FREEDOM HOLDINGS, INC. The following Management's Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements that involve risks and uncertainties. We use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this report. The management's discussion, analysis of financial condition, and results of operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this report. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include:
(a) an abrupt economic change resulting in an unexpected downturn in demand for
our services; (b) governmental restrictions or excessive taxes on our services; (c) economic resources to support the development of our projects; (d) expansion plans, access to potential clients, and advances in technology;
and.
(e) lack of working capital that could hinder acquisitions for development of our
projects.
Our Business Overview.
FREEDOM HOLDINGS,
Implications of Being an
We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
? A requirement to have only two years of audited financial statements and
only two years of related MD&A;
? Exemption from the auditor attestation requirement in the assessment of
the emerging growth company's internal control over financial reporting
under Section 404 of the Sarbanes-Oxley Act of 2002.
? Reduced disclosure about the emerging growth company's executive
compensation arrangements; and
? No non-binding advisory votes on executive compensation or golden
parachute arrangements.
We have already taken advantage of these reduced reporting burdens in this registration statement, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election is irrevocable and allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We could remain an emerging growth company for up to five years, or until the
earliest of (i) the last day of the first fiscal year in which our annual gross
revenues exceed
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(b) Business of Issuer
The analysis of new business opportunities will be undertaken by or under the
supervision of
(a) Potential for growth, indicated by new technology, anticipated market expansion or new products.
(b) Competitive position as compared to other firms of similar size and experience within the industry segment as well as with the industry as a whole.
(c) Strength and diversity of management, either in place or scheduled for recruitment.
(d) Capital requirements and anticipated availability of required funds, to be provided by the Registrant or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources.
(e) The cost of participation by the Registrant as compared to the perceived tangible and intangible values and potentials.
(f) The extent to which the business opportunity can be advanced.
(g) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
(h) Other relevant factors.
The Company was formed to participate in the mortgage industry however was
forced to cease mortgage operations during the 2008 housing crisis at which time
the Company acquired small oil and gas leases in
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We believe that
In applying for foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Registrant's limited capital available for investigation, the Registrant may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
FORM OF ACQUISITION
The manner in which the Registrant participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Registrant and the promoters of the opportunity, and the relative negotiating strength of the Registrant and such promoters.
It is likely that the Registrant will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Registrant. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code") depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity.
In addition, depending upon the transaction, the Registrant's current stockholders may be substantially diluted to less than 20% of the total issued and outstanding shares of the surviving entity and possibly even eliminated as stockholders by an acquisition. Current shareholders will seek to either maintain an equity interest in the surviving company or a cash payment in exchange for outstanding shares, or a combination thereof.
The present stockholders of the Registrant will likely not have control of a majority of the voting securities of the Registrant following a reorganization transaction. As part of such a transaction, all, or a majority of, the Registrant's sole director may resign, and one or more new directors may be appointed without any vote by stockholders.
In the case of an acquisition, the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require stockholder approval.
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It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs incurred.
We presently have no employees apart from our management. Our sole officer and director is engaged in outside business activities and anticipates that he will devote to our business very limited time (estimated at five hours per week) until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.
(c) Reports to security holders.
(1) The Company is not required to deliver an annual report to security holders and at this time does not anticipate the distribution of any such report.
(2) The Company will file reports with the
(3) The public may read and copy any materials the Company files with the
(i) Filing of Exchange Act reports, and
(ii) Consummating an acquisition
We anticipate that our cost for filing Exchange Act reports for the next 12
months will be approximately
We are in the development stage and have negative working capital, negative stockholders' equity and have not earned any revenues from operations to date. These conditions raise substantial doubt about our ability to continue as a going concern. We are currently devoting our efforts to locating merger candidates. Our ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, locate and complete a merger with another company, ultimately, achieve profitable operations.
We may consider a business which has recently commenced operations, in a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Our sole officer and director has not had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
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Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and dilution of interest for present and prospective stockholders, which is like to occur as a result of our management's plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered to a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or perceived benefits of becoming a publicly traded corporation. We intend to contact various stock transfer agents, investment relation firms and business development entities to locate potential candidates for a business combination transaction. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. An additional perceived benefit for a private operating company in becoming public by merging with us as opposed to filing its own form 10 registration statement is the time and money required to get through the process. This private company must take into account the consideration that such private company would have to provide to us in such a transaction as well as our obligation to file a Form 8-K in connection with such a transaction including Form 10 information regarding the private operating company. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
PLAN OF OPERATION.
The Company is in the process of investigating potential business ventures
which, in the opinion of management, will provide a source of eventual profit to
the Company. Such involvement may take many forms, including the acquisition of
an existing business or the acquisition of assets to establish subsidiary
businesses.
The Company possesses limited funds and will be extremely limited in its
attempts to locate potential business situations for investigation. The Company
has commenced the process of investigating possible merger and acquisition
candidates and believes that the Company's status as a publicly held corporation
will enhance its ability to locate such potential business ventures. No
assurance can be given as to when
Business opportunities, if any arise, are expected to become available to
The analysis of business opportunities will be undertaken by or under the
supervision of
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It is not possible at present to predict the exact manner in which the Company
may participate in a business opportunity. Specific business opportunities will
be reviewed and based upon such review, the appropriate legal structure or
method of participation will be decided upon by management. Such structures and
methods may include, without limitation, leases, purchase and sale agreements,
licenses, joint ventures; and may involve merger, consolidation or
reorganization. The Company may act directly or indirectly through an interest
in a partnership, corporation or reorganization. However, it is most likely that
any acquisition of a business venture the Company would make would be by
conducting a reorganization involving the issuance of FREEDOM HOLDING's
restricted securities. Such a reorganization may involve a merger (or
combination pursuant to state corporate statutes, where one of the entities
dissolves or is absorbed by the other), or it may occur as a consolidation,
where a new entity is formed and FREEDOM HOLDING, and such other entity combine
assets in the new entity. Reorganization may also occur, directly or indirectly,
through subsidiaries, and there is no assurance that the Company would be the
surviving entity. Any such reorganization could result in loss of control of a
majority of the shares.
As part of his investigation of acquisition possibilities,
It may be anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention, and substantial costs for accountants, attorneys and others. Should a
decision thereafter be made not to participate in a specific business
opportunity, it is likely that costs already expended would not be recoverable.
It is likely, in the event a transaction should eventually fail to be
consummated, for any reason, that the costs incurred by the Company would not be
recoverable.
The Company is not able to determine the time or resources that will be necessary to locate and acquire or merge with a business prospect. There is no assurance that the Company will be able to acquire an interest in any such prospects, products or opportunities that may exist or that any activity of the Company, regardless of the completion of any transaction, will be profitable.
If and when
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We have limited history as a public company. We currently file with the
? prepare and distribute reports and other stockholder communications in
compliance with our obligations under the federal securities laws and the
applicable national securities exchange listing rules;
? define and expand the roles and the duties of our Board of Directors and
its committees;
? institute more comprehensive compliance, investor relations and internal
audit functions;
? evaluate and maintain our system of internal control over financial
reporting, and report on management's assessment thereof, in compliance
with the requirements of Section 404 of the Sarbanes-Oxley Act and related
rules and regulations of the SEC ; and
? involve and retain outside legal counsel and accountants in connection
with the activities listed above.
The adequacy of our internal control over financial reporting must be assessed
by management for each year commencing with the year ending
The significant obligations related to being a public company will continue to
require a significant commitment of additional resources and management
oversight that will increase our costs and might place a strain on our systems
and resources. As a result, our management's attention might be diverted from
other business concerns. In addition, we might not be successful in implementing
and maintaining controls and procedures that comply with these requirements. If
we fail to maintain an effective internal control environment or to comply with
the numerous legal and regulatory requirements imposed on public companies, we
could make material errors in, and be required to restate, our financial
statements. Any such restatement could result in a loss of public confidence in
the reliability of our financial statements and sanctions imposed on us by the
Results of Operations and Critical Accounting Policies and Estimates.
The results of operations are based on preparation of financial statements in
conformity with accounting principles generally accepted in
Results of Operations for years ended
Revenues.
All revenues were derived from
Total Revenue. Total revenues for the years ended
Cost of goods sold. Cost of goods sold for the years ended
Gross profit. Gross profit for the years ended
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Expenses.
Total Operating Expenses. Total operating expenses for the years ended
Other Income (Expense): Total other income (expense) for the years ended
Financial Condition.
Total Assets. Total assets at
Total Liabilities. Total liabilities at
Liquidity and Capital Resources.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
The Company sustained a loss of
We are presently able to meet our obligations as they come due through the
support of our CEO. At
Net cash used in operating activities for the years ended
Net cash provided by financing activities for the years ended
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We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from the private sources and/or debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. Our Plan of Operation for the next twelve months is to raise capital to implement our strategy. We do not have the necessary cash and revenue to satisfy our cash requirements for the next twelve months. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then we may not be able to expand our operations. If adequate funds are not available, we believe that our officers and directors will contribute funds to pay for some of our expenses. However, we have not made any arrangements or agreements with our officers and directors regarding such advancement of funds. We do not know whether we will issue stock for the loans or whether we will merely prepare and sign promissory notes. If we are forced to seek funds from our officers or directors, we will negotiate the specific terms and conditions of such loan when made, if ever. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our company's securities. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See "Note 3 - Going Concern" in our financial statements for additional information as to the possibility that we may not be able to continue as a "going concern."
We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of
Off-Balance Sheet Arrangements
We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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