ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, our expectations regarding future financial performance and liquidity, our long-term strategy, restructuring and other initiatives, and future operations or operating results. These statements often can be identified by the use of terms such as “may,” “should,” “could,” “will," “expect,” “believe,” “planned,” “anticipate,” “estimate,” “project,” “intend,” “forecast,” “approximate” or “continue,” or similar expressions. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, we cannot assure that actual results will not differ materially from our expectations. We assume no responsibility to update forward-looking statements made herein or otherwise.
Unless the context requires otherwise, references to “we,” “us,” “our” and “the Company” refer to Agro Capital Management Corp.
GENERAL
Corporate Background
Agro Capital Management Corp. was incorporated in the State of Nevada on November 12, 2013 under the name Guate Tourism Inc. Until September 11, 2015, we operated an online tourist guide company in Guatemala. On September 11, 2015, our then largest shareholder, Ms. Blanca Bamaca, entered into a Stock Purchase Agreement with certain third party investors, whereby Ms. Bamaca sold 6 million shares of our common stock held by her, representing at the time 82.8% of our issued and outstanding shares of common stock. Upon completion of the sale, we abandoned our business plan and sought an operating company with which to merge or to acquire. On October 29, 2015, Guate Tourism Inc. conducted a statutory merger with its wholly-owned subsidiary, Agro Capital Management Corp. The subsidiary was not an operating company and held no assets. Guate Tourism Inc., as the surviving entity, changed its name in connection therewith to Agro Capital Management Corp. We also amended our Articles of Incorporation to increase our authorized number of shares of common stock from 75 million to 300 million and to increase our total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of ten shares for every one share then issued and outstanding.
On December 31, 2015, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Capital Epitome Sdn Bhd, a private Malaysian corporation (“Capital Epitome”), and Mr. Mohd Nasir Bin Baba, a Malaysian citizen (“Mr. Nasir”), whereby we agreed to issue 30 million shares of its common stock in exchange for all of the issued and outstanding capital stock of Agro Capital Management Berhad, a Malaysian corporation (“Agro Malaysia”).
On September 19, 2016, we, Capital Epitome and Mr. Nasir rescinded the Share Exchange Agreement (the “Mutual Rescission”) due to, among other reasons, the lack of currently available information regarding Agro Malaysia necessary for us to complete a full financial audit of Agro Malaysia for the two prior fiscal years. In connection with the rescission of the Share Exchange Agreement, we returned all of the shares of Agro Malaysia held by us to Capital Epitome and Mr. Nasir and, simultaneously, Capital Epitome and Mr. Nasir returned all of the shares of the Company held by them to us for cancellation.
Mr. Michael Xavier Dorairaj and Mr. Michael Marcus Liew are former directors of Capital Epitome. At the time of the Share Exchange Agreement and the Mutual Rescission, Mr. Michael Xavier Dorairaj and Mr. Michael Marcus Liew, two of our directors, were not directors of Capital Epitome.
On August 21, 2017, we effected a one-for-four reverse stock split of our common stock.
Business Overview
Agro Capital Management Corp. is a shell company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), because we have no or nominal assets and no or nominal operations.
Our current business plan is to enter into a merger, acquisition or other business venture with Agro Malaysia or other companies in the aqua-culture development industry in Malaysia. No assurances can be given that we will be successful in either consummating a transaction with Agro Malaysia or identifying or negotiating a business transaction with another company, or, if we do enter into a business transaction with Agro Malaysia or another company, no assurances can be given as to the terms of a business transaction, or as to the nature of the target company.
If we successfully enter into a merger, acquisition or other business venture with Agro Malaysia in the future, we intend to expand Agro Malaysia into a fully-integrated aquaculture company by developing our own research and development, hatcheries, aquaculture feeds, grow-out operations, processing plant operations, seafood sales and marketing.
Results of Operation
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, stockholder loans and the issuance of securities.
Three Month Periods Ended June 30, 2017 and 2016 and Six Month Periods Ended June 30, 2017 and 2016
Our net loss for the three-month periods ended June 30, 2017 and 2016 was $3,500,919 and $16,094, respectively. Our net loss for the six-month periods ended June 30, 2017 and 2016 was $5,020,696 and $31,119, respectively. During the three and six-month periods ended June 30, 2017 and 2016, we have not generated any revenue.
During the three-month period ended June 30, 2017, our operating expenses were $3,500,919, which consisted of $3,475,679 in share based compensation, $25,165 in professional fees and $75 in administrative expenses, compared to $0, $13,254 and $2,840, respectively for the same period from the prior year. During the six-month period ended June 30, 2017, our operating expenses were $5,020,696, which consisted of $4,958,524 in share based compensation, $52,037 in professional fees and $10,135 in administrative expenses, compared to $0, $23,279 and $7,840, respectively for the same period from the prior year. Our professional fees increased primarily due to an increase in professional fees related to the development of our business plans. The weighted average number of shares outstanding was 18,909,911 for the six-month period ended June 30, 2017, and the weighted average number of shares outstanding was 18,125,000 for the six-month period ended June 30, 2016.
Liquidity and Capital Resources
Six Month Period Ended June 30, 2017
As at June 30, 2017, our total assets were $30. As at June 30, 2017, our current liabilities were $165,336. Stockholders’ equity (deficit) was $(165,306) as of June 30, 2017.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the six month period ended June 30, 2017 and 2016, net cash flows used in operating activities was $(52,226) and $(31,365), respectively.
Cash Flows from Investing Activities
For the six month period ended June 30, 2017 and 2016, we did not have any net cash flows used in, or provided by, investing activities.
Cash Flows from Financing Activities
For the six month period ended June 30, 2017, net cash flows received from financing activities was $52,176, which was the result of a shareholder’s loan to us, compared to $15,965 from a shareholder’s loans provided to us for the period ended June 30, 2016.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds, shareholders’ loans and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, officer and director loans, and further issuances of securities are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of officer and director loans and the issuance of securities. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of software; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with officer and director loans and further issuances of securities. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current stockholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The independent auditor’s report accompanying our June 30, 2017 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. As discussed in the notes to the financial statements, we have limited operations and have yet to obtain profitability. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
