SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2017

 

or

 

¨

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

 

For the transition period from __ to ___

 

Commission File No. 000-55389

 

RANDOLPH ACQUISITIONS, INC.
(Exact name of registrant as specified in its charter)

 

Delaware		47-3152749
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

Randolph Acquisitions, Inc.

4228 First Avenue

Suite# 15

Tucker, GA 30084

(Address of principal executive offices) (zip code)

 

404-267-7093
(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days).    Yes  x    No ¨

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller Reporting Company	x
Emerging growth company	x

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(1) of the Exchange Act. ¨

 

As of May 22, 2017, the Company had 5,860,000 shares of its common stock, par value $.0001 per share, issued and outstanding.

 

 

RANDOLPH ACQUISITIONS, INC.
TABLE OF CONTENTS

 

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements
	Condensed Balance Sheets, March 31, 2017 (unaudited) and December 31, 2016	3
	Condensed Statements of Operations, Three Months Ended March 31, 2017 and 2016 (unaudited)	4
	Condensed Statements of Cash Flows, Three Months Ended March 31, 2017 (unaudited)	5
	Notes to Condensed Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 5.	Other Information	14
Item 6.	Exhibits	15

 

 

RANDOLPH ACQUISITIONS, INC.

Condensed Balance Sheets

 

		March 31,				December 31,
		2017				2016
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash		$	866			$	-
Restricted cash			-				1,712
Total Current Assets			866				1,712
OTHER ASSETS
Real estate property			128,750				126,750
TOTAL ASSETS		$	129,616			$	128,462
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	-			$	-
Deferred revenue			1,100				-
Note payable - related party			38,942				38,942
Note payable, current portion			4,624				4,624
Total Current Liabilities			44,666				43,566
LONG-TERM LIABILITIES
Note payable, non-current portion			121,306				122,126
Total Long-Term Liabilities			121,306				122,126
TOTAL LIABILITIES			165,972				165,692
STOCKHOLDERS’ DEFICIT
Common stock - 100,000,000 shares authorized, $0.0001 par value; 5,860,000 and 5,500,000 shares issued and outstanding at March 31, 2017 and December 31, 2016			586				550
Discount on common stock			(550	)			(550	)
Additional paid-in capital			1,166				1,166
Accumulated deficit			(37,558	)			(38,396	)
Total Stockholders’ Deficit			(36,356	)			(37,230	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	129,616			$	128,462

 

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

 

 

RANDOLPH ACQUISITIONS, INC.

Condensed Statements of Operations

(Unaudited)

 

		For the Three Months Ended
		March 31,
		2017				2016
REVENUES
Rental income		$	4,000			$	-
OPERATING EXPENSES
Rent expense			-				7,800
Legal and professional			-				2,750
General and administrative			4,638				-
Total Operating Expenses			4,638				10,550
LOSS FROM OPERATIONS			(638	)			(10,550	)
OTHER INCOME (EXPENSES)
Miscellaneous income			2,900				-
Interest expense			(1,424	)			-
Total Other Income (Expense)			1,476				-
INCOME (LOSS) BEFORE INCOME TAXES			838				(10,550	)
Provision for income taxes			-				-
NET INCOME (LOSS)		$	838			$	(10,550	)
BASIC AND DILUTED INCOME (LOSS) PER SHARE		$	0.0001			$	(0.002	)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING			5,708,000				5,500,000

 

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

 

 

RANDOLPH ACQUISITIONS, INC.

Condensed Statements of Cash Flows

(Unaudited)

 

		For the Three Months Ended
		March 31,
		2017				2016
OPERATING ACTIVITIES
Net income (loss)		$	838			$	(10,550	)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Expenses paid by related party			-				10,550
Changes in operating assets and liabilities:
Restricted cash			1,712				-
Deferred revenue			1,100				-
Net Cash Provided by Operating Activities			3,650				-
INVESTING ACTIVITIES
Additions to real estate property			(2,000	)			-
Net Cash Used in Investing Activities			(2,000	)			-
FINANCING ACTIVITIES
Common stock issued for cash			36				-
Payments on note payable			(820	)			-
Net Cash Used in Financing Activities			(784	)			-
NET INCREASE (DECREASE) IN CASH		$	866			$	-
CASH AT BEGINNING OF PERIOD			-				-
CASH AT END OF PERIOD		$	866			$	-
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
NON-CASH TRANSACTIONS
Common stock issued for no consideration		$	35			$	-

 

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

 

 

RANDOLPH ACQUISITIONS, INC.

Notes to Unaudited Condensed Financial Statements

March 31, 2017

 

NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

NATURE OF OPERATIONS

 

Randolph Acquisitions, Inc. (formerly "Purple Grotto Acquisition Corporation") ("Randolph" or the "Company") was incorporated on January 12, 2015, under the laws of the state of Delaware. The business purpose of the Company is to acquire and operate real estate properties located in Georgia and throughout the United States. The Company is currently developing plans to acquire and operate single-family, multi-family, commercial and mixed-use real estate properties using the Company’s proprietary grading matrix to identify properties for purchase.

 

On December 16, 2016, the Company entered into a Standard Commercial Sales Contract to acquire a parcel of commercial real estate property (the “Property”) located at 4228 1st Avenue, Suite 15, Tucker, GA 30084, for a purchase price of $126,750 plus fees. The purchase of the Property closed on December 29, 2016. In connection with the purchase of the Property, on December 29, 2016, the Company issued a promissory note to William C. Gottschalk, the seller of the property, in the amount of $126,750 at an interest rate of 6.75% per year to be paid in monthly installments equal to $1,122.57 per month. This promissory note shall be due and payable on January 1, 2032, unless sooner paid.

 

BASIS OF PRESENTATION

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company's financial statements. Such financial statements and accompanying notes are the representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("U.S. GAAP") in all material respects, and have been consistently applied in preparing the accompanying financial statements. The accompanying balance sheet as of December 31, 2016, has been derived from audited financial statements. All adjustments, normal and recurring in nature, considered necessary for a fair presentation have been included in the accompanying unaudited interim condensed financial statements. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results of operations that may be expected for the full year.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with GAAP 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 of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

INCOME TAXES

 

Under Accounting Standards Codification 740, "Income Taxes," deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2017, there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.

 

 

LOSS PER COMMON SHARE

 

Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of March 31, 2017, there are no outstanding dilutive securities.

 

NOTE 2 GOING CONCERN

 

The Company has adopted Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). As a result, management is required to evaluate whether there are relevant conditions and events that would indicate the probability of the Company’s inability to meet its obligations as they become due within one year of the date the financial statements are issued.

 

The financial statements have been prepared under the assumption that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the financial statements, the Company had an accumulated deficit of $37,558 at March 31, 2017, a net loss from operations of $638 and $10,550, and net cash provided by operating activities of $3,650 and $-0-, for the three month periods ended March 31, 2017 and 2016, respectively. While the Company believes in the viability of its strategy to acquire and operate real estate properties, there can be no assurances to that effect and is therefore not considered a mitigating factor in determining the probability that the Company will meet its obligations. The Company holds minimal current assets, has generated little revenue since inception and has relied primarily on advances from its controlling shareholder/Director to meet its operating expenses. Through oral conveyance, management affirms that it is probable that it will meet its obligations through advances from the Company’s Director and controlling shareholder; therefore, alleviating doubt about the Company’s ability to continue as a going concern for the twelve-month period from the date of the issuance of this report.

 

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 3 RECENT ACCOUNTING PRONOUNCEMENTS

 

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which amends the guidance used in evaluating whether a set of acquired assets and activities represents a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not considered a business. Application of ASU 2017-01 is expected to result in more acquisitions of real estate being accounted for as asset acquisitions as opposed to business combinations. As a result, acquisition fees and expenses will be capitalized to the cost basis of the property acquired, and the tangible and intangible components acquired will be recorded based on their relative fair values as of the acquisition date. The standard is effective for all public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted for periods for which financial statements have not yet been issued. The Company had not elected to early adopt the provisions of ASU 2017-01 as of October 1, 2016, and as a result, the Company’s real estate acquisition during the period ended December 31, 2016 was determined to represent an asset acquisition, but no acquisition fees or expenses related to this acquisition were capitalized.

 

 

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows, and transfers between cash and cash equivalents and restricted cash are no longer presented within the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company elected to early adopt ASU 2016-18 for the reporting period ended December 31, 2016, and the standard was applied retrospectively for all periods presented. As a result of the adoption of ASU 2016-18, the Company no longer presents the change within restricted cash in the consolidated statement of cash flows.

 

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU 2016-15 addresses certain issues where diversity in practice was identified. It amends existing guidance, which is principles based and often requires judgment to determine the appropriate classification of cash flows as operating, investing or financing activities. In addition, ASU 2016-15 clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU 2016-15 is effective during the first quarter of 2018, and will generally require a retrospective approach. Early adoption is permitted. The Company does not believe that the adoption of ASU 2016-15 will have a material effect on its consolidated financial statements.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The amendments in ASU 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements.

 

On June 12, 2015, the FASB issued ASU No. 2015-10-Technical Corrections and Improvements. The amendments in this Update cover a wide range of Topics in the Codification. The amendments in this Update represent changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-240-Technical Corrections and Improvements, which has been deleted. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this Update. Management is in the process of assessing the impact of this ASU on the Company's financial statements.

 

 

On April 30, 2015, the FASB issued ASU No. 2015-06 Earnings Per Share (Topic 260): Effects on Historical Earnings per Units of Master Limited Partnership Dropdown Transactions. Under Topic 260, Earnings Per Share, master limited partnerships (MLPs) apply the two-class method to calculate earnings per unit (EPU) because the general partner, limited partners, and incentive distribution rights holders each participate differently in the distribution of available cash. When a general partner transfers (or "drops down") net assets to a master limited partnership and that transaction is accounted for as a transaction between entities under common control, the statements of operations of the master limited partnership are adjusted retrospectively to reflect the dropdown transaction as if it occurred on the earliest date during which the entities were under common control. The amendments in this Update specify that for purposes of calculating historical EPU under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner interest, and previously reported EPU of the limited partners would not change as a result of a dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs also are required. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-14A Earnings Per Share Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (Topic 260), which has been deleted. This update is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier application is permitted. The amendments in this Update should be applied retrospectively for all financial statements presented. Management is in the process of assessing the impact of this ASU on the Company's financial statements.

 

In January 2015, the FASB issued ASU No. 2015-01 Income Statement Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The objective of this Update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-220 Income Statement Extraordinary Items (Subtopic 225-20), which has been deleted. This Update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities. Management is in the process of assessing the impact of this ASU on the Company's financial statements.

 

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The amendments in ASU 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. On December 31, 2016, the Company adopted ASU 2015-03 and it did not have a material impact on the Company’s consolidated financial statements.

 

Management has considered all recent accounting pronouncements issued since the last audit of its consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.

 

 

NOTE 4 REAL ESTATE PROPERTY

 

On December 16, 2016, the Company entered into a Standard Commercial Sales Contract to acquire a parcel of commercial real estate property (the “Property”) located at 4228 1st Avenue, Suite 15, Tucker, GA, 30084, for a purchase price of $126,750 plus fees. The purchase of the Property closed on December 29, 2016. On February 1, 2017, the Company paid $2,000 for certain improvements on the property, which were capitalized and included in the total balance at March 31, 2017.

 

NOTE 5 NOTE PAYABLE – RELATED PARTY

 

Certain expenses paid by the Company's sole officer and director, principally audit and accounting fees and office expenses have been reflected in the Company's financial statements, along with a corresponding payable to the stockholder for amounts due him. As of March 31, 2017, the amount due to the related party totaled $38,942.

 

NOTE 6 NOTE PAYABLE

 

In connection with the purchase of the Property discussed in Note 4, on December 29, 2016, the Company issued a promissory note to William C. Gottschalk, the seller of the Property, in the amount of $126,750 at an interest rate of 6.75% per year to be paid in monthly installments equal to $1,123 per month. This promissory note shall is due and payable on January 1, 2032, unless sooner paid. Of the note balance at March 31, 2017, $4,624 is classified as a current liability, with the remaining $121,306 classified as non-current.

 

NOTE 7 STOCKHOLDERS' DEFICIT

 

On January 22, 2015, the Company issued 20,000,000 founders common stock to two directors and officers. The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.

 

On October 28, 2015, the Company redeemed a total of 19,500,000 shares from the then two shareholders (9,750,000 shares each) resulting in 500,000 shares of common stock remaining outstanding.

 

On October 30, 2015, the Company issued 5,000,000 shares of common stock to Richard J. Randolph, the new sole officer and director of the Company, as part of a change in control of the Company.

 

On February 8, 2017, the Company issued 360,000 shares of its common stock for total proceeds of $36.00 at a purchase price of $0.0001 per share to 33 investors pursuant to executed subscription agreements in reliance on the Section 4(a)(2) exemption from registration under the Securities Act.

 

NOTE 8 SUBSEQUENT EVENTS

 

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

 

 

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

 

Overview

 

Randolph Acquisitions, Inc. (formerly “Purple Grotto Acquisition Corporation”) (“Randolph” or the “Company”) was incorporated on January 12, 2015, under the laws of the state of Delaware. The business purpose of the Company is to acquire and operate real estate properties located in Georgia and throughout the United States. The Company is currently developing plans to acquire and operate single-family, multi-family, commercial and mixed-use real estate properties using the Company’s proprietary grading matrix to identify properties for purchase.

 

The Company has been in the development stage since inception and its operations to date have been limited to issuing shares to its original shareholders and effecting a change in control of the Company described below.

 

The Company originated as a blank check company and qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act which became law in April 2012.

 

On October 29, 2015, the Company effected a change in control by the redemption of 19,500,000 shares of the then outstanding 20,000,000 shares of common stock and the issuance on October 30, 2015 of 5,000,000 shares of common stock to Richard J. Randolph III at no cost. Messrs. James Cassidy and James McKillop, the then officers and directors of the Company, resigned and Richard J. Randolph III was named its sole officer and director. Pursuant to the change in control, the Company changed its name to Randolph Acquisitions, Inc.

 

The Company filed Current Reports on Form 8-K to disclose the change of control and the change of name.

 

Subsequently, on December 16, 2016, the Company entered into a Standard Commercial Sales Contract to acquire a parcel of commercial real estate property (the “Property”) located at 4228 1st Avenue, Suite 15, Tucker, GA 30084, for a purchase price of $126,750 plus fees. The purchase of the Property closed on December 29, 2016. In connection with the purchase of the Property, on December 29, 2016, the Company issued a promissory note to William C. Gottschalk, the seller of the property, in the amount of $126,750 at an interest rate of 6.75% per year to be paid in monthly installments equal to $1,122.57 per month. This promissory note shall be due and payable on January 1, 2032, unless sooner paid.

 

On February 8, 2017, the Company conducted private offering of its securities (the “Private Offering”) and issued 360,000 shares of its common stock for total proceeds of $36.00 at a purchase price of $0.0001 per share to 33 investors (the “Investors”) pursuant to executed subscription agreements in reliance on the Section 4(a)(2) exemption from registration under the Securities Act.

 

The Company has filed a registration statement on Form S-1 to register the resales of the shares purchased by the Investors in the Private Offering. As of the date of this Report, the registration statement was under review by the U.S. Securities and Exchange Commission.

 

An affiliate of the Company has entered into an agreement with Tiber Creek Corporation of which the former president of the Company is the president and controlling shareholder. Tiber Creek Corporation assists companies to become public reporting companies and for the preparation and filing of registration statements pursuant to the Securities Act of 1933, and the introduction to brokers and market makers.

 

Other than the purchase of the Property described above, the Company has not entered into other any definitive or binding agreements and there are no assurances that any transactions will occur.

 

As of March 31, 2017, the Company had not generated significant, recurring revenues and had not shown a history of positive income or cash flows from operations since inception. At March 31, 2017, the Company had sustained net losses of $37,558 since inception and had a net capital deficiency and working capital deficiency of $43,800.

 

For the period ended December 31, 2016, the Company's independent auditors issued a report raising substantial doubt about the Company's ability to continue as a going concern. As of March 31, 2017, the Company has minimal operations and the continuation of the Company as a going concern is dependent upon financial support from its principal stockholders, its ability to obtain necessary equity financing, or its ability to expand its existing commercial real-estate portfolio into consistent profitability.

 

 

The Company’s independent auditors have expressed substantial doubt as to the ability of the Company to continue as a going concern. Unless the Company is able to generate sufficient cash flow from operations and/or obtain additional financing, there is a substantial doubt as to the ability of the company to continue as a going concern.

 

Revenues and Losses

 

During the three months ended March 31, 2017, the Company generated revenues totaling $4,000, through leasing space in its real estate property. The Company is focusing its efforts on identifying additional properties for acquisition and business development.

 

During the quarter ended March 31, 2017, the Company posted net income of $838.

 

Equipment Financing

 

The Company has no existing equipment financing arrangements.

 

Potential Revenue

 

The Company owns and operates a commercial property located in Atlanta, Georgia from which it expects to generate revenue from leasing operations. Further, depending on the market environment, the Company may elect to sell this property and generate revenue from the sale of this property.

 

The Company also plans to acquire and operate additional mixed-use, commercial and residential properties located in Georgia and throughout the United States. Depending on market conditions and the nature of the property acquired, the Company may generate revenue from leasing operations and/or from re-sales of such properties. As part of its business strategy, the Company expects to employ a short-term divestment strategy in connection with its acquisition of residential properties, from which it plans to generate revenues from resales of such properties, and expects to employ a long-term buy and hold strategy in connection with its acquisition of mixed-use and commercial properties, from which it expects to generate revenues from leasing and property management operations.

 

Alternative Financial Planning

 

The Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to survive as a going concern and implement any part of its business plan or strategy will be severely jeopardized.

 

Critical Accounting Policies

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Early Stage of Company and Capital Resources

 

Since its inception, the Company has devoted most of its efforts to business planning, research and development, recruiting management and staff and raising capital. Accordingly, the Company was considered to be in the development stage until it recently began formal operations. The Company has not generated any revenues from its operations, and there is no assurance of future revenues.

 

 

The Company’s proposed activities will necessitate significant uses of capital beyond 2016.

 

There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

 

Discussion of the Quarter Ended March 31, 2017

 

During the three months ended March 31, 2017, the Company generated revenues totaling $4,000, compared to $-0- in revenue for the comparable quarter of 2016. The revenue for the current period was generated through leasing space in its real estate property. The Company is focusing its efforts on identifying additional properties for acquisition and business development.

 

During the quarter ended March 31, 2017, the Company posted net income of $838, compared to a net loss of $10,550 for the quarter ended March 31, 2016. The increased income is primarily the result of generating revenue from the Company’s real estate property, coupled with decreased rent expense.

 

During the quarter ended March 31, 2017, the Company experienced a net cash inflow of $3,650 in its operating activities, compared to $-0- for the same period of 2016. During the quarter ended March 31, 2017, net cash used by investing activities totaled $2,000, and net cash used by financing activities totaled $784. The Company had a cash balance of $866 as of March 31, 2017.

 

Liquidity and Capital Resources

 

Early Stage of Company and Capital Resources

 

Since its inception, the Company has devoted most of its efforts to business planning, research and development, recruiting management and staff and raising capital. Accordingly, the Company was considered to be in the development stage until it recently began formal operations. The Company generated $4,000 in revenues since its inception; however, and there is no assurance of future revenues.

 

The Company’s proposed activities will necessitate significant uses of capital beyond 2017.

 

There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans. Until such time that the Company’s registration statement becomes effective with the SEC, the Company plans to rely on its primary shareholder to continue his commitment to fund the Company’s continuing operating requirements. Upon the registration statement’s becoming effective, management anticipates a total capital raise between $5-10M USD over the course of the following four consecutive quarters. Management believes that this capital would allow the Company to meet its operating cash requirements, and would facilitate the Company’s acquisitions of multi-family, mixed-use, and commercial property for the purposes of building and sustaining a real estate portfolio of performing assets. Management also believes that the acquisition of such assets would generate revenue to cover overhead cost and general liabilities of the Company, and allow the Company to achieve overall sustainable profitability.

 

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Information not required to be filed by a Smaller reporting company.

 

ITEM 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report by the Company's principal executive officer (who is also the principal financial officer) in consultation with an outside accounting advisor.

 

Based upon that evaluation, the Company’s principal executive officer has concluded that the Company's disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the 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 Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

The Company intends to engage outside accounting advisors to assist the Company in implementing effective disclosure controls and procedures.

 

Changes in Internal Controls

 

There was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II -- OTHER INFORMATION

 

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

 

On February 8, 2017, the Company issued 360,000 shares of its common stock for total proceeds of $36.00 at a purchase price of $0.0001 per share to 33 investors pursuant to a private placement/non-public offering.

 

The non-public offering was made in reliance on the private offering exemption of Section 4(a)(2) of the Securities Act and/or the private offering safe harbor provisions of Rule 506 of Regulation D based on the following factors: (i) the number of offerees or purchasers, as applicable, (ii) the absence of general solicitation, (iii) investment representations obtained from the security holders in the transaction, (iv) the provision of appropriate disclosure, and (v) the placement of restrictive legends on the certificates reflecting the securities.

 

ITEM 5. OTHER INFORMATION

 

Change in Shell Company Status

 

As noted above, on December 16, 2016, the Company entered into a Standard Commercial Sales Contract to acquire a parcel of commercial real estate property (the “Property”) located at 4228 1st Avenue, Suite 15, Tucker, GA 30084, for a purchase price of $126,750 plus fees. The purchase of the Property closed on December 29, 2016. In connection with the purchase of the Property, on December 29, 2016, the Company issued a promissory note to William C. Gottschalk, the seller of the property, in the amount of $126,750 at an interest rate of 6.75% per year to be paid in monthly installments equal to $1,122.57 per month. This promissory note shall be due and payable on January 1, 2032, unless sooner paid.

 

 

In connection with the purchase of the Property, as of December 16, 2016, the Company no longer met the definition of a shell company as defined in Rule 12b-2 under the Exchange Act, in that the Company had operations (owning a leasing real property), and assets other than cash or cash equivalents. As such, as of December 16, 2016, the Company had exited shell status.

 

No Changes in Nomination Procedures

 

During the quarter covered by this Report, there were not any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

ITEM 6. EXHIBITS

 

Exhibit No.		Description
10.1		Standard Commercial Sales Contract (Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on March 6, 2017, and incorporated herein by this reference)
10.2		Form of Promissory Note (Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q, filed on March 6, 2017, and incorporated herein by this reference)
10.3		Form of Promissory Note by and between the Company and Richard Randolph dated December 29, 2016 (Previously filed as an exhibit to the Company’s Registration Statement on Form S-1, filed on March 16, 2017, and incorporated herein by this reference)
31		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase 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.

 

Dated: May 22, 2017

 

	RANDOLPH ACQUISITIONS, INC.
	By:	/s/ Richard J. Randolph III
	Name:	Richard J. Randolph III
	Title:	Chief Executive Officer, Chief Financial Officer