UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 2015
| ¨ | 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: 0-53900
Renewable Energy Acquisition Corp.
(Exact name of registrant as specified in its charter)
| Nevada | 74-3219044 | |
| (State of incorporation) | (IRS Employer ID Number) |
10935 57th Avenue North, Plymouth, MN 55442
(Address of principal executive offices)
(952) 541-1155
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨
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. (Check one):
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES x NO ¨
State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: November 1, 2015: 1,623,750 shares of common stock, par value $0.001
Renewable Energy Acquisition Corp.
Form 10-Q for the Quarter ended September 30, 2015
Table of Contents
2
Part I - Financial Information
Renewable Energy Acquisition Corp.
Balance Sheets
September 30, 2015 and December 31, 2014
(Unaudited)
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 2,536 | $ | 1,633 | ||||
| Total Assets | $ | 2,536 | $ | 1,633 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Notes payable to stockholders | $ | 39,920 | $ | 31,920 | ||||
| Accrued interest payable to stockholders | 945 | 308 | ||||||
| Accounts payable - trade | 7,135 | 3,300 | ||||||
| Total Liabilities | 48,000 | 35,528 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Deficit | ||||||||
| Preferred stock - $0.001 par value 5,000,000 shares authorized, none issued and outstanding, | - | - | ||||||
| Common stock - $0.001 par value, 50,000,000 shares authorized. 1,623,750 shares issued and outstanding | 1,624 | 1,624 | ||||||
| Additional paid-in capital | 53,509 | 52,529 | ||||||
| Accumulated deficit | (100,597 | ) | (88,048 | ) | ||||
| Total Stockholders' Deficit | (45,464 | ) | (33,895 | ) | ||||
| Total Liabilities and | ||||||||
| Stockholders’ Deficit | $ | 2,536 | $ | 1,633 | ||||
The accompanying notes are an integral part of these financial statements.
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Renewable Energy Acquisition Corp.
Statements of Operations and Comprehensive Loss
Nine and Three months ended September 30, 2015 and 2014
(Unaudited)
| Nine months | Nine months | Three months | Three months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating expenses | ||||||||||||||||
| Professional fees | 14,055 | 13,898 | 6,016 | 2,999 | ||||||||||||
| Other expenses | 4,377 | 3,830 | 1,475 | 780 | ||||||||||||
| Total operating expenses | 18,432 | 17,728 | 7,491 | 3,779 | ||||||||||||
| Loss from operations | (18,432 | ) | (17,728 | ) | (7,491 | ) | (3,779 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Miscellaneous income | 7,500 | - | 5,000 | - | ||||||||||||
| Interest expense on notes payable to stockholders | (1,617 | ) | (1,072 | ) | (603 | ) | (415 | ) | ||||||||
| Loss before provision for income taxes | (12,549 | ) | (18,800 | ) | (3,094 | ) | (4,194 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | $ | (12,549 | ) | $ | (18,800 | ) | $ | (3,094 | ) | $ | (4,194 | ) | ||||
| Loss per common share – basic and fully diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted-average number of shares of common stock outstanding - basic and fully diluted | 1,623,750 | 1,623,750 | 1,623,750 | 1,623,750 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
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Renewable Energy Acquisition Corp.
Statements of Cash Flows
Nine months ended September 30, 2015 and 2014
(Unaudited)
| Nine months | Nine months | |||||||
| ended | ended | |||||||
| September 30, | September 30, | |||||||
| 2015 | 2014 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (12,549 | ) | $ | (18,800 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest expense contributed as capital by stockholders | 980 | 906 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | - | 8,675 | ||||||
| Accounts payable - trade | 3,835 | 498 | ||||||
| Accrued interest payable to stockholders | 637 | 166 | ||||||
| Net cash used in operating activities | (7,097 | ) | (8,555 | ) | ||||
| Cash Flows from Investing Activities | - | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Cash received from notes payable to stockholders | 8,000 | 8,400 | ||||||
| Net cash provided by financing activities | 8,000 | 8,400 | ||||||
| Increase (Decrease) in Cash | 903 | (155 | ) | |||||
| Cash at beginning of period | 1,633 | 1,033 | ||||||
| Cash at end of period | $ | 2,536 | $ | 878 | ||||
| Supplemental Disclosure of | ||||||||
| Interest and Income Taxes Paid | ||||||||
| Interest paid during the period | $ | - | $ | - | ||||
| Income taxes paid during the period | $ | - | $ | - | ||||
| Supplemental Disclosure of Non-Cash | ||||||||
| Investing and Financing Activities | ||||||||
| Accounts payable to stockholders converted into note payable | $ | - | $ | 635 | ||||
The accompanying notes are an integral part of these financial statements.
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Renewable Energy Acquisition Corp.
Notes to Financial Statements
(Unaudited)
Note A - Background and Description of Business
Renewable Energy Acquisition Corp. (the “Company”) was incorporated on June 21, 2007 under the laws of the State of Nevada.
The Company was formed as a blank check company to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, the Company’s efforts have been limited to organizational activities.
Note B - Preparation of Financial Statements
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles and has elected a year-end of December 31.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
Note C - Going Concern Uncertainty
The Company was formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, the Company’s efforts have been limited to organizational activities. There is no assurance that the Company will be able to successful in the implementation of this business plan.
The Company has no operating history, limited cash on hand, no operating assets and has a business plan with inherent risk. Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s financial statements which includes a statement describing our going concern status. This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.
The Company’s current management anticipates that the initial capitalization will be sufficient to maintain the corporate status of the Company for the immediate future. Because of the Company's lack of operating assets, the Company’s continuance may become fully dependent upon either future sales of securities and/or advances or loans from significant stockholders or corporate officers to provide sufficient working capital to preserve the integrity of the corporate entity during the development phase.
The Company's continued existence is dependent upon its ability to implement its business plan, generate sufficient cash flows from operations to support its daily operations, and provide sufficient resources to retire existing liabilities and obligations on a timely basis. The Company faces considerable risk in it’s business plan and a potential shortfall of funding due to our uncertainty to raise adequate capital in the equity securities market.
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Renewable Energy Acquisition Corp.
Notes to Financial Statements - Continued
(Unaudited)
Note C - Going Concern Uncertainty - Continued
The Company is dependent upon existing cash balances to support its day-to-day operations. In the event that working capital sufficient to maintain the corporate entity and implement our business plan is not available, the Company’s existing controlling stockholders intend to maintain the corporate status of the Company and provide all necessary working capital support on the Company's behalf. However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for either management or existing controlling stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company’s existing controlling stockholders to have the resources available to support the Company.
The Company anticipates offering future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.
The Company’s Articles of Incorporation authorizes the issuance of up to 5,000,000 million shares of preferred stock and 50,000,000 shares of common stock. The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede the implementation of the Company’s business plan. The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.
In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market.
While the Company is of the opinion that good faith estimates of the Company’s ability to secure additional capital in the future to reach its goals have been made, there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.
Note D - Summary of Significant Accounting Policies
| 1. | Cash and cash equivalents |
The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
| 2. | Organization costs |
The Company has adopted the provisions of provisions required by the Start-Up Activities topic of the FASB Accounting Standards Codification whereby all costs incurred with the incorporation and reorganization, post-bankruptcy, of the Company were charged to operations as incurred.
7
Renewable Energy Acquisition Corp.
Notes to Financial Statements - Continued
(Unaudited)
Note D - Summary of Significant Accounting Policies - Continued
| 3. | Income taxes |
The Company files income tax returns in the United States of America and various states, as appropriate and applicable. The Company is no longer subject to U.S. federal, state and local, as applicable, income tax examinations by regulatory taxing authorities for any period prior to January 1, 2011.
The Company uses the asset and liability method of accounting for income taxes. At September 30, 2015 and December 31, 2014, respectively, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences generally represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals.
The Company recognizes potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority.
| 4. | Income (Loss) per share |
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.
As of September 30, 2015 and 2014, respectively, the Company does not have any outstanding items which could be deemed to be dilutive.
| 5. | New and Pending Accounting Pronouncements |
The Company is of the opinion that any and all pending accounting pronouncements, either in the adoption phase or not yet required to be adopted, will not have a significant impact on the Company's financial position or results of operations.
8
Renewable Energy Acquisition Corp.
Notes to Financial Statements - Continued
(Unaudited)
Note E - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.
Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.
Note F - Notes Payable to Stockholders
In conjunction with the initial capitalization of the Company, the subscribing stockholders agreed that additional working capital would be needed to support the initial phases of the Company’s implementation of its business plan. Accordingly, two controlling stockholders agreed to lend the Company an aggregate $25,000 with an initial maturity of the sooner of August 31, 2008 or 10 days after the closing of an anticipated initial public offering.
The notes are non-interest bearing and, as such, the Company has recognized an aggregate of approximately $3,386 as additional paid-in capital for economic event (calculated at an imputed interest rate of 6.0% per annum) related to the non-interest bearing feature on the aforementioned notes payable to stockholders.
On September 29, 2009, the Company paid the controlling stockholders an aggregate of $19,000 as principal repayment and the controlling stockholders converted their remaining $6,000 in debt into 250,000 shares of restricted, unregistered common stock.
The outstanding balances on these two separate notes are an aggregate $-0- and $-0-, respectively.
During 2010, three stockholders loaned the Company an aggregate $3,000 to support the Company’s working capital needs. These notes are due upon demand and are non-interest bearing.
During 2011, two stockholders loaned the Company an aggregate $7,320 to support the Company’s working capital needs. These notes are due upon demand and are non-interest bearing.
On November 12, 2012, the Company executed five (5) separate Investment Letter and Subscription Agreement(s) with three (3) separate stockholders converting an aggregate $10,475 in notes payable to stockholders into approximately 523,750 shares of restricted, unregistered common stock at $0.02 per share.
During 2013, two (2) separate stockholders loaned an additional aggregate $13,240 in cash to the Company to support operations. Additionally, one stockholder converted $635 of open accounts payable into a note payable. These notes are due upon demand and are non-interest bearing.
9
Renewable Energy Acquisition Corp.
Notes to Financial Statements - Continued
(Unaudited)
Note F - Notes Payable to Stockholders - Continued
During 2014, two (2) separate stockholders loaned an additional aggregate $10,900 in cash to the Company to support operations. These notes are due upon demand and bear interest at 6.0% per annum.
During 2015, two (2) separate stockholders loaned an additional aggregate $8,000 in cash to the Company to support operations. These notes are due upon demand and bear interest at 6.0% per annum.
The Company has accrued interest payable to these stockholders aggregating approximately $945 and $308 as of September 30, 2015 and December 31, 2014, respectively.
As of September 30, 2015 and December 31, 2014, respectively, the outstanding aggregate balances payable to stockholders was as follows:
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Notes payable | $ | 39,920 | $ | 31,920 | ||||
| Accrued interest payable | 945 | 308 | ||||||
| Total due stockholders | $ | 40,865 | $ | 32,228 | ||||
The Company has recognized an aggregate of $980 and $906, respectively, in interest expense for each of the nine month periods ended September 30, 2015 and 2014 as additional paid-in capital for the economic event (calculated at an imputed interest rate of 6.0% per annum) related to the non-interest bearing feature on the aforementioned notes payable to stockholders.
Note G - Income Taxes
The components of income tax (benefit) expense for the each of the nine month periods ended September 30, 2015 and 2014, respectively, are as follows:
| Nine months | Nine months | |||||||
| ended | ended | |||||||
| September 30, | September 30, | |||||||
| 2015 | 2014 | |||||||
| Federal: | ||||||||
| Current | $ | - | $ | - | ||||
| Deferred | - | - | ||||||
| - | - | |||||||
| State: | ||||||||
| Current | - | - | ||||||
Deferred | - | - | ||||||
| - | - | |||||||
| Total | $ | - | $ | - | ||||
10
Renewable Energy Acquisition Corp.
Notes to Financial Statements - Continued
(Unaudited)
Note G - Income Taxes - Continued
As of September 30, 2015, the Company had aggregate net operating loss carryforwards to offset future taxable income of approximately $100,600. The amount and availability of any net operating loss carryforward(s) will be subject to the limitations set forth in the Internal Revenue Code. Such factors as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of any net operating loss carryforward(s).
The Company's income tax (benefit) expense for the each of the nine-month periods ended September 30, 2015 and 2014, are as follows:
| Nine months | Nine months | |||||||
| ended | ended | |||||||
| September 30, | September 30, | |||||||
| 2015 | 2014 | |||||||
| Statutory rate applied to income before income taxes | $ | (4,200 | ) | $ | (6,400 | ) | ||
| Increase (decrease) in income taxes resulting from: | ||||||||
| State income taxes | - | - | ||||||
| Other, including reserve for deferred tax asset and application of net operating loss carryforward(s) | 4,200 | 6,400 | ||||||
| Income tax expense | $ | - | $ | - | ||||
The Company’s only temporary difference due to statutory requirements in the recognition of assets and liabilities for tax and financial reporting purposes, as of September 30, 2015 and December 31, 2014, relate solely to the Company’s net operating loss carryforwards. This difference gives rise to the financial statement carrying amounts and tax bases of assets and liabilities causing either deferred tax assets or liabilities, as necessary, as of September 30, 2015 and December 31, 2014, respectively:
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carryforwards | $ | 34,200 | $ | 30,000 | ||||
| Less valuation allowance | (34,200 | ) | (30,000 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
During the nine months ended September 30, 2015, the valuation allowance for the deferred tax asset increased (decreased) by approximately $4,200.
Note H - Subsequent Events
Management has evaluated all activity of the Company through the issue date of the financial statements and concluded that no subsequent events have occurred that would require recognition in the accompanying financial statements or disclosure in the notes to financial statements.
11
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
| (1) | Caution Regarding Forward-Looking Information |
Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
| (2) | General |
Renewable Energy Acquisition Corp. (the “Company”) was incorporated on June 21, 2007 under the laws of the State of Nevada.
The Company was formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industry and their related infrastructures. To date, our efforts have been limited to organizational activities.
On September 2, 2013, the Company received a $20,000 “stand still” payment from TM Worldlink, Inc. (TMW) of Kaneohe, Hawaii. In consideration of the payment, the Company agreed to conduct due diligence and to negotiate in good faith an agreement for a potential acquisition of TMW’s Adon Solar Division. In addition, the Company agreed to not enter into discussions or negotiations with any other acquisition target for a period of 30 days. In December 2013, the Company was advised by TMW that it was terminating any further discussions with the Company regarding an acquisition. Accordingly, we have no reason to believe that the Company will engage in any transaction with TMW in the future and the Company retained the $20,000 in accordance with the original standstill agreement.
In 2015, the Company accepted a cumulative $7,500 “stand still” payment from an unrelated third party in anticipation of conducting the appropriate due diligence and to negotiate in good faith an agreement related to a potential acquisition. In addition, the Company agreed to not enter into discussions or negotiations with any other acquisition target for a period of at least 30 days. As of the release date of this report, the Company has no definitive agreement or other arrangement related to any potential acquisition or business combination transaction.
| (3) | Results of Operations |
The Company had no revenue for either of the nine or three-month periods ended September 30, 2015 and 2014.
General and administrative expenses of approximately $18,400 and $17,700 for each of the nine-month periods ended September 30, 2015 and 2014, respectively, were directly related to maintaining the corporate entity and continued compliance with the periodic reporting requirements of the Securities Exchange Act of 1934, as amended.
The Company may or may not experience increases in expenses in future periods as the Company explores various options for the implementation of its business plan. However, at this time, the Company has not executed or consummated any definitive agreements with any identified business combination target. Further, it is anticipated that future expenditure levels may increase as the Company intends to fully comply with its periodic reporting requirements.
12
The Company does not expect to generate any meaningful revenue or incur operating expenses for purposes other than fulfilling the obligations of a reporting company under the Securities Exchange Act of 1934 unless and until such time that the Company acquires or participates in a business with revenue producing activities.
Loss per share for the nine-month periods ended September 30, 2015 and 2014 were $(0.01) and $(0.01), respectively, based on the weighted-average shares issued and outstanding for each respective period.
| (4) | Plan of Business |
We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the advantages of being a publicly held corporation. In order for a company to be listed on a U.S. stock exchange or a quotation system, such company must be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, (Exchange Act). On May 3, 2010, 60 days following our filing of a General Form for Registration of Securities pursuant to Section 12(g) of the Securities Exchange Act of 1934 on Form 10, we became subject to the periodic reporting requirements of the Exchange Act. After the consummation of a business combination with an operating company, the surviving company arising from the transaction between us and a private operating company will continue to be subject to the reporting requirements of the Exchange Act. Although an operating company may choose to effect a business combination with a company that is trading on the OTC Bulletin Board in order to become public, purchasing an OTC Bulletin Board trading company may be substantially more expensive than purchasing a Form 10 “blank check” company and such companies trading on the OTC Bulletin Board may also have liabilities or shareholder issues. Within three days after the consummation of the business combination transaction between a target operating company and us, the surviving company will be required to file an extensive Form 8-K with the SEC in connection with the transaction, including Form 10 type disclosures and other information on the private operating company. However, the aggregate expenses of purchasing a Form 10 “blank check” company and filing the Form 8-K is anticipated to be substantially lower than purchasing an OTC Bulletin Board company and have less risk to the shareholders of such company. Therefore, we believe that we would be attractive to a private operating company seeking to become public.
We were formed as a vehicle to pursue a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industries and their related infrastructures. The renewable energy industry and its related infrastructure generally includes the production, generation, transmission and distribution of electricity, heat, fuel and other consumable forms of energy through the utilization of renewable fuel sources such as, but not limited to, geothermal, biofuels, synfuels, wind, ocean waves, "clean coal," and waste stream pyrolysis; and the infrastructure needed to maintain and operate the facilities, services and installations used in the foregoing areas.
Although we may consider a target business in any segment of any industry, we currently intend to concentrate our search for an acquisition candidate on companies in the following segments:
| · | Wind electric generation, distribution and transmission; |
| · | Solar power; |
| · | Co-generation; |
| · | Bio-mass; |
| · | Synthetic gas production, distribution and transmission; |
| · | Energy efficiency and energy conservation related products and services; |
| · | Alternative transportation technologies; |
| · | Steam generation and distribution; |
| · | Alternative transportation technologies; |
| · | Energy storage technologies; |
| · | Other alternative and renewable energy technologies; and |
| · | The development, installation, financing, or manufacturing of any of the above. |
We have a nominal amount of capital and will depend on our directors to provide us with the necessary funds to implement our business plan. We intend to seek opportunities demonstrating the potential of long-term growth as opposed to short-term earnings.
The analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors. Our officers and directors will devote approximately 10 hours per week to searching for a target company until an acquisition candidate is identified and the transaction closed. However, we believe that business opportunities may also come to our attention from various sources, including, professional advisors such as attorneys, and accountants, securities broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited proposals. We have no plan, understanding, agreements, or commitments with any individual for such person to act as a finder of opportunities for us. We can give no assurances that we will be successful in finding or acquiring a desirable business opportunity, given the limited funds that are expected to be available to us for implementation of our business plan. Furthermore, we can give no assurances that any acquisition, if it occurs, will be on terms that are favorable to us or our current stockholders.
13
During the next 12 months, we anticipate incurring costs related to filing of periodic reports under the Exchange Act, seeking a prospective business acquisition and, if an attractive prospect is located, pursue completion of an acquisition.
| (5) | Liquidity and Capital Resources |
At September 30, 2015 and December 31, 2014, the Company had working capital deficits of approximately $45,500 and $34,000, respectively; inclusive of notes and accrued interest payable to stockholders of approximately $40,800 and $32,200, respectively.
The Company currently has limited cash on hand, no operating assets and a business plan with inherent risk. Because of these factors, the Company’s auditors have issued an audit opinion on the Company’s annual financial statements which includes a statement describing our going concern status. This means, in the auditor’s opinion, substantial doubt about our ability to continue as a going concern exists at the date of their opinion.
The Company’s current business plan is to locate and pursue a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in either the renewable energy or the environmental industries and their related infrastructures which is profitable or, in management's view, has growth potential. The renewable energy industry and its related infrastructure generally includes the production, generation, transmission and distribution of electricity, heat, fuel and other consumable forms of energy through the utilization of renewable fuel sources such as, but not limited to, geothermal, biofuels, synfuels, wind, ocean waves, "clean coal," and waste stream pyrolysis; and the infrastructure needed to maintain and operate the facilities, services and installations used in the foregoing areas. A combination may be structured as a merger, consolidation, exchange of the Company's common stock for stock or assets or any other form which will result in the combined enterprise's becoming a publicly-held corporation. However, there is no assurance that the Company will be able to successfully implement our business plan.
It is the belief of management and significant stockholders that, should the need arise, they will provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. Further, the Company is at the mercy of future economic trends and business operations for the Company’s majority stockholder to have the resources available to support the Company. Should management and significant stockholders fail to provide additional financing, the Company has not identified any alternative sources. Consequently, there is substantial doubt about the Company's ability to continue as a going concern.
The Company's need for working capital may change dramatically as a result of any business acquisition or combination transaction. There can be no assurance that the Company will identify any such business, product, technology or company suitable for acquisition in the future. Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage the business, product, technology or company it acquires.
The Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a merger or acquisition candidate. Accordingly, there can be no assurance that sufficient funds will be available to the Company to allow it to cover the expenses related to such activities.
Regardless of whether the Company’s cash assets prove to be inadequate to meet the Company’s operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.
14
| (6) | Critical Accounting Policies |
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note D of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Not required of a smaller reporting company.
Item 4 - Controls and Procedures
| (a) | Evaluation of Disclosure Controls and Procedures |
Our management, under the supervision and with the participation of our Chief Executive and Financial Officer (Certifying Officer), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Exchange Act as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Certifying Officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to a inherent weakness in our internal controls over financial reporting due to our status as a shell corporation and having a sole supervising officer. However, our Certifying Officer believes that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.
| (b) | Changes in Internal Controls |
There were no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
None
15
We are a smaller reporting company as defined by Reg. 240.12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Mine Safety Disclosure
N/A
In August 2015, the spouse of Craig Laughlin, an officer, director, and principal shareholder of the Company, acquired from another shareholder of the Company 510,000 shares of the Company’s common stock. As a result, Mr. Laughlin may be deemed to be the beneficial owner of the shares acquired by his spouse, so that he would be the beneficial owner of a total of 1,023,750 of the 1,623,750 shares of the Company’s common stock issued and outstanding.
In August 2015, Larry Hopfenspirger resigned as a director of the Company so that Craig Laughlin now serves as the sole director of the Company.
| 31.1 | Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Renewable Energy Acquisition Corp. | |
| Dated: November 13, 2015 | /s/ Craig S. Laughlin |
| Craig S. Laughlin | |
| President, Chief Executive Officer, | |
| Chief Financial Officer and Director |
16
Exhibit No. 31.1
Renewable Energy Acquisition Corp.
File No. 0-53900
Form 10-Q
Quarter ended September 30, 2015
Certification
I, Craig S. Laughlin, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Renewable Energy Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Date: November 13, 2015 | By: | /s/ Craig S. Laughlin |
| Craig S. Laughlin | ||
| Chief Executive Officer | ||
| and Chief Financial Officer |
Exhibit No. 32.1
Renewable Energy Acquisition Corp.
File No. 0-53900
Form 10-Q
Quarter ended September 30, 2015
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Renewable Energy Acquisition Corp. (the “Company”) on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig S. Laughlin, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 13, 2015 | By: | /s/ Craig S. Laughlin |
| Craig S. Laughlin | ||
| Chief Executive Officer | ||
| and Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to Renewable Energy Acquisition Corp. and will be retained by Renewable Energy Acquisition Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certificate is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as a part of the Report or as a separate disclosure document.