This report contains certain forward-looking statements and information relating
to us that are based on the beliefs and assumptions made by our management as
well as information currently available to the management. When used in this
document, the words “anticipate,” “believe,” “estimate,” “expect,” and similar
expressions are intended to identify forward-looking statements. Such statements
reflect our current views with respect to future events and are subject to
certain risks, uncertainties, and assumptions. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, or expected.
General
Video River Networks, Inc. (“NIHK,” “PubCo” or “Company”), previously known as
Nighthawk Systems Inc., a Nevada corporation, used to be a provider of wireless
and IP-based control solutions for the utility and hospitality industries. On
October 29, 2019, Video River Networks, Inc. sold one (1) Special 2019 series A
preferred share (one preferred share is convertible 150,000,000 share of common
stocks) of the company for an agreed upon purchase price to Community Economic
Development Capital LLC, (“CED Capital”) a California limited liability company
CED. The Special preferred share controls 60% of the company’s total voting
rights and thus, gave to CED Capital the controlling vote power to control and
dominate the affairs of the company theretofor. Upon the closing of the
transaction, the business of CED Capital was merged into the Company and CED
Capital became a wholly owned subsidiary of the Company.
Following the completion of above mentioned transactions, the Company added real
estate operations to its business model and started devoting capital to real
estate holding operations for specialized assets including, affordable housing,
opportunity zones properties, medical real estate investments, industrial and
commercial real estate, and other real estate related services.
On June 10, 2020, the Company filed Form 10-12g, General Form for Registration
of Securities, which became effective on August 10, 2020, and as a result, the
Company is required to file all required SEC forms since August 10, 2020.
Environmental, Social and Governance (“ESG”)
We endeavor to provide a richly diverse work environment that employs the
highest performers, cultivates the best ideas and creates the widest possible
platform for success. We are committed to elevating and supporting the core
values of diversity and inclusion, “Total Well-Being” (which brings together
physical, financial, career, social and community well-being into a cohesive
whole), and environmental, social and governance (“ESG”), which includes
sustainability and social responsibility, by actively engaging in these areas.
Each member of the executive team maintains an annual goal related to these core
values, which is evaluated by the Company’s Board of Trustees. Our goal is to
create and sustain an inclusive environment where diversity will thrive,
employees will want to work and tenants will want. We are committed to providing
our employees with encouragement, guidance, time and resources to learn and
apply the skills required to succeed in their jobs. We provide many classroom
and on-line training courses to assist our employees in interacting with
prospects and tenants as well as extensive training for our customer service
specialists in maintaining our properties and improvements, equipment and
appliances. We actively promote from within and many senior corporate and
property leaders have risen from entry level or junior positions. We monitor our
employees’ engagement by surveying them annually and find most employees say
they are proud to work at the Company, value one another as colleagues, believe
in our mission and values and feel their skills meet their job requirements.
We have a commitment to sustainability and consider the environmental impacts of
our business activities. Sustainability and social responsibility are key
drivers of our focus on creating the best properties for tenants operate, work
and play. We have a dedicated in-house team that initiates and applies
sustainable practices in all aspects of our business, including investment
activities, development, property operations and property management activities.
With its high density, multifamily housing is, by its nature, an environmentally
friendly property type. Our recent acquisition and development activities have
been primarily concentrated in pedestrian-friendly urban and close-in suburban
locations near public transportation. When developing and renovating our
properties, we strive to reduce energy and water consumption by investing in
energy saving technology while positively impacting the experience of our
tenants and the value of our assets. We continue to implement a combination of
irrigation, lighting, HVAC and renewable energy improvements at our properties
that will reduce energy and water consumption. For 2020, we continue to have an
express company-wide goal for Total Well-Being, which includes enhanced ESG
efforts. Employees, including our executives, will have their performance
against our various Total Well – Being goals evaluated as part of our annual
performance review process.
41
On September 15, 2020, the Company spun-off its specialty real estate holding
business to an operating subsidiary and then pivot back to being a technology
company.
Subsequent to the above spinoff, the Company has now returned back to its
original technology-focused businesses of Power Controls, Battery Technology,
Wireless Technology, and Residential utility meters and remote, mission-critical
devices in addition to a primary focus of building a portfolio businesses and
assets and operations that source, design, develop, manufacture and distribute
affordable, high-performance fully electric vehicles in North America.
On April 21, 2021, Cannabinoid Biosciences, Inc. (“CBDX”), a California
corporation, was sold to Premier Information Management, Inc. for $1 in cash. As
further consideration pursuant to the stated sales, CBDX returned Kid Castle
Educational Inc., the parent Company of GMPW, the 100,000 shares of KDCE
preferred stock and 900,000,000 shares of KDCE common stock that CBDX bought in
October of 2019. Pursuant to the April 21, 2021 transaction, CBDX ceased from
being a subsidiary of GMPW, effective April 1, 2021.
On December 30, 2021, in exchange for the 87% control block held by Kid Castle
Educational Corporation, a subsidiary of Video River Networks, Inc. both of
which are publicly traded companies with ticker symbols KDCE and NIHK
respectively, GiveMePower sold Alpharidge Capital LLC to KDCE.
Going forward, the Company intends to focus its business model to operate and
manage a portfolio of Electric Vehicles, Artificial Intelligence, Machine
Learning and Robotics (“EV-AI-ML-R”) assets, businesses and operations in
addition to its Power Controls, Battery Technology, Wireless Technology, and
Residential utility meters and remote, mission-critical devices businesses in
North America.
Basis of Presentation
The following discussion and analysis are based on Video River Networks’
financial statements contained in this Current Report, which we have prepared in
accordance with United States generally accepted accounting principles.
Accompanying financial statements for Alpharidge Capital LLC fiscal year 2021
include a summary of our significant accounting policies and should be read in
conjunction with the discussion below. In the opinion of management, all
material adjustments necessary to present fairly the results of operations for
such periods have been included in these audited financial statements. All such
adjustments are of a normal recurring nature.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, in which the Company has a controlling voting interest and
entities consolidated under the variable interest entities (“VIE”) provisions of
ASC 810, “Consolidation” (“ASC 810”). Inter-company balances and transactions
have been eliminated upon consolidation.
ASC 810 requires that the investor with the controlling financial interest
should consolidate the investee/affiliate. ASC 810-10 requires that an equity
interest investor consolidates a VIE when it retains an investment in the
entity, is considered a variable interest investor in the entity, and is the
primary beneficiary of the entity. An investor in a VIE is a “variable interest
beneficiary” when, per an arrangement’s governing documents, the investor will
absorb a portion of the VIE’s expected losses or will receive a portion of the
entity’s “residual returns.” The variable interest beneficiary retaining a
controlling financial interest in the VIE is designated as its “primary
beneficiary” and must consolidate the VIE. A variable interest beneficiary
retains a “controlling financial interest” in a VIE when that beneficiary
retains the power to direct the activities of the VIE that have the greatest
influence over the VIE’s economic performance and retains an obligation to
absorb the VIE’s significant losses or the right to receive benefits from the
VIE that could potentially be significant to the VIE. Based on the ASC 810 test
above, Video River Network, Inc. is the primary beneficiary of Kid Castle
Educational Corporation (“VIE-2”), Kid Castle Educational Corporation is the
primary beneficiary of GiveMePower Corporation (the “VIE-1”) because Video River
retained a controlling financial interest in the VIE-2 and has the power to
direct the activities of the VIE-2, having the greatest influence over the
VIE-2’s economic performance and retains an obligation to absorb the VIE-2’s
significant losses and the right to determine and receive benefits from the
VIE-2. Similarly, Kid Castle Educational Corporation is the primary beneficiary
of GiveMePower Corporation (the “VIE-1”). Kid Castle retained a controlling
financial interest in the VIE-1 and has the power to direct the activities of
the VIE-1, having the greatest influence over the VIE-1’s economic performance
and retains an obligation to absorb the VIE-1’s significant losses and the right
to determine and receive benefits from the VIE-1.
Because GiveMePower Corporation is 88% controlled by Kid Castle Educational
Corporation, the consolidation rule requires that the Revenue, Assets and
Liabilities recognized and disclosed on the financial statements of GiveMePower
Corporation are also recognized and disclosed on the financial statements of Kid
Castle Educational Corporation pursuant to ASC 810.
42 Overview
General – Electric Vehicles (EV) Business
The Company’s Electric Vehicles (EV) business model is a newly created business
model created in the 3rd quarter of 2020, for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or
similar Business acquisition with one or more EV manufacturers and related
businesses, which we refer to throughout this prospectus as our EV Business
acquisition plan. We have not selected any specific EV Business acquisition
target and we have not, nor has anyone on our behalf, initiated any substantive
discussions, directly or indirectly, with any EV Business acquisition target. We
have generated no revenues to date and we do not expect that we will generate
operating revenues at the earliest until we consummate our initial EV Business
acquisition. While we may pursue an acquisition opportunity in the Electric
Vehicles, Artificial Intelligence, Machine Learning and Robotics (“EV-AI-ML-R”)
industry or sector, we intend to focus on: (1) businesses that source, design,
develop, manufacture and distribute high-performance, affordable and fully
electric vehicles; and (2) businesses that design, manufacture, install and sell
Power Controls, Battery Technology, Wireless Technology, and Residential utility
meters and remote, mission-critical devices mostly engineered using Artificial
Intelligence, Machine Learning and Robotic technologies.
Our management team is comprised of two business professionals that have a broad
range of experience in executive leadership, strategy development and
implementation, operations management, financial policy and corporate
transactions. Our management team members have worked together in the past, at
Goldstein Franklin, Inc. and other firms as executive leaders and senior
managers spearheading turnarounds, rollups and industry-focused consolidation
while generating shareholder value for many for investors and stakeholders.
We believe that our management team is well positioned to identify acquisition
opportunities in the marketplace. Our management team’s industry expertise,
principal investing transaction experience and business acumen will make us an
attractive partner and enhance our ability to complete a successful Business
acquisition. Our management believes that its ability to identify and implement
value creation initiatives has been an essential driver of past performance and
will remain central to its differentiated acquisition strategy.
Although our management team is well positioned and have experience to identify
acquisition opportunities in the marketplace, past performance of our management
team is not a guarantee either (i) of success with respect to any EV Business
acquisition we may consummate or (ii) that we will be able to identify a
suitable candidate for our initial EV Business acquisition. You should not rely
on the historical performance record of our management team as indicative of our
future performance. Additionally, in the course of their respective careers,
members of our management team have been involved in businesses and deals that
were unsuccessful. Our officers and directors have not had management experience
with EV companies in the past.
General – Real Estate Business
Our real estate operations has two lines of business: (1) promote and preserve
affordable housing and economic development across urban neighborhoods in the
United States; and (2) acquire, hold and manage specialized assets. To achieve
our objectives, we plan to acquire, own, renovate, develop, redevelop, operate,
dispose of, and manage specialized assets including industrial and commercial
real estate, affordable housing and rental property and multi-family properties
both on our own and through our investment management platform. We focus
primarily on commercial and multifamily properties located in urban and
high-density suburban markets throughout the United States. Our real estate
platform is internally managed with primarily focused on: (1) the acquisition,
ownership and management of specialized industrial properties; and (2)
ownership, operation and development of multi-family affordable housing
properties.
Our Business Plan
Returning back to its foremost business model of technology focused operations,
Video River Networks, Inc. (the “Company”), a technology firm intends to operate
and manage a portfolio of Electric Vehicles, Artificial Intelligence, Machine
Learning and Robotics (“EV-AI-ML-R”) assets, businesses and operations in North
America. The Company’s current targeted portfolio businesses include those that
source, design, develop, manufacture and distribute high-performance, affordable
and fully electric vehicles; and design, manufacture, install and sell Power
Controls, Battery Technology, Wireless Technology, and Residential utility
meters and remote, mission-critical devices mostly engineered using Artificial
Intelligence, Machine Learning and Robotic technologies.
43
Our current technology-focused business model was a result of our board
resolution on September 15, 2020 to spin-in our specialty real estate holding
business to an operating subsidiary and then pivot back to being a technology
company. The Company has now returned back to its original technology-focused
businesses of Power Controls, Battery Technology, Wireless Technology, and
Residential utility meters and remote, mission-critical devices. In addition to
above list, the Company intends to spread its wings into the Electric Vehicles,
Artificial Intelligence, Machine Learning and Robotics (“EV-AI-ML-R”)
businesses/markets, targeting acquisition, ownership and operation of acquired
EV-AI-ML-R businesses or portfolio of EV-AI-ML-R businesses.
Video River Networks, Inc., prior to September 15, 2020, used to be a specialty
real estate holding company, focuses on the acquisition, ownership, and
management of specialized industrial properties. The Company’s real estate
business objective is to maximize stockholder returns through a combination of
(1) distributions to our stockholders, (2) sustainable long-term growth in cash
flows from increased rents, which we hope to pass on to stockholders in the form
of increased distributions, and (3) potential long-term appreciation in the
value of our properties from capital gains upon future sale. As a real estate
holding company, the Company is engaged primarily in the ownership, operation,
management, acquisition, development and redevelopment of predominantly
multifamily housing and specialized industrial properties in the United States.
Having partially freed itself from the day-to-day operation of the real estate
operations, the Company now returns to its technology root with a primary
purpose of acquiring Electric Vehicles manufacturer or doing a joint venture
(JV) with Electric Vehicles businesses that source, design, develop, manufacture
and distribute high-performance, affordable and fully electric vehicles; and
design, manufacture, install and sell Power Controls, Battery Technology,
Wireless Technology, and Residential utility meters and remote, mission-critical
devices mostly engineered using Artificial Intelligence, Machine Learning and
Robotic technologies.
Business Strategy and Deal Origination
We have not finalized an acquisition target yet, but making progress in
identifying several potential candidates from which we intend to pick those that
meet our criteria for acquisition. Our acquisition and value creation strategy
will be to identify, acquire and, after our initial EV Business acquisition,
build an EV company that source, design, develop, manufacture and distribute
high-performance, affordable and fully electric vehicles that suit the
experience of our management team and can benefit from their operational
expertise. Our Business acquisition strategy will leverage our management team’s
network of potential transaction sources, where we believe a combination of our
relationships, knowledge and experience could effect a positive transformation
or augmentation of existing businesses to improve their overall value
proposition.
Our management team’s objective is to generate attractive returns and create
value for our shareholders by applying our disciplined strategy of underwriting
intrinsic worth and implementing changes after making an acquisition to unlock
value. While our approach is focused on the EV-AI-ML-R industries where we have
differentiated insights, we also have successfully driven change through a
comprehensive value creation plan framework. We favor opportunities where we can
accelerate the target’s growth initiatives. As a management team we have
successfully applied this approach over approximately 16 years and have deployed
capital successfully in a range of market cycles.
We plan to utilize the network and Finance industry experience of our Chief
Executive Officer and our management team in seeking an initial EV Business
acquisition and employing our Business acquisition strategy described below. Our
CEO is a top financial professional with designations that include, CPA, CMA,
and CFM. He’s very knowledgeable in the fields of corporate law, real estate,
lending, turnarounds and restructuring. Over the course of their careers, the
members of our management team have developed a broad network of contacts and
corporate relationships that we believe will serve as a useful source of EV
acquisition opportunities. This network has been developed through our
management team’s extensive experience:
? investing in and operating a wide range of businesses;
? growing brands through repositioning, increasing household penetration and
geographic expansion; expanding into new distribution channels, such as
e-Commerce, in an increasingly omni-channel world;
? identifying lessons learned and applying solutions across product portfolios
and channels;
? sourcing, structuring, acquiring, operating, developing, growing, financing
and selling businesses;
? developing relationships with sellers, financing providers, advisors and
target management teams; and
? executing transformational transactions in a wide range of businesses under
varying economic and financial market conditions.
44
In addition, drawing on their extensive investing and operating experience, our
management team anticipates tapping four major sources of deal flow:
? directly identifying potentially attractive undervalued situations through
primary research into EV industries and companies;
? receiving information from our management team’s global contacts about a
potentially attractive situation;
? leads from investment bankers and advisors regarding businesses seeking a
combination or added value that matches our strengths; and
? inbound opportunities from a company or existing stakeholders seeking a
combination, including corporate divestitures.
We expect this network will provide our management team with a robust flow of EV
acquisition opportunities. In addition, we anticipate that target EV Business
candidates will be brought to our attention by various unaffiliated sources,
which may include investment market participants, private equity groups,
investment banking firms, consultants, accounting firms and large business
enterprises. Upon completion of this offering, members of our management team
will communicate with their network of relationships to articulate the
parameters for our search for a target company and a potential Business
acquisition and begin the process of pursuing and reviewing potential leads.
Acquisition/Business acquisition Criteria
Consistent with this strategy, we have identified the following general criteria
and guidelines that we believe are important in evaluating prospective target EV
businesses. We will use these criteria and guidelines in evaluating acquisition
opportunities. While we intend to acquire EV companies that we believe exhibit
one or more of the following characteristics, we may decide to enter into our
initial EV Business acquisition with a target EV business that does not meet
these criteria and guidelines. We intend to acquire EV companies that source,
design, develop, manufacture and distribute high-performance, affordable and
fully electric vehicles:
? have potential for significant growth, or can act as an attractive EV
acquisition platform, following our initial EV Business acquisition;
? have demonstrated market segment, category and/or cost leadership and would
benefit from our extensive network and insights;
? provide operational platform and/or infrastructure for variety of EV models
and/or services, with the potential for revenue, market share, footprint and/or
distribution improvements;
? are at the forefront of EV evolution around changing consumer trends;
? offer marketing, pricing and product mix optimization opportunities across
distribution channels;
? are fundamentally sound companies that could be underperforming their potential
and/or offer compelling value;
? offer the opportunity for our management team to partner with established
target management teams or business owners to achieve long-term strategic and
operational excellence, or, in some cases, where our access to accomplished
executives and the skills of the management of identified targets warrants
replacing or supplementing existing management;
? exhibit unrecognized value or other characteristics, desirable returns on
capital and a need for capital to achieve the company’s growth strategy, that
we believe have been misevaluated by the marketplace based on our analysis and
due diligence review; and
? will offer an attractive risk-adjusted return for our shareholders.
These criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular initial EV Business acquisition may be based, to the
extent relevant, on these general guidelines as well as other considerations,
factors and criteria that our management may deem relevant. In the event that we
decide to enter into our initial EV Business acquisition with a target EV
Business that does not meet the above criteria and guidelines, we will disclose
that the target EV Business does not meet the above criteria in our shareholder
communications related to our initial EV Business acquisition.
45
Acquisition/Business acquisition Process
In evaluating a prospective target EV business, we expect to conduct a thorough
due diligence review that will encompass, among other things, meetings with
incumbent management and employees, document reviews, inspection of EV
manufacturing facilities, as well as a review of financial and other
information. We will also utilize our operational and capital allocation
experience.
In order to execute our business strategy, we intend to:
Assemble a team of EV industry and financial experts: For each potential
transaction, we intend to assemble a team of EV industry and financial experts
to supplement our management’s efforts to identify and resolve key issues facing
a target EV Business. We intend to construct an operating and financial plan
that optimizes the potential to grow shareholder value. With extensive
experience investing in both healthy and underperforming businesses, we expect
that our management will be able to demonstrate to the target EV business and
its stakeholders that we have the resources and expertise to lead the combined
company through complex and potentially turbulent market conditions and provide
the strategic and operational direction necessary to grow the business in order
to maximize cash flows and improve the overall strategic prospects for the
company.
Conduct rigorous research and analysis: Performing disciplined, fundamental
research and analysis is core to our strategy, and we intend to conduct
extensive due diligence to evaluate the impact that a transaction may have on a
target EV Business.
Business acquisition driven by trend analysis: We intend to understand the
underlying purchase and industry behaviors that would enhance a potential
transaction’s attractiveness. We have extensive experience in identifying and
analyzing evolving industry and consumer trends, and we expect to perform macro
as well as bottoms-up analysis on consumer and industry trends.
Acquire the target company at an attractive price relative to our view of
intrinsic value: Combining rigorous analysis as well as input from industry and
financial experts, our management team intends to develop its view of the
intrinsic value of a potential Business acquisition. In doing so, our management
team will evaluate future cash flow potential, relative industry valuation
metrics and precedent transactions to inform its view of intrinsic value, with
the intention of creating a Business acquisition at an attractive price relative
to its view of intrinsic value.
Implement operational and financial structuring opportunities: Our management
team has the ability to structure and execute a Business acquisition that will
establish a capital structure that will support the growth in shareholder value
and give it the flexibility to grow organically and/or through strategic
acquisitions. We intend to also develop and implement strategies and initiatives
to improve the business’ operational and financial performance and create a
platform for growth.
Seek strategic acquisitions and divestitures to further grow shareholder value:
Our management team intends to analyze the strategic direction of the company,
including evaluating potential non-core asset sales to create financial and/or
operational flexibility for the company to engage in organic and/or inorganic
growth. Our management team intends to evaluate strategic opportunities and
chart a clear path to take the EV business to the next level after the Business
acquisition.
46
After the initial EV Business acquisition, our management team intends to apply
a rigorous approach to enhancing shareholder value, including evaluating the
experience and expertise of incumbent management and making changes where
appropriate, examining opportunities for revenue enhancement, cost savings,
operating efficiencies and strategic acquisitions and divestitures and
developing and implementing corporate strategies and initiatives to improve
profitability and long-term value. In doing so, our management team anticipates
evaluating corporate governance, opportunistically accessing capital markets and
other opportunities to enhance liquidity, identifying acquisition and
divestiture opportunities and properly aligning management and board incentives
with growing shareholder value. Our management team intends to pursue
post-merger initiatives through participation on the board of directors, through
direct involvement with company operations and/or calling upon a stable of
former managers and advisors when necessary.
Strategic Approach to Management. We intend to approach the management of a
company as strategy consultants would. This means that we approach business with
performance-based metrics based on strategic and operational goals, both at the
overall company level and for specific divisions and functions.
Corporate Governance and Oversight. Active participation as board members can
include many activities ranging from conducting monthly or quarterly board
meetings to chairing standing (compensation, audit or investment committees) or
special committees, replacing or supplementing company management teams when
necessary, adding outside directors with industry expertise which may or may not
include members of our own board of directors, providing guidance on strategic
and operational issues including revenue enhancement opportunities, cost
savings, brand repositioning, operating efficiencies, reviewing and testing
annual budgets, reviewing acquisitions and divestitures and assisting in the
accessing of capital markets to further optimize financing costs and fund
expansion.
Direct Operational Involvement. Our management team members, through ongoing
board service, intend to actively engage with company management. These
activities may include: (i) establishing an agenda for management and instilling
a sense of accountability and urgency; (ii) aligning the interest of management
with growing shareholder value; (iii) providing strategic planning and
management consulting assistance, particularly in regards to re-invested capital
and growth capital in order to grow revenues, achieve more optimal operating
scale or eliminate costs; (iv) establishing measurable key performance metrics;
and (v) complementing product lines and brands while growing market share in
attractive market categories. These skill sets will be integral to shareholder
value creation.
M&A Expertise and Add-On Acquisitions. Our management team has expertise in
identifying, acquiring and integrating synergistic, margin-enhancing and
transformational businesses. We intend to, wherever possible, utilize M&A as a
strategic tool to strengthen the financial profile of an EV business we acquire,
as well as its competitive positioning. We would seek to enter into accretive
Business acquisitions where our management team or an acquired company’s
management team can seamlessly transition to working together as one
organization and team.
Access to Portfolio Company Managers and Advisors. Through their combined 32+
year history of investing in and controlling businesses, our management team
members have developed strong professional relationships with former company
managers and advisors. When appropriate, we intend to bring in outside
directors, managers or consultants to assist in corporate governance and
operational turnaround activities. The use of supplemental advisors should
provide additional resources to management to address time intensive issues that
may be delaying an organization from realizing its full potential shareholder
returns.
Our acquisition criteria, due diligence processes and value creation methods are
not intended to be exhaustive. Any evaluation relating to the merits of a
particular initial EV Business acquisition may be based, to the extent relevant,
on these general guidelines as well as other considerations, factors and
criteria that our management may deem relevant. In the event that we decide to
enter into our initial EV Business acquisition with a target EV Business that
does not meet the above criteria and guidelines, we will disclose that the
target EV Business does not meet the above criteria in our shareholder
communications related to our initial EV Business acquisition, which, as
discussed in this prospectus, would be in the form of tender offer documents or
proxy solicitation materials that we would file with the SEC.
47
Sourcing of Potential Business acquisition Targets
We believe that the operational and transactional experience of our management
team and their respective affiliates, and the relationships they have developed
as a result of such experience, will provide us with a substantial number of
potential Business acquisition targets. These individuals and entities have
developed a broad network of contacts and corporate relationships around the
world. This network has grown through sourcing, acquiring and financing
businesses and maintaining relationships with sellers, financing sources and
target management teams. Our management team members have significant experience
in executing transactions under varying economic and financial market
conditions. We believe that these networks of contacts and relationships and
this experience will provide us with important sources of investment
opportunities. In addition, we anticipate that target EV Business candidates may
be brought to our attention from various unaffiliated sources, including
investment market participants, private equity funds and large business
enterprises seeking to divest noncore assets or divisions.
Other Acquisition Considerations
We are not prohibited from pursuing an initial EV Business acquisition with a
company that is affiliated with our sponsor, officers or directors. In the event
we seek to complete our initial EV Business acquisition with a company that is
affiliated with our officers or directors, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm or
another independent firm that commonly renders valuation opinions for the type
of company we are seeking to acquire or an independent accounting firm that our
initial EV Business acquisition is fair to our company from a financial point of
view.
Unless we complete our initial EV Business acquisition with an affiliated
entity, or our Board of Directors cannot independently determine the fair market
value of the target EV Business or businesses, we are not required to obtain an
opinion from an independent investment banking firm, another independent firm
that commonly renders valuation opinions for the type of company we are seeking
to acquire or from an independent accounting firm that the price we are paying
for a target is fair to our company from a financial point of view. If no
opinion is obtained, our shareholders will be relying on the business judgment
of our Board of Directors, which will have significant discretion in choosing
the standard used to establish the fair market value of the target or targets,
and different methods of valuation may vary greatly in outcome from one another.
Such standards used will be disclosed in our tender offer documents or proxy
solicitation materials, as applicable, related to our initial EV Business
acquisition.
Members of our management team may directly or indirectly own our ordinary
shares and/or private placement warrants following this offering, and,
accordingly, may have a conflict of interest in determining whether a particular
target EV Business is an appropriate business with which to effectuate our
initial EV Business acquisition. Further, each of our officers and directors may
have a conflict of interest with respect to evaluating a particular Business
acquisition if the retention or resignation of any such officers and directors
was included by a target EV Business as a condition to any agreement with
respect to our initial EV Business acquisition.
In the future any of our directors and our officers may have additional,
fiduciary or contractual obligations to other entities pursuant to which such
officer or director is or will be required to present acquisition opportunities
to such entity. Accordingly, subject to his or her fiduciary duties, if any of
our officers or directors becomes aware of an acquisition opportunity which is
suitable for an entity to which he or she has then current fiduciary or
contractual obligations, he or she will need to honor his or her fiduciary or
contractual obligations to present such acquisition opportunity to such entity,
and only present it to us if such entity rejects the opportunity. We do not
believe, however, that any fiduciary duties or contractual obligations of our
directors or officers would materially undermine our ability to complete our
Business acquisition.
48 Plan of Operations
While our major focus is to find, acquire and manage an EV business, our real
estate portfolio is still alive and must figure in our plan of operation. In the
next twelve months, we plan on buying rehabilitating and selling up to six
properties and adding the net proceeds obtained from the sales to finance our
acquisition business plan.
The Company will continue to evaluate its projected expenditures relative to its
available cash and to seek additional means of financing in order to satisfy the
Company’s working capital and other cash requirements.
Upon completion of the acquisition of an Electric Vehicles manufacturer or doing
a joint venture (JV) with Electric Vehicles businesses that source, design,
develop, manufacture and distribute high-performance, affordable and fully
electric vehicles, our strategy will subsequently include distribution of the
electric vehiclesand related product lines to retailers and consumers across
North America.
Critical Accounting Policies, Estimates and New Accounting Pronouncements
Management’s discussion and analysis of its financial condition and plan of
operations is based upon 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 that we make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. At each balance sheet date, management evaluates its estimates. We
base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions. The
estimates and critical accounting policies that are most important in fully
understanding and evaluating our financial condition and results of operations
include those stated in our financial statements and those listed below:
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, we had zero cash flows from operations for the twelve months ended
December 31, 2022 and 2021 These conditions raise substantial doubt as to our
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary if we are unable to continue as a going
concern. Management intends to finance these deficits by making additional
shareholder notes and seeking additional outside financing through either debt
or sales of its Common Stock.
Recently Adopted Accounting Standards
Leases
In February 2016, the FASB issued ASU 2016-02, “Leases” that requires for leases
longer than one year, a lessee to recognize in the statement of financial
condition a right·of·use asset, representing the right to use the underlying
asset for the lease term, and a lease liability, representing the liability to
make lease payments. The accounting update also requires that for finance
leases, a lessee recognize interest expense on the lease liability, separately
from the amortization of the right-of-use asset in the statements of earnings,
while for operating leases, such amounts should be recognized as a combined
expense. In addition, this accounting update requires expanded disclosures about
the nature and terms of lease agreements. The Company has reviewed the new
standard and does not expect it to have a material impact to the statement of
financial condition or its net capital. The adoption of this guidance resulted
in no significant impact to our results of operations or cash flows.
Revenue Recognition
The Company recognizes revenue in accordance with the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue
from Contracts with Customers, which requires that five basic steps be followed
to recognize revenue: (1) a legally enforceable contract that meets criteria
standards as to composition and substance is identified; (2) performance
obligations relating to provision of goods or services to the customer are
identified; (3) the transaction price, with consideration given to any variable,
noncash, or other relevant consideration, is determined; (4) the transaction
price is allocated to the performance obligations; and (5) revenue is recognized
when control of goods or services is transferred to the customer with
consideration given, whether that control happens over time or not.
Determination of criteria (3) and (4) are based on our management’s judgments
regarding the fixed nature of the selling prices of the products and services
delivered and the collectability of those amounts. The adoption of ASC 606 did
not result in a change to the accounting for any of the in-scope revenue
streams; as such, no cumulative effect adjustment was recorded.
49
The Company generates revenue primarily from: (1) the sale of homes/properties;
(2) commissions and fees charged on each real estate services transaction closed
by our lead agents or partner agents; (3) principal transactions from sales of
trading securities, less original purchase cost; and (4)Entrepreneurship
Development Initiative Revenue. Principal transaction is net trading revenues
consisting primarily of revenues from trading securities earned upon completion
of trade, net of any trading fees. A trading is completed when earned and
recognized at a point in time, on a trade-date basis, as the Company executes
trades. The Company records trading revenue on a net basis, trading sales less
original purchase cost. Net realized gains and losses from securities
transactions are determined for federal income tax and financial reporting
purposes on the first-in, first-out method and represent proceeds on disposition
of investments less the cost basis of investments. Sale of real estate
properties are recognized at the sales price/amount and the total cost
(including cost of rehabilitation) associated with the property acquisition and
rehabilitation are classified in Cost of Goods Sold (COGS).
Entrepreneurship Development Initiative Revenue:
Alpharidge Capital LLC, an operating subsidiary of the Company operates an
Entrepreneurship Development Initiative through which it acquires abandoned
shell companies that are listed on the OTC expert market with the goal of
cleaning them up and deploying them into the capital markets for possible
merger/acquisition to small businesses that are looking for vehicles to help
boost their businesses and create jobs for their family and friends.
Alpharidge’s process flows as follows: (1) The acquisition of control of
abandoned shell/pubco through cash-purchase of custodianship process. All
shells/pubcos acquired are held in the name of Alpharidge or one of its
affiliates; (2) Alpharidge cleanse and revives the shell/pubcos; (3) Alpharidge
issues control-block-shares of the pubco to CED Capital an affiliate company, to
hold in trust for Alpharidge. (4) CED sells the control-block-shares of the
pubco to buyers in exchange for cash or notes. The cash component goes to
Alpharidge immediately, while the note is simultaneously assigned to Alpharidge;
and (5) Alpharidge releases control of the pubco to the new buyer and recognize
the revenue from the sale done on its behalf by CED Capital. As at December 31,
2022 the Company recognized $4,850,408 in Entrepreneurship Development
Initiative Revenue consisting of $4,655,033 from shell/pubco sales and $195,376
from accrued interest.
Income Taxes
The provision for income taxes is computed using the asset and liability method,
under which deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial reporting
and tax bases of assets and liabilities, and for operating losses and tax credit
carry-forwards. Deferred tax assets and liabilities are measured using the
currently enacted tax rates that apply to taxable income in effect for the years
in which those tax assets are expected to be realized or settled. We record a
valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.
Loss Contingencies
Consistent with ASC 450-20-50-1C, if the Company determines that there is a
reasonable possibility that a material loss may have been incurred, or is
reasonably estimable, regardless of whether the Company accrued for such a loss
(or any portion of that loss), the Company will confer with its legal counsel,
consistent with ASC 450. If the material loss is determinable or reasonably
estimable, the Company will record it in its accounts and as a liability on the
balance sheet. If the Company determines that such an estimate cannot be made,
the Company’s policy is to disclose a demonstration of its attempt to estimate
the loss or range of losses before concluding that an estimate cannot be made,
and to disclose it in the notes to the financial statements under Contingent
Liabilities.
Net Income (Loss) Per Common Share
Basic net loss per common share (“EPS”) is computed by dividing loss available
to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share is computed by dividing
net income by the weighted average shares outstanding, assuming all dilutive
potential common shares were issued. Dilutive loss per share excludes all
potential common shares if their effect is anti-dilutive.
Except for the October 29, 2019 transaction in which the company sold one (1)
Special 2019 series A preferred share (one preferred share is convertible
150,000,000 share of common stocks) to Community Economic Development Capital
LLC, no other potentially dilutive debt or equity instruments were issued or
outstanding during the years ended December 31, 2022 and 2021.
50 Related Party Transactions
We follow ASC subtopic 850-10, “Related Party Transactions,” for the
identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) affiliates of the
Company; b) entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d) principal owners of the Company; e) management of the Company; f)
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
Material related party transactions are required to be disclosed in the
financial statements, other than compensation arrangements, expense allowances,
and other similar items in the ordinary course of business. However, disclosure
of transactions that are eliminated in the preparation of or combined financial
statements is not required in those statements. The disclosures shall include:
a) the nature of the relationship(s) involved; b) a description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which statements of operation are
presented, and such other information deemed necessary to an understanding of
the effects of the transactions on the financial statements; c) the dollar
amounts of transactions for each of the periods for which statements of
operations are presented and the effects of any change in the method of
establishing the terms from that used in the preceding period; and d) amounts
due from or to related parties as of the date of each balance sheet presented
and, if not otherwise apparent, the terms and manner of settlement.
A related party is generally defined as (i) any person that holds 10% or more of
our membership interests including such person’s immediate families, (ii) our
management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with us, or (iv) anyone who can significantly
influence our financial and operating decisions. A transaction is considered to
be a related party transaction when there is a transfer of resources or
obligations between related parties.
Results of Operations
Comparison of Fiscal Years 2022 and 2021
Our financial statements are prepared using accounting principles generally
accepted in the United States of America applicable to a going concern, which
contemplates the realization of assets and the liquidation of liabilities in the
normal course of business.
Revenues – We are generating substantially all our revenue from entrepreneurship
development initiative, principal transactions in proprietary trading operation,
and interest accrual on EDI Notes. For the year ended December 31, 2022, revenue
from entrepreneurship development initiative was $4,655,033, net revenue from
principal transactions was $(983,869), and EDI interest revenue of $195,376 for
total revenue of $3,866,539. Compared to revenue from entrepreneurship
development initiative was $146,000 and revenue from principal transactions was
$7,331,882 for total revenue of $7,477,882 for the year ended December 31, 2021.
Operating Expenses – Operating expense was $1,734,148 and $309,963 for the years
ended December 31, 2022 and 2021 respectively. Operating expense consists of
costs related to the establishment of corporate governance; and costs associated
with our plans and preparations for a future potential capital raise. These
expenses also include the costs of conducting market research, attending and/or
participating in industry conferences and seminars, business development
activities, and professional fees, other general business outside consulting
activities. Operating expense also includes travel costs, for third-party
consultants, legal and accounting fees and other professional and administrative
costs.
Net Income (Loss) – Net Income for the year ended December 31, 2022 was $767,121
compared to Net Income of $2,206,953 for the year ended December 31, 2021.
Accumulated Deficit – As at December 31, 2022, we have accumulated deficit of
$16,394,409 compared to accumulated deficit of $17,159,878 as at December 31,
2021.
51
Liquidity and Capital Resources
Cash and Cash Equivalent – As at December 31, 2022, we had $64,579 cash on hand
compared to $701,042 in cash as at December 31, 2021.
Other Current Assets – Inventory and Receivables – As at December 31, 2022, we
had $143,198 in account receivable compared to $446,050 as at December 31, 2021.
Related parties liabilities – As at December 31, 2022, we had $419,979 balance
from advances from related compared to $588,859 as at December 31, 2021.
Liquidity and Capital Resources
As of December 31, 2022, we had $64,579 cash on hand compared to $701,042 as at
December 31, 2021. We anticipate that our cash position is sufficient to fund
current operations. We believe that our capital resources, including cash on
hand, cash generated from operations, and available capacity on our credit
facility, will provide us with sufficient liquidity to meet our strategic
objectives, maintain current operations and execute the capital program for the
next 12 months and beyond, given current oil price trends and production levels.
In accordance with our investment policy, available cash balances are held in
our primary cash management banks or tradable securities for short-term
liquidity. We believe that our current financial position provides us the
flexibility to respond to both internal growth opportunities and those available
through acquisitions.
Since 2019, all of our operations have been financed through advances from a
company controlled by our president and CEO. As of December 31, 2022, the
company controlled by our president and CEO has loaned operating capital,
pursuant to a Line of Credit Agreements to advance or loan any additional funds
to us in the future. We have not yet achieved significant profitability. We
expect that our general and administrative expenses will continue to increase
and, as a result, we will need to generate significant revenues to achieve
significant profitability. We may never achieve significant profitability.
Future financing of our operation depends largely on our controlling
shareholder, Mr. Igwealor, advancing most or all of our operating budget.
We will now be obligated to file annual, quarterly and current reports with the
SEC pursuant to the Exchange Act. In addition, the Sarbanes-Oxley Act of 2002
(“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the
Public Company Accounting Oversight Board have imposed various requirements on
public companies, including requiring changes in corporate governance practices.
We expect these rules and regulations to increase our legal and financial
compliance costs and to make some activities of ours more time- consuming and
costly. In order to meet the needs to comply with the requirements of the
Securities Exchange Act, we will need investment of capital.
Management has determined that additional capital will be required in the form
of equity or debt securities. There is no assurance that management will be able
to raise capital on terms acceptable to the Company. If we are unable to obtain
sufficient amounts of additional capital, we may have to cease filing the
required reports and cease operations completely. If we obtain additional funds
by selling any of our equity securities or by issuing common stock to pay
current or future obligations, the percentage ownership of our shareholders will
be reduced, shareholders may experience additional dilution, or the equity
securities may have rights preferences or privileges senior to the common stock.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not engage in any off-balance sheet arrangements
as defined in Item 303(a)(4) of Regulation S-K promulgated by the SEC under the
Securities Exchange Act of 1934.
Contractual Obligations Not applicable. 52
Plan of Operation for the Next Twelve (12) Months
While our major focus is to find, acquire and manage an EV business, our real
estate portfolio is still alive and must figure in our plan of operation. In the
next twelve months, we plan on buying rehabilitating and selling four to six
properties and adding the net proceeds obtained from the sales to the to finance
our electric vehicles business plan.
The Company will continue to evaluate its projected expenditures relative to its
available cash and to seek additional means of financing in order to satisfy the
Company’s working capital and other cash requirements.
Upon completion of the acquisition of an Electric Vehicles manufacturer or doing
a joint venture (JV) with Electric Vehicles businesses that source, design,
develop, manufacture and distribute high-performance, affordable and fully
electric vehicles, our strategy will subsequently include distribution of the
electric vehiclesand related product lines to retailers and consumers across
North America.
NIHK currently own zero real property in Los Angeles County.
Using the real properties as collateral, we believe that we could always obtain
the capital needed to complete the rehabilitation of these three properties.
Although there is no assurance that we would be able to put the three properties
to good use such as renting them our to tenants. If we are unable to put them to
productive use, we would be forced to sell them and use the money generated from
the sales to pay off the loans used to acquire them.
To effectively fund our business plan, we must raise additional capital. But
there can be no assurance that we will be able to raise the capital necessary to
acquire, own or hold these specialized real properties. Moreover, there can be
no assurance that we will be able to raise the capital necessary to execute our
business plan and also to acquire, own or hold specialized real properties.
Our operations will be conducted on five platforms comprising of: (1)
specialized real properties; and (2) affordable housing real estate operation.
Within the next twelve months, we intend to use income generated from our three
properties to hire employees that would help us to raise capital to build our
company.
We intend to implement the following tasks within the next twelve months:
1. Month 1-3: Phase 1 (1-3 months in duration; purchase and rehabilitation of
three properties and put them to good use)
a. Identify 3 properties to acquire
b. Sign purchase agreement with the sellers of the 3 properties identified above;
c. Acquire and consolidate the revenue from those 3 properties.
2. Month 3-6 Phase 2 (1-3 months in duration; cost control, process improvements,
admin & mngt.).
a. Integrate acquired properties into NIHK’s model – consolidate the management
of the properties including integration of their accounting and finance
systems, synchronization of their operating systems, and harmonization of
their human resources functions.
b. Complete and file quarterly reports and other required filings for the quarter
3. Month 6-9: Phase 3 (1-3 months in duration; $5 million in estimated fund
receipt)
a. Identify and acquire 4 specialized properties that are complementary/similar
properties or assets in the target market
4. Month 9-12: Phase 4 (1-3 months duration; use acquired businesses’ free cash
flow for more acquisitions)
a. Run the businesses efficiently, giving employees a conducive and friendly
workplace and add value to investors and shareholders by identifying and
reducing excesses and also identifying and executing growth strategies
b. Acquire 4 more properties especially in regions where RE is at or below their
book-value.
5. Operating expenses during the twelve months would be as follows:
a. For the six months through June 30, 2023, we anticipate to incur general and
other operating expenses of $238,000.
b. For the six months through December 31, 2023 we anticipate to incur additional
general and other operating expenses of $328,000.
53
As noted above, the execution of our current plan of operations requires us to
raise significant additional capital immediately. If we are successful in
raising capital through the sale of shares offered for sale in this Filing we
believe that the Company will have sufficient cash resources to fund its plan of
operations for the next twelve months. If we are unable to do so, our ability to
continue as a going concern will be in jeopardy, likely causing us to curtail
and possibly cease operations.
We continually evaluate our plan of operations discussed above to determine the
manner in which we can most effectively utilize our limited cash resources. The
timing of completion of any aspect of our plan of operations is highly dependent
upon the availability of cash to implement that aspect of the plan and other
factors beyond our control. There is no assurance that we will successfully
obtain the required capital or revenues, or, if obtained, that the amounts will
be sufficient to fund our ongoing operations. The inability to secure additional
capital would have a material adverse effect on us, including the possibility
that we would have to sell or forego a portion or all of our assets or cease
operations. If we discontinue our operations, we will not have sufficient funds
to pay any amounts to our stockholders.
Even if we raise additional capital in the near future, if our current business
plan is not successfully executed, our ability to fund our biopharmaceutical
research and development, or our financial product deployment and services
efforts would likely be seriously impaired.
Because our working capital requirements depend upon numerous factors there can
be no assurance that our current cash resources will be sufficient to fund our
operations. At present, we have no committed external sources of capital, and do
not expect any significant product revenues for the foreseeable future. Thus, we
will require immediate additional financing to fund future operations. There can
be no assurance, however, that we will be able to obtain funds on acceptable
terms, if at all.
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