UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2019
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 333-206963
Vigilant Diversified Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Nevada | 47-4543540 | |
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660-8011
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (949) 538-2700
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| Common Stock, no par value per share | None | None |
Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [X] No [ ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
| Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter is $560,850.
The number of shares of the registrant’s common stock issued and outstanding as of March 30, 2020 is 16,398,400.
table of contents
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FORWARD-LOOKING STATEMENTS
The information contained in this Report includes some statements that are not purely historical and that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. Our expectations, beliefs and forward-looking statements are expressed in good faith based on management’s views and assumptions as of the time the statements are made, but there can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished.
In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: technological advances, impact of competition, dependence on key personnel and the need to attract new management, effectiveness of cost and marketing efforts, acceptances of products, ability to expand markets and the availability of capital or other funding on terms satisfactory to us. We disclaim any obligation to update forward-looking statements to reflect events or circumstances after the date hereof.
For a discussion of the risks, uncertainties, and assumptions that could affect our future events, developments or results, you should carefully review the “Risk Factors” set forth under “Item 1. Description of Business” below. Considering these risks, uncertainties and assumptions, the future events, developments or results described by our forward-looking statements herein could turn to be materially different from those we discuss or imply.
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Organization
We were incorporated in the State of Nevada as a for-profit company on June 30, 2015, under the name Vigilant Diversified Holdings, Inc. and our incorporator adopted our bylaws and appointed our sole director. From inception until June 30, 2018, we had limited operations and were focused on implementing our business plan to provide management consulting services to start-up and development stage enterprises in North America that are in the cannabis industry. We have established a fiscal year end of December 31. Since our change of control on June 30, 2018, we have actively pursued acquisition opportunities that can provide us with immediate revenues and have entered into a share exchange agreement with a private air charter and management company to acquire it subject to certain conditions as set forth in the agreement.
History
On June 30, 2015, we issued 15,000,000 shares of our $0.0001 par value common stock, valued at $0.0001 per share, to our 2 initial shareholders, which includes 14,900,000 common shares to Vigil & Vigil Investments, LLC, a Colorado limited liability company, in exchange for organizational services incurred in our formation, which our sole director valued at $0.0001 per share, or $1,490 for preformation services rendered to develop our organization, business model and website. Vigil & Vigil Investments, LLC is owned 40% by our chief executive officer, Todd W. L. Vigil, and 60% by Diana Vigil, our Vice President and Secretary. Diana Vigil is the mother of Todd Vigil. On June 30, 2015, we also issued 100,000 shares of our $0.0001 par value commons shares to our other initial shareholder, Jonathan McDermott, in exchange for organizational services incurred in our formation, which our sole director valued at $0.0001 per share, or $10 for preformation services rendered to us for assisting in our organization. From December 21, 2015 until May 11, 2016, we issued 156,000 shares of our common stock at $0.25 per share for $39,000 to 21 investors. On April 11, 2017, we converted 540,000 shares of our Series A Preferred into 540,000 shares of our common stock. On November 14, 2017, we issued 60,000 shares of our common stock at $0.25 per share for a total of $15,000. On November 24, 2017, we issued 642,400 shares of our common stock, which our sole director valued at $0.25 per share in exchange for $147,485 in related party advances and accounts payable.
On June 30, 2018, we effectuated a change of control and our new management’s goal was to pursue the acquisition of an operating company with revenues and the potential for growth. On October 29, 2018, we entered into a share exchange agreement (the “Share Exchange Agreement”) to acquire up to 100% of the issued and outstanding shares of FUGA, Inc., a Wyoming corporation (“FUGA”) that is in the private air charter and aircraft management business. Founded in 2007, FUGA is a FAA 135 certificate carrier and currently manages a Gulfstream IV SP aircraft. FUGA’s certificate allows it to operate worldwide with aircraft that have seating capacity for up to 30 passengers. The Company intends to raise capital to expand FUGA’s operations by expanding the number of aircraft under management, launching a membership program, exploring an air ambulance line of business and pursuing government contracts. We will also seek financing to acquire aircraft, which we believe will provide us with increase profitability over managed aircraft. The closing of the transaction with FUGA, as set forth in the Share Exchange Agreement, is subject to various conditions, which FUGA must satisfy or the Company must waive. The Share Exchange Agreement is set forth as Exhibit 10.1 in the Company’s Form 8-K, which it filed on November 13, 2018. We have also had discussions with other air charter businesses that are interested in exploring a transaction with us and we will continue to pursue those and other opportunities.
We believe that our present capital is insufficient to cover our monthly burn rate for the next 12 months. We believe that we will require a minimum of $100,000 in cash to accomplish the goals set out in our plan of operation. To the extent, we are unable to accomplish our goals with the proceeds from the issuance of our common stock, then we intend to raise additional capital from investors through loans or advances from our majority shareholder or other third parties.
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Our principal business, executive and registered statutory office is located at 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660 and our telephone number is (949) 538-2700, fax is (310) 388-5899 and email contact is info@vigilantdiversifiedholdings.com. Our URL address is www.vigilantdiversifiedholdings.com.
In January 2016, we made a $100,000 investment in Curved Rolling Papers, LLC, a company that provides curved rolling papers to the tobacco and cannabis industry. We have since written off our investment and may seek a refund of our investment through binding mediation or assign our claim to a third party.
Since beginning operations in June 2015, we have not earned any revenues or provided any consulting services and we have an accumulated deficit of $495,220 as of December 31, 2019. We have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
In June 2015, the Company issued 14,900,000 common shares to Vigil & Vigil Investments, LLC, which is 100% owned by Todd W. L. Vigil, our former chairman, chief executive officer and Diana Vigil, our former vice president secretary and the mother of Todd W. L. Vigil, for services rendered in our formation and organization valued at $1,490 or $0.0001 per share. We also issued 100,000 common shares to Jonathan McDermott, for services rendered in our formation and organization valued at $10 or $0.0001 per share. These transactions are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”) in reliance on Section 4(a)(2) of the Act. In December 2015, we sold 20,000 shares of our common stock at a price of $0.25 per share under our registration statement. In 2016, we sold 136,000 shares of our common stock at a price of $0.25 per share under our registration statement. All of our stock sales have been in reliance on Section 4(a)(2) of the Act.
In January 2016, we authorized a Series A preferred issued 540,000 shares of our Series A preferred for $135,000 in cash from two investors. Our auditors indicated in their report on our financial statements (the “Report”) that “the Company has not generated profits to date and has minimal liquidity, which raises substantial doubt as to its ability to continue as a going concern.” In April 2017, we converted the 540,000 Series A preferred shares into 540,000 shares of our common stock.
Our chief executive officer and director, Donald P. Hateley, and our other officer and director, Dennis C. Murchison, are our only personnel. Mr. Hateley and Mr. Murchison intend to devote up to 10 hours per week to us but may adjust the number of hours as necessary.
Our fiscal year end is December 31.
We were formed to be a consulting company to assist companies that are involved in various aspects of the cannabis industry by providing consulting services focused on providing administrative and regulatory support functions. We also attempted to market our services to other industries. From inception until June 30, 2018, when we effectuated a change of control, our mission was to assist management with services designed to keep them focused on their core business ideas while provide the administrative support such as bookkeeping, payroll, website development and marketing strategies. We had limited operations and had limited financial resources. Our operations from June 30, 2015 to January 4, 2016, were devoted primarily to start-up, development and operational activities, which included:
| 1. | Formation of the Company; | |
| 2. | Development of our business plan; | |
| 3. | Evaluating various target companies to market our services; | |
| 4. | Research on marketing channels/strategies for our services; | |
| 5. | Secured our website domain www.vigilantdiversifiedholdings.com and beginning the development of our initial online website; | |
| 6. | Research on services and pricing of our services; and | |
| 7. | Hiring our consultant to provide a variety of services to us |
On January 4, 2016, we made an investment in Curved Rolling Papers LLC (“Curved”). We entered into an agreement (the “Agreement”) with Curved that provided for the purchase of up to 5% ownership in Curved for $250,000 to be paid in installments. We anticipated funding the investment in the Agreement through unrelated equity funding. Curved was to receive $250,000 in consideration from January 4, 2016 through March 1, 2016. We invested $50,000 on January 4, 2016 and $50,000 on February 2, 2016. We were unable to fund the additional contributions to Curved since the additional equity we were seeking to raise did not materialize. Curved subsequently notified us that it was transferring its assets to a new entity and discontinuing Curved, thus, nullifying our investment. Our negotiations with Curved did not result in a satisfactory resolution.
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We may file for binding mediation against Curved and its owners, in the State of New York, for rescission of the Agreement to return of our $100,000 investment in Curved or, we may assign the claim to the former majority shareholder or a third party to pursue. The Company decision on whether to file for binding mediation or to assign the causes of action will be evaluated on the resources it anticipates spending against the anticipated recovery. Our decision to consider filing for binding mediation is in response to Curved’s management’s unilateral communication that it was dissolving Curved and its relationship with us, leaving us with nothing and declining to return any of the $100,000 we invested in it.
On June 30, 2018, we effectuated a change of control and our new management’s goal was to pursue the acquisition of an operating company with revenues and the potential for growth. On October 29, 2018, we entered into a share exchange agreement (the “Share Exchange Agreement”) to acquire up to 100% of the issued and outstanding shares of FUGA, Inc., a Wyoming corporation (“FUGA”) that is in the private air charter and aircraft management business. Founded in 2007, FUGA owns an air carrier 135 certificate and currently manages a Gulfstream IV SP aircraft. FUGA’s certificate allows it to operate worldwide with aircraft that have seating capacity for up to 30 passengers. The Company intends to raise capital to expand FUGA’s operations by launching an air ambulance and government division as well as expand its fleet of managed aircraft. We will also seek financing to acquire aircraft, which we believe will provide us with increase profitability over managed aircraft. The closing of the transaction with FUGA, as set forth in the Share Exchange Agreement, is subject to various conditions, which FUGA must satisfy or the Company must waive. The Share Exchange Agreement is set forth as Exhibit 10.1 in the Company’s Form 8-K, which it filed on November 13, 2018.
As of December 31, 2019, we had $58 cash on hand and in the bank. Management does not believe this amount will satisfy our cash requirements for the next twelve months. We plan to satisfy our future cash requirements - primarily the working capital required for operations by the sale of our common or preferred stock or with advances from our shareholders or third-party investors. The additional equity or debt financings will likely be in the form of private placements of common stock, preferred stock or convertible debt. As of December 31, 2019, the Company has $114,536 in accounts payable and accrued liabilities, which includes $93,438 in legal fees owed to a related party. $36,850 of those legal fees have been incurred in 2019. We also have $37,210 in related party advances of which $35,950 is owed to MT Capital Partners, LLC and $1,025 to our related party law firm and $235 to Intercap Partners, LLC, our other related party major shareholder.
Management believes that if subsequent private placements are successful and we close the transaction contemplated by the Share Exchange Agreement, then we will record revenues following the closing. We also intend to raise capital to expand FUGA’s operations; however, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
If we are unsuccessful in closing the FUGA transaction, another acquisition, or in raising capital through a private placement or public offering, then we will then have to seek additional funds through debt financing, which would be highly difficult for a company with nominal assets to secure. Therefore, we are highly dependent upon the success of closing the FUGA transaction, acquiring another company, or a private placement offering, and failure thereof would result in our having to seek capital from other resources such as debt financing, which may not even be available to us. However, if such financing were available, because we are a company with no current operations other than seeking to close the FUGA transaction, we would likely have to pay additional costs associated with high-risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of our common stock or secure debt financing or we would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.
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Financing Strategy
Our ability to increase our revenues and market our services will dependent on additional outside financing, advances from our shareholders and reinvesting our profits. Primary responsibility for the overall planning and management of our services will rest with our management. For each service we plan to offer, management will need to assess the market and our needs to offer such services at cost-effective prices. All decisions will be subject to budgetary restrictions and our business control. We cannot provide any guarantee that we will be able to ever offer services on cost-effect terms.
Whenever possible we will attempt to plan with providers of goods and services that we might utilize to defer payment until a later stage in our revenue cycle. Once we determine our cash flow needs, there are various methods of obtaining the funds needed to provide our services to our future clients. Examples of financing alternatives include the assignment of our rights to receivables and equity to the extent we can obtain shares from our clients for services rendered. Alternatively, we may form a limited liability company or partnership where we will be the managing member or the general partner and raise funds to finance our services.
Competition
The mergers and acquisition and consulting services industry is highly competitive. We compete with a variety of companies, many of which have greater financial and other resources than us or are subsidiaries or divisions of larger organizations. The industry is characterized by a small number of large, dominant organizations that perform this service as well as middle market investment banks and brokers, accounting firms, law firms, consultants as well as many companies that have greater financial and other resources than us.
Many of our competitors have substantially greater financial, technical, managerial, marketing and other resources than we do, and they may compete more effectively than we can. If our competitors offer the opportunity to be acquired on more favorable terms than we can, this adversely affect our results of operations. Furthermore, many of our competitors are able to obtain more experienced employees than we can.
Our Website
Our website is located at www.vigilantdiversifiedholdings.com and will provide a description of our company, our services, mission statement along with our contact information including our address, telephone number and e-mail address.
Dependence on Customers
We do not have any customers.
Trademarks and other Intellectual Property
As of December 31, 2019, we do not have any registered trademarks, patents or any other intellectual property rights.
Need for any Government Approval of Principal Services
We are also subject to federal, state and local laws and regulations generally applied to businesses, such as payroll taxes on the state and federal levels. Sales of the services we intend to provide to customers may be subject to U.S. and local government regulations.
Research and Development
We have not spent any money on research and development activities.
Employees
As of December 31, 2019, we had 2 employees, which are our officers and directors and who devote their time as needed to our business. They expect to devote ten hours per week to us.
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Legal Proceedings
We are not involved in any legal proceedings; however, we may pursue binding mediation against Curved Rolling Papers, LLC. See Results of Operations and Footnote 8 to our financial statements. None of our officers or directors is a party to any legal proceeding or litigation.
Property
We do not own any real property. Our executive, administrative and operating offices are located at 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660. We have a written lease with the landlord and rent space on a month-to-month basis at the rate of $62.50 per month.
Available Information
We maintain a website at www.vigilantdiversifiedholdings.com. Our website is currently under development. Once it is operational, the information on or available through our website is not, and should not be considered, a part of this Annual Report. You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as other reports relating to us that are filed with, or furnished to, the Securities and Exchange Commission (“SEC”) free of charge on our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We are not required to provide this information as a “smaller reporting company.”
Item 1B. Unresolved Staff Comments
None.
We do not own any real property. Our executive, administrative and operating offices are located at 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660. We have a written lease with the landlord and rent space on a month-to-month basis at the rate of $62.50 per month.
We are not a party to any legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
There is no established public market for our common stock, and a public market may never develop. We previously entered into an agreement with a market maker and filed an application with FINRA, so as to be able to quote the shares of our common stock on the OTC Markets, which is overseen by FINRA. However, since our business model has changed, we will have to file a new application, which we intend to do in the second quarter of 2020. There can be no assurance as to whether such market maker’s application will be accepted by FINRA. We cannot estimate the time period that will be required for the application process. Even if our common stock were quoted in a market, there may never be substantial activity in such market. If there is substantial activity, such activity may not be maintained, and no prediction can be made as to what prices may prevail in such market.
If we become able to have our shares of common stock quoted on the OTC Markets, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTC Markets), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTC Markets). What this means to is that while DTC-eligibility is not a requirement to trade on the OTC Markets, it is a necessity to process trades on the OTC Markets if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.
We do not have any common equity subject to outstanding options or warrants to purchase or securities convertible into our common equity. In general, under Rule 144, a holder of restricted common shares who is an affiliate at the time of the sale or any time during the three months preceding the sale can resell shares, subject to the restrictions described below. The last price that our common stock was sold to investors at is $0.25 per share.
If we have been a public reporting company under the Exchange Act for at least 90 days immediately before the sale, then at least six months must have elapsed since the shares were acquired from us or one of our affiliates, and we must remain current in our filings for an additional period of six months; in all other cases, at least one year must have elapsed since the shares were acquired from us or one of our affiliates.
The number of shares sold by such person within any three-month period cannot exceed the greater of:
| ● | 1% of the total number of our common shares then outstanding; or | |
| ● | The average weekly trading volume of our common shares during the four calendar weeks preceding the date on which notice on Form 144 with respect to the sale is filed with the SEC (or, if Form 144 is not required to be filed, the four calendar weeks preceding the date the selling broker receives the sell order) This condition is not currently available to the Company because its securities do not trade on a recognized exchange. |
Conditions relating to the manner of sale, notice requirements (filing of Form 144 with the SEC) and the availability of public information about us must also be satisfied.
16,398,400 of the presently outstanding shares of our common stock are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144, which have become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, ceases to be a “shell company” and files a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 registration statement 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 Exchange Act. Under the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met:
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| 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, we do not believe we are classified as a “shell company” under Rule 405 of the Securities Act Rule 12b-2 of the Exchange Act and that 2,243,400 shares may have the restricted legend removed by an opinion of counsel to our transfer agent. In the event that we close the transaction with FUGA, we will file a Form 8-K containing Form 10 information.
Current Public Information
In general, for sales by affiliates and non-affiliates, the satisfaction of the current public information requirement depends on whether we are a public reporting company under the Exchange Act:
| ● | If we have been a public reporting company for at least 90 days immediately before the sale, then the current public information requirement is satisfied if we have filed all periodic reports (other than Form 8-K) required to be filed under the Exchange Act during the 12 months immediately before the sale (or such shorter period as we have been required to file those reports). | |
| ● | If we have not been a public reporting company for at least 90 days immediately before the sale, then the requirement is satisfied if specified types of basic information about us (including our business, management and our financial condition and results of operations) are publicly available. |
However, no assurance can be given as to:
| ● | the likelihood of a market for our common shares developing, | |
| ● | the liquidity of any such market, | |
| ● | the ability of the shareholders to sell the shares, or | |
| ● | the prices that shareholders may obtain for any of the shares. |
No prediction can be made as to the effect, if any, that future sales of shares or the availability of shares for future sale will have on the market price prevailing from time to time. Sales of substantial amounts of our common shares, or the perception that such sales could occur, may adversely affect prevailing market prices of the common shares.
Common Stock Currently Outstanding
As of December 31, 2019, we had 16,398,400 shares of our common stock outstanding.
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Holders
As of December 31, 2019, we had 31 stockholders of record.
Dividend Policy
We have not declared any cash dividends on our common stock or preferred stock since our inception and do not anticipate paying any dividends in the foreseeable future. We plan to retain future earnings, if any, for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as our Director deems relevant.
Transfer Agent
VStock Transfer, LLC is our independent stock transfer agent.
Recent Sales of Unregistered Securities
None.
Additional Information
Copies of our annual reports on Form 10−K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov. All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
Item 6. Selected Financial Data
Not required under Regulation S-K for “smaller reporting companies.”
Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes thereto and other financial information included elsewhere in this filing. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Overview
We were formed and commenced operations on June 30, 2015. From June 30, 2015 until January 4, 2016, our activities were limited to organizational and business development activities related to providing advice to companies. We intended to assist companies that are involved in various aspects of the cannabis industry by providing consulting services focused on providing administrative and regulatory support functions. We also intended to market our services to other industries. Our original mission statement was to assist management of these companies with services designed to keep them focused on their core business ideas while provide the administrative support such as bookkeeping, payroll, website development and marketing strategies. We intended to use the Internet as well as the services of an independent sales representative to market our services to start-up companies in California and Colorado with our initial efforts focused in Denver. We also intended to market to service professionals. During this period, we have had limited operations and have limited financial resources. Our operations until January 4, 2016, were devoted primarily to start-up, development and operational activities, which included:
| 1. | Formation of the Company; | |
| 2. | Development of our business plan; | |
| 3. | Evaluating various target companies to market our services; | |
| 4. | Research on marketing channels/strategies for our services; |
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| 5. | Secured our website domain www.vigilantdiversifiedholdings.com and beginning the development of our initial online website; | |
| 6. | Research on services and pricing of our services; | |
| 7. | Hiring our consultant to provide a variety of services to us. |
On July 22, 2015, we engaged a cannabis consulting firm to provide a variety of services to us, including, but not limited to, introducing us to various cannabis opportunities. Our agreement with them was for 6 months for a total fee of $25,000 payable as follows: (i) $10,000 upon execution, $7,500 thirty days thereafter and the balance of $7,500 ninety days thereafter.
On January 4, 2016, we made an investment in Curved Rolling Papers LLC (“Curved”). We entered into an agreement (the “Agreement”) with Curved that provided for the purchase of up to 5% ownership in Curved for $250,000 to be paid in installments. We anticipated funding the investment in the Agreement through unrelated equity funding. Curved was to receive $250,000 in consideration from January 4, 2016 through March 1, 2016. We invested $50,000 on January 4, 2016 and $50,000 on February 2, 2016. We were unable to fund the additional contributions to Curved since the additional equity we were seeking to raise did not materialize. Curved subsequently notified us that it was transferring its assets to a new entity and discontinuing Curved, thus, nullifying our investment. Our negotiations with Curved did not result in a satisfactory resolution.
We may file for binding mediation against Curved and its owners, in the State of New York, for rescission of the Agreement to return of our $100,000 investment in Curved or, we may assign the claim to the former majority shareholder to pursue. The Company decision on whether to file for binding mediation or to assign the causes of action will be evaluated on the resources it anticipates spending against the anticipated recovery. Our decision to consider filing for binding mediation is in response to Curved’s management’s unilateral communication that it was dissolving Curved and its relationship with us, leaving us with nothing and declining to return any of the $100,000 we invested in Curved.
On June 30, 2018, we effectuated a change of control and our new management’s goal was to pursue the acquisition of an operating company with revenues and the potential for growth. On October 29, 2018, we entered into a share exchange agreement (the “Share Exchange Agreement”) to acquire up to 100% of the issued and outstanding shares of FUGA, Inc., a Wyoming corporation (“FUGA”) that is in the private air charter and aircraft management business. Founded in 2007, FUGA owns an air carrier 135 certificate and currently manages a Gulfstream IV SP aircraft. FUGA’s certificate allows it to operate worldwide with aircraft that have seating capacity for up to 30 passengers. The Company intends to raise capital to expand FUGA’s operations by launching an air ambulance and government division as well as expand its fleet of managed aircraft. We will also seek financing to acquire aircraft, which we believe will provide us with increase profitability over managed aircraft. The closing of the transaction with FUGA, as set forth in the Share Exchange Agreement, is subject to various conditions, which FUGA must satisfy or the Company must waive. The Share Exchange Agreement is set forth as Exhibit 10.1 in the Company’s Form 8-K, which it filed on November 13, 2018. In the event that we do not proceed forward with the acquisition of FUGA, we have identified other acquisitions opportunities that we will pursue.
As of December 31, 2019, we had $58 cash on hand and in the bank. Management does not believe this amount will satisfy our cash requirements for the next twelve months. We plan to satisfy our future cash requirements - primarily the working capital required for operations by the sale of our common or preferred stock or with advances from one of our shareholders or third-party investors. The additional equity or debt financings will likely be in the form of private placements of common stock, preferred stock or convertible debt. As of December 31, 2019, the Company has $151,746 in current liabilities, which consist of $114,536 in accounts payable and accrued liabilities and $37,210 in related party advances.
Management does not plan to hire additional employees at this time. Our officers and directors, as well as independent contractors, will be responsible for providing consulting services.
| 11 |
Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Annual Report on Form 10-K.
The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended December 31, 2019 together with notes thereto, which are included in this Annual Report on Form 10-K.
For the year ended December 31, 2019 compared to the year ended December 31, 2018
Revenues. We did not have any revenues for the year ended December 31, 2019 or December 31, 2018. The lack of revenues is based on our lack of customers and the shift of our business model to pursue acquisitions.
Operating expenses. Operating expenses include general and administrative expenses, professional fees, franchise tax expense, salaries, wages and benefits and transfer agent and Edgar filing fees. In total, our operating loss decreased $4,218, or 6.81%, to $57,701 for the year ended December 31, 2019 compared to $61,919 for the comparable period in 2018. The components of operating expenses are discussed below.
| ● | General and administrative expenses decreased $766, or 27.73%, to $1,996 for the year ended December 31, 2019 compared to $2,762 for the comparable period in 2018. The decrease is due to a decrease in dues and subscriptions, travel expenses, office expense, and meals and entertainment. | |
| ● | Professional fees increased $4,453, or 9.22%, to $52,726 for the year ended December 31, 2019 compared to $48,273 for the comparable period in 2018. The increase is due to an increase in legal and accounting fees. | |
| ● | Franchise tax expense increased $1,631 to $1,631 for the year ended December 31, 2019 compared to $0 for the comparable period in 2018. The increase is due to our payment of back franchise taxes. | |
| ● | Salaries, wages and benefits decreased $1,728, or 100.00%, to $0 for the year ended December 31, 2019 compared to $1,728 for the comparable period in 2018. The decrease is attributable to our change of control whereby our new officers and not receiving salary compensation. | |
| ● | Transfer agent and Edgar filing fees decreased $7,808, or 85.28%, to $1,348 for the year ended December 31, 2019 compared to $9,156 for the comparable period in 2018. This is decrease is due to the decrease in Edgar and filing fees. |
Net Loss. Our net loss decreased $4,218, or 6.81%, to $57,701 for the year ended December 31, 2019 compared to $61,919 for the comparable period in 2018. The components of operating expenses are as set forth above.
Liquidity and Capital Resources. In 2019, our related party shareholders advanced us $13,085.
Our total assets are $928 as of December 31, 2019, consisting of $58 in cash and $870 in other receivables. Our working capital deficit was $150,818 as of December 31, 2019.
Our total liabilities as of December 31, 2019 are $151,746, which consist of $114,536 in accounts payable and accrued liabilities and $37,210 in related party advances. One of our majority shareholders, which is owned by our legal counsel, advanced us $235 and our legal counsel advanced us $1,025. Our other majority shareholder did not advance us any monies in 2019.
| 12 |
As of December 31, 2019, our total stockholders’ deficit is $150,818 and our accumulated deficit is $495,220.
We used $22,129 in cash by operating activities, which consisted of $57,701 in net loss, increased by $870 in other receivables and offset by $36,442 in accounts payable and accrued liabilities.
We did not have any cash used or provided by investing activities.
We had $13,085 in cash provided by financing activities, which consisted of $13,085 in related party advances.
We do not now have funds sufficient for pursuing our plan of operation, but we are in the process of trying to procure funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.
The Company had no formal long-term lines or credit or other bank financing arrangements as of December 31, 2019.
The Company has no current plans for the purchase or sale of any plant or equipment.
The Company has no current plans to make any changes in the number of employees.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carryforward and startup costs that may offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past quarter.
Capital Expenditures
The Company expended no amounts on capital expenditures for the year ended December 31, 2019.
Plan of Operation
We were incorporated in the State of Nevada on June 30, 2015. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. Since incorporation, we have not made any significant purchase or sale of assets except for our $100,000 investment in Curved as more fully explained in our Form 10-K for the year ended December 31, 2017. We have not generated any revenue and just recently changed our business strategy from offering consulting services to seeking an acquisition of an operating company with revenues. On October 29, 2018, we entered into the Share Exchange Agreement to acquire up to 100% of the issued and outstanding shares of FUGA from its shareholders. The transaction is set forth in our Form 8-K filed on November 13, 2018.
| 13 |
We may change our name in the second quarter of 2020 and, if so, will select a name that we believe will be indicative of the FUGA transaction and our future goals. Our current website (www.vigilantdiversifiedholdings.com) has ceased providing information on our prior business and is currently under construction. We intend to develop our new website in the second quarter of 2020.
On January 12, 2016, we amended our Articles of Incorporation to authorize up to 4,000,000 shares of a Series A Convertible Preferred Stock (the “Series A Stock”) issuable at $0.25 per share and convertible into its common stock on a 1 for 1 basis. From January 12, 2016 to June 30, 2016, we sold 540,000 shares of its Series A Stock for $135,000 in cash. These offerings were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. On April 11, 2017, we converted the 540,000 shares of Series A Stock to 540,000 shares of our $0.0001 par value common stock.
On October 29, 2018, we amended and restated our Articles of Incorporation to increase our authorized common stock, par value $0.0001, from 100,000,000 shares to 500,000,000 shares and our authorized preferred stock, par value $0.0001, from 10,000,000 shares to 50,000,000 shares. The details are set forth in our Form 8-K filed on November 13, 2018.
We do not expect to purchase or sell plant or significant equipment. Further we do not expect significant changes in the number of employees.
Our anticipated plan is as follows:
Raise Working Capital
Time Frame: Q2 & Q3 of 2020
We intend to concentrate our efforts on raising capital to provide the necessary working capital for our operations and to provide FUGA with the necessary capital to increase its operations of managed aircraft and owned aircraft. Our operations will be limited due to the limited amount of funds on hand. Our plan of operations is as follows:
Develop Our Website
Time Frame: Q2 2020.
Material costs: $3,000-$5,000.
We intend to completely revise our website and possibly change our URL. Our officer and director, Dennis Murchison, will be in charge of overseeing the revision of our website. We intend to hire a web designer to help us with the building and functionality of our website. We do not have any written agreements with any web designers at current time. We anticipate the website expansion costs, including enhanced site design and implementation will be approximately $3,000 to $5,000. Updating and improving our website will continue throughout the lifetime of our operations.
Assist FUGA with the completion of their audit and file our Form 8-K
Time Frame: Q2 2020
$15,000-$20,000
We will assist FUGA with the audit of their financial statements and have agreed to pay for any costs in excess of $5,000. MT Capital Partners, LLC, one of our majority shareholders, has agreed to advance the necessary costs to accomplish this task.
Concurrently while FUGA’s financial statements are being audited, we will prepare our Form 8-K, which will contain Form 10 information to file with the SEC. This 8-K will contain the necessary information to enable us to close the transaction and will contain pro forma information on the Company going forward with FUGA as a subsidiary.
File an S-1 or Form 1-A
Time Frame: Q2 2020
Concurrently with the preparation of our Form 8-K containing Form 10 information, we intend to raise additional capital and either file a registration statement on either Form S-1 or 1-A. We will make that determination in Q2 2020.
| 14 |
Donald P. Hateley, our chief executive officer and Dennis Murchison, our vice president and secretary, will be devoting up to ten hours per week to our operations. Once we complete the transaction contemplated by the Share Exchange Agreement, then our officers have orally agreed to commit more time as required.
Estimated Expenses for the Next Twelve Months
The following provides an overview of our estimated expenses to fund our plan of operation for the next twelve months. The amount may vary depending upon how much we spend on pursuing acquisition opportunities. We believe we would need a minimum of $100,000.
| Description | Amount | |||
| Expenses | ||||
| SEC reporting and compliance | $ | 50,000 | ||
| Establishing and office | 10,000 | |||
| Website revisions | 5,000 | |||
| Advertising | 10,000 | |||
| Travel | 20,000 | |||
| Other expenses | 5,000 | |||
| Total | $ | 100,000 | ||
If we do not raise additional working capital, or if MT Capital Partners does not provide us with the necessary working capital, then our cash reserves will be not sufficient to meet our obligations for the next twelve-month period. We anticipate that the minimum additional capital necessary to fund our planned operations in this case for the 12-month period will be approximately $100,000 and will be needed for general administrative expenses, business development, and costs associated with being a publicly reporting company. As a result, we will need to seek additional funding in the near future. The source of this additional capital is through the sale of additional shares of common stock or advances from MT Capital Partners MT Capital Partners has agreed to advance or loan funds to working capital funds for this purpose and is obligated to under its stock purchase agreement with Intercap Partners.
Our management may hire full or part-time employees or independent contractors over the next six (6) months depending upon whether we are able to raise capital; however, at the present, the services provided by our officers and directors appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by these two individuals and can be supplemented by engaging independent contractors. Our management’s responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six (6) months, the professionals we plan to utilize may be independent contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.
Our management does not expect to incur any material research costs in the next twelve months; we currently do not own any plants or equipment that we would seek to sell soon; we do not have any off-balance sheet arrangements. Additionally, we believe that this fact shall not materially change. Donald P. Hateley, our Chairman, President and CEO is also our legal counsel and will provide legal services to us.
Off-Balance Sheet Arrangements
None.
Recent Accounting Pronouncements
We have adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements is not anticipated to have a material effect on our operations.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 7A of Regulation S-K, we are not required to provide this information.
Item 8. Financial Statements and Supplementary Data
Our audited financial statements are set forth in this Annual Report beginning on page F-1.
| 15 |
VIGILANT DIVERSIFIED HOLDINGS, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019 AND 2018
INDEX TO FINANCIAL STATEMENTS
| 16 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Vigilant Diversified Holdings Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Vigilant Diversified Holdings Inc. (the “Company”) as of December 31, 2019 and 2018, the related statements of operations, stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet achieved profitable operations and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ DMCL LLP |
| DALE MATHESON CARR-HILTON LABONTE LLP |
| CHARTERED PROFESSIONAL ACCOUNTANTS |
We have served as the Company’s auditor since 2017
Vancouver, Canada
March 30, 2020
| F-1 |
Part I – FINANCIAL INFORMATION
VIGILANT DIVERSIFIED HOLDINGS, INC.
| December 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 58 | $ | 9,102 | ||||
| Other receivable | 870 | - | ||||||
| TOTAL ASSETS | $ | 928 | $ | 9,102 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 114,536 | $ | 78,094 | ||||
| Related party advances | 37,210 | 24,125 | ||||||
| TOTAL LIABILITIES | 151,746 | 102,219 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred Stock, Authorized 5,000,000 preferred shares, $0.0001 par, none issued and outstanding on December 31, 2019 and 2018 | - | - | ||||||
| Common Stock; Authorized 100,000,000 common shares, $0.0001 par, 16,398,400 issued and outstanding on December 31, 2019 and 2018 | 1,640 | 1,640 | ||||||
| Additional paid-in capital | 342,762 | 342,762 | ||||||
| Accumulated Deficit | (495,220 | ) | (437,519 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (150,818 | ) | (93,117 | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | 928 | $ | 9,102 | ||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
VIGILANT DIVERSIFIED HOLDINGS, INC.
| For the years ended | ||||||||
| December 31, 2019 | December 31, 2018 | |||||||
| Expenses | ||||||||
| General & administrative expenses | $ | 1,996 | $ | 2,762 | ||||
| Professional fees | 52,726 | 48,273 | ||||||
| Franchise tax | 1,631 | - | ||||||
| Salaries, wages and benefits | - | 1,728 | ||||||
| Transfer agent and filings | 1,348 | 9,156 | ||||||
| Total Expenses | 57,701 | 61,919 | ||||||
| Net Loss for the Year | $ | (57,701 | ) | $ | (61,919 | ) | ||
| Basic loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Diluted loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding | ||||||||
| Basic and diluted | 16,398,400 | 16,398,400 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
VIGILANT DIVERSIFIED HOLDINGS, INC.
Statements of Stockholders’ Deficit
| Common stock | Additional | |||||||||||||||||||
| Number of shares | Amount | paid-in
capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2017 | 16,398,400 | $ | 1,640 | $ | 342,762 | $ | (375,600 | ) | $ | (31,198 | ) | |||||||||
| Net loss for the period | - | - | - | (61,919 | ) | (61,919 | ) | |||||||||||||
| Balance, December 31, 2018 | 16,398,400 | 1,640 | 342,762 | (437,519 | ) | (93,117 | ) | |||||||||||||
| Net loss for the period | - | - | - | (57,701 | ) | (57,701 | ) | |||||||||||||
| Balance, December 31, 2019 | 16,398,400 | $ | 1,640 | $ | 342,762 | $ | (495,220 | ) | $ | (150,818 | ) | |||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
VIGILANT DIVERSIFIED HOLDINGS, INC.
| For the years ended | ||||||||
| December 31, 2019 | December 31, 2018 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net Loss | $ | (57,701 | ) | $ | (61,919 | ) | ||
| Adjustments to reconcile net loss to net cash used by operations: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivable | (870 | ) | - | |||||
| Prepaid expense | - | 2,827 | ||||||
| Accounts payable and accrued liabilities | 36,442 | 40,367 | ||||||
| Net cash used by operating activities | (22,129 | ) | (18,725 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Related party advances | 13,085 | 24,125 | ||||||
| Net cash provided by financing activities | 13,085 | 24,125 | ||||||
| Net cash (decrease) increase | (9,044 | ) | 5,400 | |||||
| Cash, beginning | 9,102 | 3,702 | ||||||
| Cash, ending | $ | 58 | $ | 9,102 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
VIGILANT DIVERSIFIED HOLDINGS, INC.
Notes to the Financial Statements
For the years ended December 31, 2019 and 2018
NOTE 1 - NATURE OF BUSINESS
Vigilant Diversified Holdings, Inc. (“the Company”) was incorporated in the State of Nevada as a for-profit company on June 30, 2015. On October 29, 2018, the Company entered into a Share Exchange Agreement (the “Agreement”) to acquire up to 100% of the issued and outstanding shares of the common stock of FUGA, Inc., a Wyoming corporation (“FUGA”) in exchange for 5,500,000 shares of the Company’s common stock. The closing of the transaction under the Agreement is subject to certain conditions including the customary board and shareholder approval of FUGA’s audit and the transaction.
NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its obligations and commitments in the normal course of operations. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.
As of December 31, 2019, the Company had not yet achieved profitable operations, has incurred cumulative losses of $495,220 and expects to incur significant further losses in the development of its business, which casts substantial doubt about the Company’s ability to continue as a going concern. To remain a going concern, the Company will be required to obtain the necessary financing to pursue its plan of operation or complete an acquisition of a profitable company. Management plans to obtain the necessary financing through the issuance of equity and/or advances from related parties.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Cash
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. As of December 31, 2019, and 2018, the Company does not have any cash and cash equivalents.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
| F-6 |
ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.
We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax position have been recorded pursuant to ASC 740. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.
Loss per Share
The Company’s basic earnings (loss) per share are calculated by dividing its net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s dilutive earnings (loss) per share is calculated by dividing its net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Fair Value of Financial Instruments
The Company’s financial instruments as defined by FASB ASC 825, “Financial Instruments” include cash and accounts payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2019 and 2018.
FASB ASC 820 “Fair Value Measurements and Disclosures” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1. Observable inputs such as quoted prices in active markets; | |
| ● | Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |
| ● | Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions. |
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
| F-7 |
NOTE 4–INCOME TAXES
A reconciliation of the income taxes at statutory rates with the reported taxes is as follows:
| 2019 | 2018 | |||||||
| Net loss for the year | $ | (57,701 | ) | $ | (61,919 | ) | ||
| Expected income tax recovery at statutory rate of 21% | (12,000 | ) | (13,000 | ) | ||||
| Change in valuation allowance | 12,000 | 13,000 | ||||||
| Total income tax recovery | $ | - | $ | - | ||||
The significant components of the Company’s deferred tax assets that have not been included on the balance sheet are as follows:
| 2019 | 2018 | |||||||
| Deferred tax assets | ||||||||
| Net operating losses | $ | 104,000 | $ | 92,000 | ||||
| Valuation allowance | (104,000 | ) | (92,000 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.
As of December 31, 2019, the Company has non-capital losses of approximately $495,000 which will may be carried forward to offset future taxable income indefinitely.
NOTE 5–STOCKHOLDERS’ EQUITY
The Company was formed with one class of common stock, $0.0001 par value and is authorized to issue 100,000,000 common shares and one class of preferred stock, $0.0001 par value and is authorized to issue 5,000,000 shares. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they chose to do so, elect all of the directors of the Company.
The Company did not issue any stock in 2019 or 2018.
NOTE 6–RELATED PARTY TRANSACTIONS
The directors and officers of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, he may face a conflict in selecting between the Company and his other business interests. The Company has not formulated a policy for the resolution of such conflicts.
One of the Company’s major shareholder is owned by the Company’s legal counsel. During the year ended December 31, 2019 and 2018, the Company’s legal counsel was owed $93,438 and $65,500, respectively and also advanced the Company $925 and $100, respectively. During the years ended December 31, 2019 and 2018, the related party legal fees were $36,850 and $38,000 respectively. During the years ended December 31, 2019 and 2018, one of the Company’s other major shareholder, MT Capital Partners, LLC, which is owned by one of the Company’s officer and director, advanced the Company $11,925 and $24,025, respectively. These amounts are unsecured and do not bear any terms of interest or repayment.
| F-8 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls are also designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer, in order to allow timely consideration regarding required disclosures.
The evaluation of our disclosure controls by our principal executive officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Annual Report. Our management, including our chief executive officer, does not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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 management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2019 were not effective in timely alerting them to material information which is required to be included in our periodic reports filed with the SEC as of the end of the period covering this report and to ensure that information required to be disclosed by us in reports that we file or submit 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.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of the year ended December 31, 2019. We believe that internal control over financial reporting is not effective. We have identified current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations. The Company does not have adequate segregation of duties in the handling of their financial reporting. This is caused by a very limited number of personnel.
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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
(c) Changes in internal controls.
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Not applicable.
Item 10. Directors, Executive Officers and Corporate Governance.
Our directors serve until any successor is elected and qualified. Our directors elect our officers to a term of one (1) year and they serve until their successors are duly elected and qualified, or until they are removed from office. The board of directors has no nominating or compensation committees.
The name, address, age, and position of our present officers and directors is set forth below:
| Name | Age | Title(s) | ||
| Donald P. Hateley | 62 | Chairman, Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer | ||
| Dennis C. Murchison | 60 | Director, Vice President & Secretary |
The persons named above have held their offices/positions since June 30, 2018, and we expect them to hold their offices/positions at least until the next annual meeting of our shareholders.
Donald P. Hateley, Chairman, President, Chief Executive Officer, and Chief Financial Officer
Mr. Hateley is our Chairman, President, CEO and CFO and has held these positions since June 30, 2018. Mr. Hateley is a California licensed attorney, certified public accountant and real estate broker. From October 1993 to the present, Mr. Hateley has practiced corporate, securities and tax law and, in October 1996, founded Hateley & Hampton, a California law firm that focuses on corporate, securities, tax and real estate matters. From 1982 to the present, Mr. Hateley is a California licensed certified public accountant and, since October 1988, a California licensed real estate broker. Mr. Hateley is an investor and involved with several companies as an investor and board member. Mr. Hateley is the Chairman and Chief Executive Officer of Intercap Partners, LLC, a private investment firm that invests in public and private companies and provides merger and acquisition services to them. He is also the Chairman and Chief Executive Officer of Esquire Partners, Inc., dba Esquire Realty, which is a California real estate investment and brokerage firm. He is also the Chairman and CEO of Combat Sports Entertainment, Inc., which owns and operates Fight Club OC and SoCa Fights in Southern California. In September 2009, Mr. Hateley founded Thunderclap Entertainment, Inc., which was a public reporting company and, in July 2018, sold his majority interest to an investor, who changed the name to TraqIQ, Inc. and subsequently acquired 3 software companies. From 1984 to 1989, Mr. Hateley was the Chairman and CEO of The Cambridge Group, Inc., an NASD broker dealer with offices in Los Angeles, Denver, and New York. From October 2005 to April 2006, Mr. Hateley served as the court appointed responsible officer of GSM Wireless, Inc., one of AT&T’s largest retail agents, where he oversaw the administration and liquidation of its assets in a Chapter 11 reorganization. Mr. Hateley has co-founded several companies including Lee’s Hoagies, a fast food franchisor in which he was also its first franchisee, WiTel, a wireless communications company manufacturing Wi-Fi phones, and College Centers of Southern California, a franchisor of SAT prep counseling. Mr. Hateley is a graduate of the University of Southern California’s Marshall School of Business where he received a Bachelor of Science in Business Administration with an emphasis in accounting.
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Dennis C. Murchison, Vice President & Secretary
Mr. Murchison is our Vice President and Secretary and has served in this capacity since June 30, 2018. In February 2018, Mr. Murchison formed MT Capital Partners, LLC to invest his capital alongside The Murchison Trust in various public and private ventures. He is also a Director and Vice President and Secretary of Combat Sports Entertainment, Inc., which owns and operates Fight Club OC and SoCa Fights in Southern California. From 2007 to the present, he is also a Managing Director of Mezzcap Partners, LLC, an investment firm in Century City, CA that structures and funds mezzanine debt for private companies to fund their growth, acquisitions and repurchase of equity held by non-management shareholders. Mr. Murchison has over 15 years’ experience in real estate financed having worked for Home Savings & Loan and Citibank Mortgage as a senior loan officer. Mr. Murchison also worked for his family’s private investment firm, Murchison International, Inc., which syndicated real estate and business ventures. Mr. Murchison currently oversees The Murchison Trust, a multi-generational private single-family office that invests in a broad spectrum of asset classes. Mr. Murchison is a graduate of San Diego State University with a Bachelor of Science in Sport Medicine.
Possible Potential Conflicts
The OTCQB, on which we plan to have our shares of common stock quoted, does not currently have any director independence requirements.
No member of management will be required by us to work on a full-time basis. Accordingly, while certain conflicts of interest may arise between us and our officers and directors in that they have other business interests in which they will devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officers’ understanding of his fiduciary duties to us.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Currently we have two officers who are also directors and will seek to add additional officer(s) and/or director(s) as and when we locate the proper personnel and the terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Code of Business Conduct and Ethics
On June 30, 2015, we adopted a Code of Ethics and Business Conduct which is applicable to our future employees and which also includes a Code of Ethics for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:
| ● | honest and ethical conduct, | |
| ● | full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements, | |
| ● | compliance with applicable laws, rules and regulations, | |
| ● | the prompt reporting violation of the code, and | |
| ● | accountability for adherence to the code. |
A copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as Exhibit 14.1 to our registration statement.
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Board of Directors
Our directors hold office until the completion of their term of office, which is not longer than one year, or until a successor(s) have been elected. Our director’s term of office expires on March 31, 2020. All officers are appointed annually by the board of directors and, subject to existing employment agreements (of which there are currently none), serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.
Involvement in Certain Legal Proceedings
During the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of us:
(1) had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities:
| i. | acting as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
| ii. | engaging in any type of business practice; or | |
| iii. | engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or |
(4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of a federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; or
(5) was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been reversed, suspended or vacated.
Committees of the Board of Directors
Concurrent with having sufficient members and resources, our board of directors intends to eventually establish an audit committee, nominating and compensation committee. We believe that we will need a minimum of five directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. When we establish a nominating committee, it will establish policies with regard to the consideration of any director candidates recommended by security holders. Currently, our majority shareholders will make any decisions to add other directors. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. See “Executive Compensation” hereinafter.
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We will reimburse all directors for any expenses incurred in attending directors’ meetings if we have the resources to pay these fees. We will consider applying for officers and directors’ liability insurance at such time when we have the resources to do so.
Item 11. Executive Compensation
Summary Executive Compensation Table
The following table shows, for the years ended December 31, 2019 and 2018, compensation awarded to or paid to, or earned by, our Chief Executive Officers and Vice Presidents (the “Named Executive Officers”).
SUMMARY COMPENSATION TABLE
Name and principal position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) | Stock Awards ($) (e) | Option Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g) | Nonqualified Deferred Compensation Earnings ($) (h) | All Other Compensation ($) (i) | Total ($) (j) | |||||||||||||||||||||||||
| Todd W. L. Vigil, CEO, CFO and Director(1) | 2019 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| 2018 | 1,728 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Donald P. Hateley(2)(3)
| 2019 2018 | - - | - - | - - | - - | - - | - - | - - | - - | |||||||||||||||||||||||||
| Dennis C. Murchison(2) | 2019 2018 | - - | - - | - - | - - | - - | - - | - - | - - | |||||||||||||||||||||||||
We currently do not have any formal employment arrangement with Mr. Hateley or Mr. Murchison and their compensation has not been fixed or based on any percentage calculations. The Board will make all decisions determining the amount and timing of their compensation if their annual compensation exceeds $50,000. In 2018, Mr. Vigil received a salary of $1,728. In 2018, up until the the change of control, neither Mr. Vigil nor Ms. Vigil receive any compensation.
| (1) | Todd W. L. Vigil resigned his positions as an officer and our sole director on June 30, 2018. |
| (2) | Mr. Hateley and Mr. Murchison have not received any compensation as our officers and directors. |
| (3) | We incurred $36,850 in legal fees to Mr. Hateley’s law firm in 2019; however, we did not have sufficient working capital to pay those fees. |
Grants of Plan-Based Awards Table
We currently do not have any equity compensation plans. Therefore, none of our named executive officers received any grants of stock, option awards or other plan-based awards during in 2019 or 2018.
Outstanding Equity Awards at Fiscal Year-End Table
None. We do not have any equity award compensation plans.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of the date of this Report, the total number of shares owned beneficially by our officers and directors, and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The shareholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares. As of December 31, 2019, we had 16,398,400 shares of common stock outstanding, which is held by 31 shareholders. There are not any pending or anticipated arrangements that may cause a change in control.
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of class | |||||||
| Common Stock | Intercap Partners, LLC(1) 620 Newport Center Drive, Suite 1100 Newport Beach, CA 92660 | 7,077,500 | 43.16 | % | ||||||
MT Capital Partners, LLC(2) 120 Newport Center Drive, Ste 120 Newport Beach, CA 92660 | 7,077,500 | 43.16 | % | |||||||
| All Officers and Directors as a Group (2 persons) | 14,155,000 | 86.32 | % | |||||||
| (1) | Donald P. Hateley, our director and officer, has dispositive voting power over the shares owned by Intercap Partners, LLC. |
| (2) | Dennis C. Murchison, our director and officer, has dispositive voting power over the shares owned by MT Capital Partners, LLC. MT Capital Partners, LLC’s retention of its shares is contingent upon it providing us with the necessary working capital to consummate our proposed share exchange agreement with the shareholders of Fuga, Inc. In the event that MT Capital Partners, LLC fails to provide us with the necessary working capital, then Intercap Partners will rescind the sale of the 7,077,500 shares it sold to MT Capital Partners, LLC. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Our promoters were Mr. Vigil, our former chairman, chief executive officer, and chief financial officer, and Ms. Diana Vigil, our former vice president and secretary and the mother of Todd Vigil.
On June 30, 2015, we issued 14,900,000 shares of our common stock to Vigil & Vigil Investments, LLC, a Colorado limited liability company, which is 100% owned by Todd Vigil and Diana Vigil. We also issued 100,000 shares to Jonathan McDermott, our other initial shareholder. These shares were issued in exchange for services our board of directors valued at $1,490 and $10, respectively or $0.0001 per share. On November 24, 2017, we issued 400,000 shares of our $0.0001 par value common stock to Vigil & Vigil Investments, LLC at a price of $0.25 per share, in exchange for the forgiveness of $100,000 in related party advances that were provided by Vigilant Diversified Holdings, Inc., a Colorado corporation, which was controlled by Todd Vigil and Diana Vigil. On November 24, 2017, we issued 60,000 shares of our $0.0001 par value common stock, at a price of $0.25 per share, to Diana Vigil for $15,000 in cash.
In the fourth quarter of 2018, Dennis C. Murchison provided us with $24,025 in advances for our working capital. These advances are an interest-free demand loan and he has orally agreed to defer payment until we are financially able to repay it. MT Capital Partners, LLC’s purchase of its 7,077,500 shares from Intercap Partners, LLC is contingent on MT Capital Partners, LLC’s payment of all our working capital expenses to fund our acquisition of Fuga, Inc. Mr. Murchison is the 100% owner of MT Capital Partners, LLC.
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Our officers and sole director are required to commit time to our affairs and, accordingly, may have conflicts of interest in allocating management time among various business activities. During other business activities, they may become aware of business opportunities that may be appropriate for presentation to us, as well as the other entities with which they are affiliated. As such, there may be conflicts of interest in determining to which entity a business opportunity should be presented.
To resolve such potential conflicts of interest, our officers and directors have orally agreed that any opportunities that they are aware of independently or directly through their association with us (as opposed to disclosure to them of such business opportunities by management or consultants associated with other entities) would be presented by them solely to us.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.
Regarding any future related party transaction, we plan to fully disclose all related party transactions, including, but not limited to, the following:
| ● | disclose such transactions in prospectuses where required; | |
| ● | disclose in all filings with the Securities and Exchange Commission, where required; | |
| ● | obtain disinterested directors’ consent; and | |
| ● | obtain shareholder consent where required. |
Item 14. Principal Accountant Fees and Services.
During the last fiscal year, the Company’s independent auditors have billed for their services as set forth below. In addition, fees and services related to the audit of the financial statements of the Company for the year ended December 31, 2019, as contained in this Report, are estimated and included for the fiscal year ended December 31, 2018.
| Year
ended December 31, 2019 | Year
ended December 31, 2018 | |||||||
| Audit Fees | $ | 13,000 | $ | 13,000 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| All Other Fees | $ | - | $ | - | ||||
Pre-Approval Policy
Our Director pre-approves all services provided by our auditors. Prior to the engagement of our auditor, for any non-audit or non-audit related services, our Director must conclude that such services are compatible with the independence of our auditors
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Item 15. Exhibits, Financial Statement Schedules.
EXHIBITS
The following exhibits are filed as part of this Annual Report, pursuant to Item 601 of Regulation S-K.
| Exhibit Number | Description of Exhibits | |
| 3.1 | Articles of Incorporation(1) | |
| 3.1.1 | Amended and Restated Articles of Incorporation(2) | |
| 3.2 | Bylaws(3) | |
| 4.1* | Certificate of Designations of Series A Preferred | |
| 10.1 | Consulting Agreement with Frontera Advisors(4) | |
| 10.2 | Share Exchange Agreement dated October 29, 2018(5) | |
| 10.3* | Amendment to Operating Agreement of Curved Rolling Papers, LLC dated January 4, 2016 | |
| 14.1 | Code of Ethics(6) | |
| 31.1* | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
| 31.2* | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
| 32.1* | Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
_______________________________
| ||
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE* | XBRL Taxonomy Presentation Linkbase | |
| * | Filed herewith. | |
| (1) | Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-206963) filed with the SEC on September 16, 2015, and incorporated herein by reference. | |
| (2) | Filed as an exhibit to the Registrant’s Form 8-K (File No. 333-206963) filed with the SEC on October 29, 2018, and incorporated herein by reference. | |
| (3) | Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-206963) filed with the SEC on September 16, 2015, and incorporated herein by reference. | |
| (4) | Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-206963) filed with the SEC on September 16, 2015, and incorporated herein by reference. | |
| (5) | Filed as an exhibit to the Registrant’s Form 8-K (File No. 333-206963) filed with the SEC on October 29, 2018, and incorporated herein by reference. | |
| (6) | Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-206963) filed with the SEC on September 16, 2015, and incorporated herein by reference. |
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Pursuant to the requirements of Section 13 or 15(d) 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.
| VIGILANT DIVERSIFIED HOLDINGS, INC. | |
| March 30, 2020 | /s/ Donald P. Hateley |
| Donald P. Hateley | |
| Chairman and Chief Executive Officer (Principal Executive Officer) and | |
| Chief Financial Officer (Principal Accounting and Financial Officer) |
In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| March 30, 2020 | /s/ Donald P. Hateley |
| Donald P. Hateley | |
| Chairman and Chief Executive Officer (Principal Executive Officer) and | |
| Chief Financial Officer (Principal Accounting and Financial Officer) and Sole Director |
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