ASC 915. Among the disclosures required by ASC 915 are that the our financial statements be identified as those of a development stage company, and that the statements of operations, stockholders’ equity and cash flows disclose activity since the date of our inception.

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

We 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 July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Off-Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

We have carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Quarterly Report.

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.

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 of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of June 30, 2014, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2014: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We know of no pending legal proceedings to which we are a party which are material or potentially material, either individually or in the aggregate. We are from time to time, during the normal course of our business operations, subject to various litigation claims and legal disputes. We do not believe that the ultimate disposition of any of these matters will have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Item 1A. Risk Factors

Not required for Smaller Reporting Companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mining Safety Disclosures

Not applicable.

Item 5. Other Information.

As noted above, on July 1, 2014, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) whereby the Company agreed to purchase from the Heather Realty Trust (“Seller”) a parcel of property in West Roxbury, Massachusets (the “Property”). The Company agreed to pay a purchase price of $800,000, with $25,000 paid upon execution of the Agreement, and the balance to be paid at the time of the delivery by the Seller of the deed to the Property, which is to be delivered on or before the fifteenth day following the expiration of an approvals period, which is deemed to run through October 1, 2014. During the approvals period, the Company is required to obtain certain approvals, permits, services, all as set forth in the Purchase Agreement. The Company has included with this Report pro forma financial statements in connection with the purchase of the property. Please see Exhibit 99.

Item 6. Exhibits

(a)

Exhibits

Exhibit No.	Description
3.1	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)
3.2	Bylaws 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))
10.1	Standard Land Purchase and Sale Agreement (previously filed as an exhibit to the Company’s registration statement on Form S-1, filed with the Commission on June 10, 2013))
10.2	Standard Form Purchase and Sale Agreement, dated July 1, 2014
31	Certification of the Chief Executive Officer/Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
32	Certification of CEO and CFO pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
99	Pro Forma Financial Statements, Acquired Property
101 INS	XBRL Instance Document*
101 SCH	XBRL Schema Document*
101 CAL	XBRL Calculation Linkbase Document*
101 DEF	XBRL Definition Linkbase Document*
101 LAB	XBRL Labels Linkbase Document*
101 PRE	XBRL Presentation Linbase Document*

SIGNATURES

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

MAZZAL HOLDING CORP

By: /s/ Nissim Trabelsi

Nissim Trabelsi

President, CEO, CFO, Director

(Principal Executive Officer, Principal Financial Officer)

Date: August 13, 2014

Znergy, Inc. - FORM 10-Q - August 14, 2014

Attached files

Znergy, Inc. Reports