ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations describes the principal factors affecting the results of operations, liquidity and capital
resources of the Company and critical accounting estimates. This discussion should be read in conjunction with the accompanying quarterly unaudited Condensed Consolidated Financial Statements contained in this Form 10-Q and our initial Registration
Statement on Form 10-12G, as amended, for the year ended December 31, 2020 (“Form 10”). Our Form 10 includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as
well as a detailed discussion of the most significant risks and uncertainties associated with our financial and operating results.
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements
are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors”, set forth in Part II, Item 1A of this Form 10-Q and in our other SEC filings. We disclaim any obligation to update any
forward-looking statements to reflect events or circumstances after the date of such statements.
Business Overview
Business Development
Pegasus Medical Holdings, Inc. (“we”, “us”, “our”, the “Company” or the “Registrant”) was incorporated in the State of Delaware on December 20, 2018. The Company has been in the developmental stage
since inception and has conducted virtually no business operations, other than organizational activities and preparation to prepare for and currently comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, which
includes the preparation and filing of the Form 10, and the Company’s subsequent periodic reports. The Company has no full-time employees and owns no real estate or personal property. The Company was formed as a vehicle to pursue a business
combination, and no existing letters of intent (“LOI”) for this purpose with third parties are currently in effect. The primary business purpose of the Company is to seek the acquisition of, or merger with, an existing operating company.
Business of Issuer
The Company, based on proposed business activities, is a “blank check” company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as “any development stage company
that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act of 1934, as amended, (the “Exchange Act”) and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an
unidentified company or companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”), the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal
operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in
our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
The Company was organized to provide a method for a foreign or domestic private company to become a reporting (“public”) company whose securities are qualified for trading in the United States
secondary market such as the New York Stock Exchange (NYSE), NASDAQ, NYSE Amex Equities, and the OTC Bulletin Board, and, as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived
advantages of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate,
short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business or be acquired should such a reasonable opportunity
arise.
We intend to either retain an equity interest (common or preferred stock) in any private company with which we engage in a business combination, or we may receive cash and/or a combination of cash
and equity from any private company we complete a business combination with. Our desire is that the value of such consideration paid to us would be beneficial economically to our shareholders though there is no assurance of that happening.
Potential Target Companies
A business entity, if any, which may be interested in a business combination with the Company may include the following:
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a company for which a primary purpose of becoming public is the use of its securities for the acquisition of assets or businesses;
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a company which is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it;
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a company which wishes to become public with less dilution of its common stock than would occur upon an underwriting;
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a company which believes that it will be able to obtain investment capital on more favorable terms or more easily after it has become public;
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a foreign company which may wish an initial entry into the United States securities market;
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a special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan; and
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a company seeking one or more of the other perceived benefits of becoming a public company.
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The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. The Company has unrestricted flexibility in seeking, analyzing and participating
in potential business opportunities. In its efforts to analyze potential acquisition targets or merger partners, the Company will consider the following kinds of factors:
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Potential for growth, indicated by new technology, anticipated market expansion or new products;
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Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
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Strength and diversity of management, either in place or scheduled for recruitment;
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Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
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The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
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The extent to which the business opportunity can be advanced;
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The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
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Other relevant factors.
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In applying the 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 Company’s limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
No assurances can be given that the Company will be able to enter into or complete a business combination, as to the terms of a business combination, or as to the nature of the target company.
Form of Acquisition
The manner in which the Company participates in an acquisition opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the target candidate
or, if any, the promoters of the opportunity, as well as the relative negotiating strength of the Company and such other involved parties.
It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Company or, if we are acquired, the securities of such operating
company. 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. Under other circumstances, depending upon the relative negotiating
strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders
of the Company prior to such reorganization.
The present stockholders of the Company will likely not have control of a majority of the voting shares of the Company following a reorganization type transaction. As part of such a transaction, all or a majority of
the Company’s directors may resign and new directors may initially be appointed without a 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 may, however, be necessary to call a stockholders’ meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder approval may result in delay and
additional expense in the consummation of any proposed transaction and may also give rise to certain appraisal rights to dissenting stockholders, if any. Most likely, management will seek to structure any such transaction so as not to require
stockholder approval.
We may seek to locate a target company through solicitation. Such solicitation may include, but is not limited to, media advertisements, mailings and other distributions to law firms, accounting firms, investment
bankers, financial advisors and similar persons, the use of one or more web sites and/or similar methods. We may also utilize consultants in the business and financial communities for referrals of potential target companies.
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 would 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 Company of the related costs incurred.
All such costs for the next twelve (12) months and beyond such time will be paid with money in our treasury, if any, or possibly with additional money contributed by Mr. Richard C. Wheeless III, our sole director,
officer and stockholder, or another source.
We presently have no employees. Our officer and sole director is engaged in outside business activities and anticipates he will devote to our business limited time until the acquisition of a
successful business opportunity has been identified. We expect no significant changes in the number of our employees or management other than such changes, if any, incident to a business combination.
RESULTS OF OPERATIONS
Three months ended March 31, 2022 compared to the three months ended March 31, 2021
The results of operations included herein contain only those operations that are part of our continuing operations. For discussion regarding our past operations which have since been disposed of, please refer to our Annual Report.
Revenue
During the three months ended March 31, 2022, the Company recognized net revenue of $0. Revenues for the three months ended March 31, 2021 were $0.
Operating Expenses
General and Administrative Expense
For the three months ended March 31, 2022, and 2021, general and administrative expenses were $7,069 and $19,360, respectively. This decrease of $12,291 was primarily attributable to professional fee related to accounting and auditors in the
quarter ended March 31, 2021. The fee charged in the quarter ended March 31, 2021, was related to the audits of year 2019, and 2020.
Net Income (Loss)
The Company generated a net loss from continuing operations of $(7,069) for the three months ended March 31, 2022, compared net income of $19,360 during the three months ended March 31, 2021. This decrease of $12,291
was primarily attributable to professional fee related to accounting and auditors in the quarter ended March 31, 2021. The fee charged in the quarter ended March 31, 2021, was related to the audits of year 2019, and 2020.
Liquidity and Capital Resources
On March 31, 2022, we had cash of $6,133 compared to March 31, 2021, of $37,154. The decrease in cash is mainly due to payment of professional fee. We have historically met our cash needs through a combination of
proceeds from private placements of our convertible notes. Our cash requirements are generally for general and administrative activities. We believe that our cash balance is sufficient to finance our cash requirements for expected general and
administrative items through the next 12 months if we remain a shell company with no operations; however, that circumstance will likely change and be based upon the circumstances of any merger or acquisition.
Cash provided by in financing activities during the three months ended March 31, 2022, and 2021 was $0 and $0, respectively, as we sold no securities in either of such quarters.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in management discussion and analysis to the financial statements, the Company has suffered recurring losses from
operations for the six and three months ended March 31, 2022, and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
The Company has no contractual obligations during the reporting period ended March 31, 2022.
Off-Balance Sheet Arrangements
As of March 31, 2022, the Company had no off-balance sheet arrangement as defined in Item 303(a)(4) of Regulation S-K.
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
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Not applicable
ITEM 4. |
CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures of an issuer that are designed to ensure that information required to be
disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated
and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a
system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods
specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to the chief executive and chief financial officer to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are not effective as of such
date. The Chief Executive Officer and Chief Financial Officer have determined that the Company continues to have the following deficiencies which represent a material weakness:
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Lack of oversight by independent directors in the establishment and monitoring of required internal controls and procedures;
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Lack of functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
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Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting and to allow for proper monitoring controls over accounting;
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Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.
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To remediate our internal control weaknesses, management would need to implement the following measures:
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The Company would need to add sufficient number of independent directors to the board and appoint an audit committee.
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The Company would need to add sufficient knowledgeable accounting personnel to properly segregate duties and to affect a timely, accurate preparation of the financial statements.
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Upon the hiring of additional accounting personnel, the Company would need to develop and maintain adequate written accounting policies and procedures.
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Currently, management does not have the resources nor will it in the near to mid-term future to accomplish all of these goals; however, following any merger or acquisition by or of us, management may reevaluate this
item and provide further disclosure regarding same. The additional hiring is contingent upon the Company’s efforts to obtain additional funding through equity or debt and the results of its operations,
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Limitations on the Effectiveness of Controls
The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource
constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
PART II - OTHER INFORMATION
ITEM 1. |
LEGAL PROCEEDINGS.
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From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of March 31, 2022, there were no pending or threatened lawsuits that could
reasonably be expected to have a material effect on the results of our operations.
Investing in our common stock and securities is subject to a number of risks and uncertainties. You should carefully consider the risk factors described under the heading “Item 1A. Risk Factors” in this Quarterly
Report on Form 10-Q and in other reports we will file with the SEC in subsequent reporting periods, and as set forth in certain updated or additional risk factor below.
An investment in the Company is highly speculative in nature and involves a high degree of risk.
An investment in our Common Stock involves a number of significant risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or
results of operation may be materially adversely affected. You should carefully consider the risks and uncertainties in addition to other information in this periodic report in evaluating our Company and our business before purchasing our
securities. Our financial condition could be seriously harmed, and the trading price, if any, of our Common Stock could decline and investors could lose all or part of their investment, as a result of the occurrence of any of the risks set forth
herein, as well as currently unknown risks related to any operating company we may merge with. You should invest in our Common Stock only if you can afford to lose your entire investment.
Our business is difficult to evaluate because we have no operating history.
As the Company has no operating history or revenue and only minimal assets, there is a risk that we will be unable to continue as a going concern and consummate a business combination. The Company has had no recent
operating history nor any revenues or earnings from operations since inception. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the
consummation of a business combination. This may result in our incurring a net operating loss that will increase continuously until we can consummate a business combination with a profitable business opportunity. We cannot assure you that we can
identify a suitable business opportunity and consummate a business combination.
There is competition for those private companies suitable for a merger transaction of the type contemplated by our management.
The Company is in a highly competitive market for a small number of business opportunities which could reduce the likelihood of consummating a successful business combination. We are and will continue to be an
insignificant participant in the business of seeking mergers, joint ventures and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a
successful business combination.
Future success is highly dependent on the ability of our management or advisors to locate and attract a suitable acquisition.
The nature of our operations is highly speculative and there is a consequent risk of loss of your investment. The success of our plan of operation will depend to a great extent on the operations, financial condition
and management of the identified business opportunity. While management intends to seek business combination(s) with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting
that criterion. In the event we complete a business combination, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
Control by management
As of the date of this Quarterly Report, the management of the Company owned approximately 99% of the Company’s outstanding shares. Future investors will own a minority percentage of the Company’s Common Stock. Future
investors will not have the ability to control a vote of the Company’s Shareholders or Board of Directors, if management controls or maintains rights to the majority of the issued and outstanding shares, and depending on the exchange value of the
shares offered in a merger transaction, which cannot be known until a transaction were to consummate or immediately prior to consummation.
Our stockholders may engage in a transaction to attempt to cause the company to repurchase their shares of Common Stock
In order to provide an interest in the Company to a third party, our stockholders may attempt to cause the Company to sell Company securities to third parties, with the proceeds of such sale being
utilized by the Company to repurchase shares of Common Stock held by the stockholders. As a result of such transaction, our management, principal stockholders and Board of Directors may change.
The Company has no existing agreement for a business combination or other transaction.
We currently have no arrangement, agreement or understanding with respect to engaging in a merger with, joint venture with or acquisition of a private or public entity. No assurances can be given that we will
successfully identify and evaluate suitable business opportunities or that we will conclude a business combination. Management has not identified any particular industry or specific business within an industry for evaluation. We cannot guarantee
that we will be able to negotiate a business combination on favorable terms, and there is consequently a risk that funds allocated to the purchase of our shares will not be invested in a company with active business operations.
Our management intends to devote only a limited amount of time to seeking a target company which may adversely impact our ability to identify a suitable acquisition candidate.
While seeking a business combination, management anticipates devoting no more than a few hours per week to the Company’s affairs in total. Our officer has not entered into a written employment agreement with us and is
not expected to do so in the foreseeable future. This limited commitment may adversely impact our ability to identify and consummate a successful business combination.
The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with the most attractive private companies.
Target companies that fail to comply with SEC reporting requirements may delay or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information about
significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target
entities to prepare these statements may significantly delay or essentially preclude consummation of an acquisition. Otherwise suitable acquisition prospects that do not have or are unable to obtain the required audited statements may be
inappropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
The Company may be subject to further government regulation which would adversely affect our operations.
Although we will be subject to the reporting requirements under the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, as amended (the “Investment Company
Act”), since we will not be engaged in the business of investing or trading in securities. If we engage in business combinations which result in our holding passive investment interests in a number of entities, we could be subject to regulation
under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status
under the Investment Company Act and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.
Any potential acquisition or merger with a foreign company may subject us to additional risks and/or reporting obligations.
If we enter into a business combination with a foreign concern, we will be subject to risks inherent in business operations outside of the United States, as well as being subject to additional regulatory notice and/or
filing requirements and other costs. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across
national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital
investment, resource self-sufficiency and balance of payments positions, and in other respects.
Our stockholders may have a minority interest in the Company following a business combination.
If we enter into a business combination with a company with a value in excess of the value of our Company, and issue shares of our Common Stock to the stockholders of such company as consideration for merging with us,
our stockholders will likely own less than 50% of the Company after the business combination. The stockholders of the acquired company would therefore be able to control the election of our board of directors (the “Board of Directors”) and control
our Company.
There is currently no trading market for our common stock.
All of the presently issued and outstanding shares of Common Stock are “restricted securities” as defined under Rule 144 promulgated under the Securities Act of 933, as amended, and may only be sold pursuant to an
effective registration statement or an exemption from registration, if available. The SEC adopted amendments to Rule 144 which became effective on February 15, 2008. Those final rules may be found at: www.sec.gov/rules/final/2007/33-8869.pdf.
Pursuant to the amended Rule 144, one year must elapse from the time a “shell company”, as defined in Rule 405, ceases to be “shell company” and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in
reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Securities and Exchange Act of 1934 (the “Exchange Act”). Under the
amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or an Issuer that has at any time previously a reporting or non- reporting shell company as defined in Rule 405, can
only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding
twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC
reflecting its status as an entity that is not a shell company.
At the present time, the Company is classified as a “shell company” as defined in Rule 12b-2 of the Securities and Exchange Act of 1934. As such, all restricted securities presently held by the founders (and initial
shareholders) of the Company may not be resold in reliance on Rule 144 until: (1) the Company files Form 10 information with the SEC when it ceases to be a “shell company”; (2) the Company has timely filed all reports as required by Section 13 and
15(d) of the Securities Act for twelve consecutive months; and (3) one year has elapsed from the time the Company files the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
There can be no assurance that the Company will ever meet these conditions and any purchases of our shares are subject to these restrictions on resale. A purchase of our shares may never be available for resale as we
cannot be assured we will ever lose our shell company status.
We may need to finance our future cash needs through equity offerings, debt financings or corporate collaboration and licensing arrangements. Any additional funds may not be available, or on terms favorable to us or
our stockholders and may require us to relinquish valuable rights.
To complete an acquisition, merger or such other strategic transaction and execute our business plan, we may likely need to raise additional funds. There can be no assurance that we will have sufficient funds to
execute our business plan or complete a strategic transaction, or that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
If we seek to sell additional equity or debt securities to raise additional capital, we may not obtain favorable terms for us and/or our stockholders or be able to raise any capital at all, all of which could result in
a material adverse effect on our business plan and results of operations. The sale of additional equity or debt securities, if convertible, could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed
obligations and could also result in covenants that would restrict our operations. Raising additional funds through collaboration or licensing arrangements with third parties may require us to relinquish valuable rights to future revenue streams,
research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders.
We have never paid dividends on our common stock.
We have never paid dividends on our Common Stock and do not presently intend to pay any dividends in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the
Company to further its business strategy.
The Company may be subject to certain tax consequences in our business, which may increase our cost of doing business.
We may not be able to structure our acquisition to result in tax-free treatment for the companies or their stockholders, which could deter third parties from entering into certain business combinations with us or
result in being taxed on consideration received in a transaction. Currently, a transaction may be structured so as to result in tax-free treatment to both companies, as prescribed by various federal and state tax provisions. We intend to structure
any business combination so as to minimize the federal and state tax consequences to both us and the target entity; however, we cannot guarantee that the business combination will meet the statutory requirements of a tax-free reorganization or that
the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes that may have an adverse effect on both parties to the
transaction.
Our business will have no revenues unless and until we merge with or acquire an operating business, or develop an operating business of our own.
We are currently a development stage company and have had no revenues from operations. We may not realize any revenues unless and until we successfully merge with or acquire an operating business, or otherwise develop
a successful business of our own.
The Company intends to issue more shares in a merger or acquisition, which will result in substantial dilution to existing shareholders.
Our Certificate of Incorporation currently authorizes the issuance of a maximum of 12,000,000 shares of Common Stock. Any merger or acquisition effected by us may result in the issuance of additional securities without
stockholder approval and may result in substantial dilution in the percentage of our Common Stock held by our then existing stockholders. Moreover, the Common Stock issued in any such merger or acquisition transaction may be valued at a lower
valuation than some of our existing stockholders, resulting in an additional reduction in the percentage of Common Stock held by our then existing stockholders. To the extent that additional shares of Common Stock or preferred stock are issued in
connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of Common Stock might be materially and adversely affected.
The Company has no currently identified business acquisition or combination opportunities, which may affect our ability to or timeline by which we will identify a business to merge with or acquire.
The Company currently has no active prospective business opportunities. Therefore, we have no assurances that market demand exists for a merger or acquisition as contemplated by us. Our management has not identified
any specific business combination or other transactions for formal evaluation by us at this time, such that it may be expected that any such target business or transaction will present such a level of risk that conventional private or public
offerings of securities or conventional bank financing will not be available. There is no assurance that we will be able to acquire a business opportunity on terms favorable to us. Decisions as to which business opportunity to participate in will
be unilaterally made by our management, which may act without the consent, vote or approval of our stockholders.
Because we may seek to complete a business combination through a “reverse merger,” following such a transaction we may not be able to attract the attention of major brokerage firms.
Additional risks may exist since we will assist a privately held business to become public through a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of our Company since there is
no incentive to brokerage firms to recommend the purchase of our Common Stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of our post-merger company in the future.
We cannot assure you that following a business combination with an operating business, our common stock will be listed on the Nasdaq Stock Market or any other securities exchange.
Following a business combination, we may seek the listing of our Common Stock on NASDAQ, NYSE Amex Equities, the OTC Markets or such other similar exchange. However, we cannot assure you that following such a
transaction, we will be able to meet the initial listing standards of those or any other stock exchange, or that we will be able to maintain a listing of our Common Stock on either of those or any other stock exchange. After completing a business
combination, until our Common Stock is listed on the NASDAQ or another stock exchange, we expect that our Common Stock would be eligible to trade and/or be quoted on the OTC Bulletin Board, another over-the-counter quotation system, or on the “pink
sheets,” where our stockholders may find it more difficult to dispose of shares or obtain accurate quotations as to the market value of our Common Stock. In addition, we would be subject to an SEC rule that, if it failed to meet the criteria set
forth in such rule, imposes various practice requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. Consequently, such rule may deter broker-dealers from
recommending or selling our Common Stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital following a business combination.
We will be deemed a blank check company under Rule 419 of the Securities Act of 1933. In any subsequent offerings while we are deemed a blank check or shell company, we will have to comply with Rule 419.
If we publicly offer any securities as a condition to the closing of any acquisition or business combination while we are a blank check or shell company, we will have to fully comply with SEC Rule 419 and deposit all
funds in escrow pending advice about the proposed transaction to our stockholders fully disclosing all information required by Regulation 14 of the SEC and seeking the vote and agreement of investment of those stockholders to whom such securities
were offered; if no response is received from these stockholders within 45 days thereafter or if any stockholder elects not to invest following our advice about the proposed transaction, all funds that must be held in escrow by us under Rule 419,
as applicable, will be promptly returned to any such stockholder. All securities issued in any such offering will likewise be deposited in escrow, pending satisfaction of the foregoing conditions. This is only a brief summary of Rule 419, and a
complete copy of such rule can be found at the following site: https://www.law.cornell.edu/cfr/text/17/230.419.
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
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Other than as disclosed in our Form 10-K Registration Statement, filed with the Securities and Exchange Commission, as most recently amended on March 29, 2022, there have been no unregistered sales of our securities in the reporting period ended
March 31, 2022.
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES.
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None.
ITEM 4. |
MINE SAFETY DISCLOSURES.
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Not applicable
ITEM 5. |
OTHER INFORMATION.
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None
3.1*
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Certificate of Incorporation, as amended on June 11, 2021
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3.2*
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Bylaws of the Company |
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Exhibit 31.1 |
Certification of Chief Executive Officer of Pegasus Medical Holdings, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Exhibit 31.2 |
Certification of Principal Accounting Officer of Pegasus Medical Holdings, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Exhibit 32.1
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Certification of Principal Executive Officer of Pegasus Medical Holdings, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
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Exhibit 32.2 |
Certification of Principal Accounting Officer of Pegasus Medical Holdings, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
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* |
Filed with the company’s Form 10 Registration Statement on July 13, 2021.
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Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
Exhibit
101
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101.INS
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
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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.
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PEGASUS MEDICAL HOLDINGS, INC. (Registrant)
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Date: May 16, 2022,
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By:
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/s/ Rich Wheeless
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Rich Wheeless
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Chief Executive Officer
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By:
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/s/ Rich Wheeless
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Rich Wheeless
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Chief Financial Officer
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17