Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The Company has significantly changed its business operations
upon its recent change of control event. On July 2, 2012, Chad M. Carpenter purchased an aggregate of 5,999,300 shares of the outstanding
common stock of the Company from certain of the Company’s shareholders in a private transaction. As consideration for the
shares, Mr. Carpenter paid a total purchase price of $128,605 from his personal funds. In connection with the transaction, an aggregate
of 1,650,000 shares of the Company’s outstanding common stock were returned to treasury for cancellation. Immediately upon
the closing of the transaction, Mr. Carpenter became the majority shareholder of the Company and beneficially owns stock representing
71.8 percent of the outstanding voting shares of the Company.
As a result of the above change in control and management,
the Company is now engaged in a new business. The Company intends to acquire portfolios of occupied and rented
single-family houses throughout the United States in accordance with its new business plan. The Company’s business plan
involves (i) acquiring portfolios of rented houses from investors; and (ii) receiving current income from profits from
rentals and benefitting from future value appreciation.
As of the date of this report, the Company has not made any
acquisitions and has minimal assets and liquidity. To carry out its business plan, the Company will need to seek additional funding.
The Company is currently in the process of pursuing potential transactions to purchase portfolios of rented houses in its target
markets across the United States and is seeking additional equity and debt capital in order to fund these acquisitions.
Liquidity and Capital Resources
The Company has not received any significant revenues in 2012. As
of September 30, 2012, the cash balance was $224. Operations have been funded by advances from Mr. Carpenter and his
affiliated entities. As a result of our limited working capital, we have had to limit our operations. Until we are able
to raise additional funds to pursue our business plan and generate material revenues, our activities will be restricted.
For the nine months ended September 30, 2011, the Company did
not pursue any investing activities. This was also the case for the first six months of 2012, however the Company has been pursuing
new portfolio acquisitions in the quarter ending September 30, 2012. The Company did not however close a transaction during the
period.
For the nine months ended September 30, 2011, the Company did
not pursue any financing activities. This was also the case for the first six months of 2012, however the Company has been actively
pursuing new sources of debt and equity in the quarter ending September 30, 2012. The Company is actively pursuing a private placement
of approximately $25,000,000 of common stock and additionally has been pursuing short term debt in order to fund its operations
and to provide capital for acquisitions.
O
n July 2, 2012, the Company issued
convertible promissory notes to four accredited investors in the aggregate principal amount of $52,789 (the “Notes”).
The maturity date of the Notes is July 2, 2013, and the Notes bear interest at a rate of 10 percent per annum payable in full on
the maturity date. In the event the Company consummates a financing in which it issues securities prior to the maturity date, the
Notes may be exchanged by the holders thereof for such securities of the Company at the same price and on the same terms and conditions
being offered to the other investors in such financing, and the principal and accrued interest under the Notes will be applied
towards the purchase price of such security. The Notes may be prepaid in whole or in part at the Company’s option without
penalty. Proceeds of the Notes were utilized to pay Company obligations and expenses.
Chad M. Carpenter, our current President, Chief
Executive Officer, Chief Financial Officer and Chairman of the Board, is one of the investors in
the Notes. The Company issued a Note in the principal amount of $26,395 to Mr. Carpenter prior to Mr. Carpenter joining the
Company.
On October 18, 2012, the Company issued additional convertible
promissory notes to five accredited investors in the aggregate principal amount of $500,000. The maturity date for these notes
is the earlier of December 31, 2013, or upon the Company raising $5 million of equity capital. The notes bear interest at a rate
of 10 percent per annum payable in full on the maturity date. Upon the Company successfully raising additional capital, the Notes
may be exchanged by the holders thereof for such securities of the Company at the same price and on the same terms and conditions
being offered to the other investors in such financing, and the principal and accrued interest under the Notes will be applied
towards the purchase price of such security. The Notes may be prepaid in whole or in part at the Company’s option without
penalty. Proceeds from the Notes will be utilized for property acquisitions and to fund payables and operations of the Company.
Chad M. Carpenter was one of the individuals investing in this
new note round and the Company issued a note for $225,000 to Mr. Carpenter in exchange for his additional investment.
Additionally the Notes issued on July 2, 2012 bearing a principal
balance of $52,789, were cancelled and exchanged, along with the accrued interest due, for new notes bearing terms identical to
the $500,000 note round explained above.
We currently have no other agreements, arrangements or understandings
with any person to obtain funds through bank loans, lines of credit, stock offerings or any other sources.
The Company’s ability to become a viable entity is dependent
on its ability to raise future debt and equity capital to utilize to purchase assets under its new business plan or to fund its
ongoing operations. Our inability to raise funds for the above purposes will have a severe negative impact on our ability to remain
a viable company.
Results of Operations
For the nine months ended September 30, 2012, the Company had
total revenues of $1,000. Legal and accounting expenses totaled $118,875, general and administrative expenses were $69,074
and interest expense was $1,601. As a result, the Company had net loss of $188,550 for the nine months ended September
30, 2012.
For the nine months ended September 30, 2011, the Company had
revenues of $42,850. The cost of those revenues was $9,425, resulting in a gross profit of $33,425. The Company
incurred legal and accounting expenses of $18,325, general and administrative expenses of $15,306, and interest expense of $900. As
a result, the Company had a net loss of $1,106 for the nine months ended September 30, 2011.
Operating results have decreased significantly and expenses
have increased over the past three months due to the Company’s decline in operations and a focus on developing a new viable
business plan along with the costs necessary to restructure the Company’s operations and prepare for the Company’s
planned expansion of operations and ongoing capital search.
Going Concern
The Company has suffered losses from operations and has a working
capital deficit, and stockholders' deficit. The Company in all likelihood will be required to make significant future expenditures
in connection with its new business plan of acquiring portfolios of rental homes along with incurring general and administrative
expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern should the
Company not be successful in raising new capital.
The Company may raise additional capital through the sale of
its equity securities, through an offering of debt securities, or through borrowings from financial institutions. By doing so,
the Company hopes to generate revenues from the rental of its future acquired residential home portfolios. Management believes
that actions presently being taken to obtain additional funding will provide the opportunity for the Company to continue as a going
concern.
Off-Balance Sheet Arrangements
The registrant had no material off-balance sheet arrangements
as of September 30, 2012.
Critical Accounting Policies and Estimates
Management's discussion and analysis of its financial condition
and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts
of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions
to be reasonable under the circumstances. However, actual results could differ from those estimates under different
assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern. If
we are unable to continue as a going concern we would experience additional losses from the write-down of assets.
New Accounting Pronouncements
The registrant has adopted all recently issued accounting pronouncements. The
adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the
financial position or results of operations of the registrant.
This information contained in this report contains forward-looking
statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events and similar expressions.
Forward-looking statements may be identified by use of words such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,”
or “potential” or similar words or phrases which are predictions of or indicate future events or trends. Statements
such as those concerning potential acquisition activity, investment objectives, strategies, opportunities, other plans and objectives
for future operations or economic performance are based on the Company’s current expectations, plans, estimates, assumptions
and beliefs that involve numerous risks and uncertainties, including the Company’s lack of (i) any real estate investment
properties to date, (ii) any agreements or understandings concerning the Company’s acquisition of real estate investment
properties and (iii) the capital required to acquire any such properties. Any of these statements could prove to be inaccurate
and actual events or investments and results of operations could differ materially from those expressed or implied. To the extent
that the Company’s assumptions differ from actual results, the Company’s ability to meet such forward-looking statements,
including its ability to invest in a diversified portfolio of quality real estate investments, may be significantly and negatively
impacted. You are cautioned not to place undue reliance on any forward-looking statements and the Company disclaims any obligation
to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information,
future events or other changes.