UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31,September 30, 2022
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-28963
STRATEGIC ACQUISITIONS, INC.
(Exact name of Registrant as specified in its charter)
| Nevada | 13-3506506 | |
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification Number) |
30 Broad Street, 14th Floor, New York, NY 10004
(Address of principal executive offices, including zip code)
(212) 878-6532
(Registrant’s telephone number, including area code)
| Securities registered pursuant to Section 12(b) of the Act: | None |
| Securities registered pursuant to Section 12(g) of the Act: | Common Stock |
| (Title of class) |
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐
As of MayNovember 10, 2022, the registrant had shares of common stock outstanding.
STRATEGIC ACQUISITIONS, INC.
TABLE OF CONTENTS
| 1 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STRATEGIC ACQUISITIONS, INC.
BALANCE SHEETS
March 31, 2022 (Unaudited) | December 31, 2021 | September 30, 2022 (Unaudited) | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash | $ | 35,393 | $ | 39,732 | $ | 12,100 | $ | 39,732 | ||||||||
| Total current assets | 35,393 | 39,732 | 12,100 | 39,732 | ||||||||||||
| Total assets | $ | 35,393 | $ | 39,732 | $ | 12,100 | $ | 39,732 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 2,965 | $ | 2,000 | $ | - | $ | 2,000 | ||||||||
| Total current liabilities | 2,965 | 2,000 | - | 2,000 | ||||||||||||
| Total liabilities | 2,965 | 2,000 | - | 2,000 | ||||||||||||
| Stockholders’ equity: | ||||||||||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding | 2,715 | 2,715 | 2,715 | 2,715 | ||||||||||||
| Additional paid-in capital | 575,688 | 575,688 | 634,088 | 575,688 | ||||||||||||
| Accumulated deficit | (545,975 | ) | (540,671 | ) | (624,703 | ) | (540,671 | ) | ||||||||
| Total stockholders’ equity | 32,428 | 37,732 | 12,100 | 37,732 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 35,393 | $ | 39,732 | $ | 12,100 | $ | 39,732 | ||||||||
The accompanying notes are an integral part of these financial statements.
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STRATEGIC ACQUISITIONS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
| 2022 | 2021 | |||||||
Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | $ | - | $ | - | ||||
| Expenses | ||||||||
| General & Administrative | 5,305 | 10,126 | ||||||
| Total Expenses | 5,305 | 10,126 | ||||||
| Other Income | ||||||||
| Interest Income | 1 | - | ||||||
| Total Other Income | 1 | - | ||||||
| Net loss before provision for income taxes | $ | (5,304 | ) | $ | (10,126 | ) | ||
| Income tax provision | - | - | ||||||
| Net loss | $ | (5,304 | ) | $ | (10,126 | ) | ||
| Net Loss Per Common Share – Basic & Fully Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares of common stock outstanding – Basic & Fully Diluted | 2,715,000 | 2,515,000 | ||||||
The accompanying notes are an integral part of these financial statements.
STRATEGIC ACQUISITIONS, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in- | Accumulated | Stockholders’ | |||||||||||||||||
| Outstanding | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2021 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (540,671 | ) | $ | 37,732 | ||||||||||
| Net loss | — | — | — | (5,304 | ) | (5,304 | ) | |||||||||||||
| Balance at March 31, 2022 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (545,975 | ) | $ | 32,428 | ||||||||||
| Balance at December 31, 2020 | 2,515,000 | $ | 2,515 | $ | 535,888 | $ | (518,578 | ) | $ | 19,825 | ||||||||||
| Net loss | — | — | — | (10,126 | ) | (10,126 | ) | |||||||||||||
| Balance at March 31, 2021 | 2,515,000 | $ | 2,515 | $ | 535,888 | $ | (528,704 | ) | $ | 9,699 | ||||||||||
The accompanying notes are an integral part of these financial statements.
STRATEGIC ACQUISITIONS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| 2022 | 2021 | |||||||
Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | (5,304 | ) | $ | (10,126 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| (Increase) Decrease in prepaid expense | - | 500 | ||||||
| Increase (Decrease) in accounts payable | 965 | 5,253 | ||||||
| Net cash used in operating activities | (4,339 | ) | (4,373 | ) | ||||
| Net decrease in cash | (4,339 | ) | (4,373 | ) | ||||
| Cash at beginning of the period | 39,732 | 19,530 | ||||||
| Cash at end of the period | $ | 35,393 | $ | 15,157 | ||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Expenses | ||||||||||||||||
| General & Administrative | 4,699 | 4,627 | 16,135 | 18,353 | ||||||||||||
| General & Administrative – related party | 9,500 | - | 9,500 | - | ||||||||||||
| General & Administrative – stock-based compensation – related party warrants | 58,400 | - | 58,400 | - | ||||||||||||
| Total Expenses | 72,599 | 4,627 | 84,035 | 18,353 | ||||||||||||
| Other Income | ||||||||||||||||
| Interest Income | 1 | - | 3 | - | ||||||||||||
| Total Other Income | 1 | - | 3 | - | ||||||||||||
| Net (loss) before provision for taxes | $ | (72,598 | ) | $ | (4,627 | ) | $ | (84,032 | ) | $ | (18,353 | ) | ||||
| Income tax provision | - | - | - | - | ||||||||||||
| Net (loss) | $ | (72,598 | ) | $ | (4,627 | ) | $ | (84,032 | ) | $ | (18,353 | ) | ||||
| Net (Loss) Per Common Share – Basic | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
| Net (Loss) Per Common Share – Diluted | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.01 | ) | |||||
| Weighted average number of shares of common stock outstanding – Basic | 2,715,000 | 2,562,283 | 2,715,000 | 2,530,934 | ||||||||||||
| Weighted average number of shares of common stock outstanding – Diluted | 2,763,913 | 2,562,283 | 2,731,484 | 2,530,934 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
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STRATEGIC ACQUISITIONS, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in- | Accumulated | Stockholders’ | |||||||||||||||||
| Outstanding | Amount | Capital | (Loss) | Equity | ||||||||||||||||
| Balance at December 31, 2021 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (540,671 | ) | $ | 37,732 | ||||||||||
| Net loss | — | — | — | (5,304 | ) | (5,304 | ) | |||||||||||||
| Balance at March 31, 2022 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (545,975 | ) | $ | 32,428 | ||||||||||
| Net loss | — | — | — | (6,130 | ) | (6,130 | ) | |||||||||||||
| Balance at June 30, 2022 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (552,105 | ) | $ | 26,298 | ||||||||||
| Issuance of 150,000 warrants on August 31, 2022 at fair value for services | - | - | 58,400 | - | 58,400 | |||||||||||||||
| Net loss | — | — | — | (72,598 | ) | (72,598 | ) | |||||||||||||
| Balance at September 30, 2022 | 2,715,000 | $ | 2,715 | $ | 634,088 | $ | (624,703 | ) | $ | 12,100 | ||||||||||
| Balance at December 31, 2020 | 2,515,000 | $ | 2,515 | $ | 535,888 | $ | (518,578 | ) | $ | 19,825 | ||||||||||
| Net loss | — | — | — | (10,126 | ) | (10,126 | ) | |||||||||||||
| Balance at March 31, 2021 | 2,515,000 | $ | 2,515 | $ | 535,888 | $ | (528,704 | ) | $ | 9,699 | ||||||||||
| Net loss | — | — | — | (3,600 | ) | (3,600 | ) | |||||||||||||
| Balance at June 30, 2021 | 2,515,000 | $ | 2,515 | $ | 535,888 | $ | (532,304 | ) | $ | 6,099 | ||||||||||
| Issuance of common stock on September 8, 2021 at $ per share for cash | 150,000 | 150 | 29,850 | 30,000 | ||||||||||||||||
| Issuance of common stock on September 13, 2021 at $ per share for cash | 50,000 | 50 | 9,950 | 10,000 | ||||||||||||||||
| Net loss | — | — | — | (4,627 | ) | (4,627 | ) | |||||||||||||
| Balance at September 30, 2021 | 2,715,000 | $ | 2,715 | $ | 575,688 | $ | (536,931 | ) | $ | 41,472 | ||||||||||
The accompanying notes are an integral part of these financial statements.
| 4 |
STRATEGIC ACQUISITIONS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| 2022 | 2021 | |||||||
Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net (loss) | $ | (84,032 | ) | $ | (18,353 | ) | ||
| Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||||||||
| Issuance of warrants for services – related party | 58,400 | - | ||||||
| Change in operating assets and liabilities: | ||||||||
| Decrease in prepaid expense | - | 500 | ||||||
| (Decrease) in accounts payable | (2,000 | ) | (205 | ) | ||||
| Net cash (used in) operating activities | (27,632 | ) | (18,058 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from issuance of common stock | - | 40,000 | ||||||
| Net cash flows from financing activities | - | 40,000 | ||||||
| Net increase (decrease) in cash | (27,632 | ) | 21,942 | |||||
| Cash at beginning of the period | 39,732 | 19,530 | ||||||
| Cash at end of the period | $ | 12,100 | $ | 41,472 | ||||
The accompanying notes are an integral part of these financial statements.
| 5 |
STRATEGIC ACQUISITIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited financial information as of and for the three and nine months ended March 31,September 30, 2022 and 2021 has been prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) as set forth in the instructions to Quarterly Report on Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended March 31,September 30, 2022 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2022.
The balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP in the U.S. for complete financial statements.
Note 2. Stockholders’ Equity
The Company is authorized to issue shares of its $ par value Common Stock.
There were no issuances of common stockCommon Stock for the three-monththree- or nine-month periods ended September 30, 2022.
The Company issued an aggregate of 150,000 warrants to purchase shares of Common Stock to current and former Directors as of August 31, 2022 in consideration for their services. The warrants vested immediately, and are valid for a period ended March 31, 2022.of 5 years from issuance at an initial purchase price of $ per share of Common Stock, subject to adjustment and registration rights. The company records stock-based compensation in accordance with FASB ASC Topic 718, Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based compensation at fair value at the grant date and recognize the expense during the service period. The Company recognizes in the statement of operations the grant-date fair value of warrants issued to employees and non-employees.
Schedule of Weighted Average Assumptions Used to Estimate Fair Value
| August 31, 2022 Issuance | ||||
| Expected volatility | % | |||
| Expected Risk free interest rate | % | |||
| Expected term (years) | ||||
| Expected dividend rate | % | |||
| 6 |
Note 3. Related Party Transactions
The Company may periodically issue payment to certain officers and directors or their affiliates for services in connection with maintaining the company’s financial statements and regulatory status in good standing and evaluating potential business opportunities. There were no such payments issued in the three months ended March 31, 2022 and 2021, as officers and directors waived the right to compensation for their services rendered or expenses paid on behalf of the Company. This arrangement could change or terminate at any time.
The Company has a month-to-month lease to rent office space at 30 Broad Street, New York, NY 10004 at a rate of approximately $100 per month. For the three monthsthree- and nine-month periods ended March 31,September 30, 2022, and 2021, this rent expense was paidthe total payment for services to related parties was: $3,500 to Westminster Securities Corp., an entity controlled by the Company’s ChairmanPresident, John O’Shea, $3,500 to Jonathan Braun, a director of the Company at the time of payment, and $2,500 to Marika Tonay, an officer and director of the Company at the time of payment.
For the three- and nine-month periods ended September 30, 2021, there were no costpayments for services issued to officers or directors.
As disclosed in Note 2, on August 31, 2022, the Company issued an aggregate of 150,000 warrants to its director and then directors in consideration for their services. The total fair value of such warrants at the grant date was $58,400.
Note 4. Change in Control
On August 31, 2022, the Company underwent a change in control. As further discussed in Item 5 of this report, Exworth Management LLC (“Exworth”) became the controlling shareholder of the Company, and Yuanyuan Huang and Wei Huang, managing partners of Exworth, became officers and directors of the Company. This arrangement could change or terminate at any time.Marika Tonay and Jonathan Braun resigned their respective positions with the Company.
Note 4.5. Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not generated any revenue since inception, incurred accumulated losses of approximately $546,000 624,703for the period from January 27, 1989 (Inception) through March 31,September 30, 2022 and has commenced limited operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company underwent a change in control during the quarter, including resignation of two officers/directors and appointment of two officers/directors. Management’s plans include that the Company will seek to fulfill the Company’s business plan to enter into a business combination, and while evaluating any such opportunities seek to minimize expenses and seek additional sources of capital as needed through the issuance of debt or equity financing, but therefinancing. There can be no assurance the Company will be successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company’s business plan. The global pandemic, COVID-19, and deteriorating global economic conditions, including risk of recession, could adversely affect the Company’s ability to obtain additional financing or identify a potential merger or acquisition candidate. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 5.6. Subsequent Events
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to March 31,September 30, 2022 to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose or recognize in the accompanyingthese financial statements.
| 7 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion should be read in conjunction with the accompanying financial statements for the three-month periodthree- and nine-month periods ended March 31,September 30, 2022 and the Form 10-K for the fiscal year ended December 31, 2021.
Liquidity and Capital Resources
At March 31,September 30, 2022, the Company had current assets in the form of cash of $35,393$12,100 and liabilities of $2,965.$0 liabilities. This compares with cash of $39,732 and liabilities of $2,000 as of December 31, 2021. The decrease in cash was due to expenses associated with maintaining the Company’s public status.status and evaluating business opportunities.
Results of Operations
The Company has not realized any revenues from operations in the past two years, and its plan of operation for the next twelve months shall be to continue its efforts to locate a suitable acquisition/merger candidate.
It is unlikely the Company will have any revenue, other than interest income, unless it is able to effect an acquisition of or merger with an operating company, of which there can be no assurance.
For the three months endingquarters ended March 31,September 30, 2022 and 2021, the Company reportedshowed net losses of $5,304$72,598 and $10,126,$4,267, respectively. The decreaseincrease in net loss was due primarily to a change in timing of incurring a portion of expensesexpense associated with related party compensation for services, including non-cash expense of warrants issued for services.
For the Company’s annual audit, as well as eliminationnine-month periods ended September 30, 2022 and 2021, the Company showed net losses of the one-time fee$84,032 and $18,353, respectively. The increase in net loss was due primarily to expense associated with the previous audit firm change.related party compensation for services, including non-cash expense of warrants issued for services.
ITEM 4. CONTROLS AND PROCEDURES
| ITEM 4. | CONTROLS AND PROCEDURES |
As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).
Based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Additionally, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.
There was no change in the Company’s internal control over financial reporting 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.
***
| 8 |
PART II – OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
None.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
| ITEM 5. | OTHER INFORMATION |
None.As previously disclosed on Form 8-K filed September 6, 2022, which is incorporated by reference as an exhibit hereto, the Company underwent a change in control on August 31, 2022. Exworth Management LLC (“Exworth”) purchased an aggregate of 2,013,000 shares of Common Stock in a private transaction from existing shareholders and now owns 74.1% of outstanding shares of the Company. Additionally, Dr. Yuanyuan Huang was appointed Secretary/Treasurer and a Director of the Company and Dr. Wei Huang was appointed a Director of the Company. Yuanyuan Huang and Wei Huang are both managing partners of Exworth. John P. O’Shea has retained his positions as President and Director of the Company. Marika X. Tonay resigned as Secretary/Treasurer and Director of the Company and Jonathan Braun resigned as Director and Chairman of the Board of the Company.
| 9 |
| ITEM 6. | EXHIBITS |
The following exhibits are filed with this Report or incorporated by reference:
EXHIBIT LIST
Exhibit
| Description | |
| 5.1 | Current Report on Form 8-K filed September 6, 2022 | |
| 31.1 | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 10 |
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.
| STRATEGIC ACQUISITIONS, INC. | ||
| (Registrant) | ||
| Date: | By: | /s/ JOHN P. O’SHEA |
| John P. O’Shea | ||
President and Principal Financial Officer | ||
***
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