UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 2010
[ _] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period from __________ To _________
Commission file number: 000 – 53905
(Exact name of registrant as specified in its charter)
| Delaware | 65-1714523 |
| (State or other | (IRS Employer Identification No.) |
| of incorporation or organization) | |
| 330 Clematis Street, Suite 217, West Palm Beach, FL | 33401 |
| (Address of principal executive offices) | (zip code) |
(Registrant’s telephone number, including area code)
________________________________
(Former Name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [_] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [_] | Accelerated filer [_] |
| Non-accelerated filer [_] | Smaller reporting company [X] |
| (Do not check if a smaller reporting company) | |
Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes [X] No [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court
Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 16, 2010, there were 100,758,543 shares of the Registrant's Common Stock outstanding.
SABRE INDUSTRIAL, INC.
For The Quarterly Period Ended June 30, 2010
TABLE OF CONTENTS
| PART I - FINANCIAL INFORMATION | 3 |
| Item 1. Financial Statements | 3 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk | 17 |
| Item 4. Controls and Procedures | 18 |
| PART II - OTHER INFORMATION | 19 |
| Item 1. Legal Proceedings | 19 |
| Item 1A. Risk Factors | 19 |
| Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds. | 20 |
| Item 3. Defaults Upon Senior Securities | 20 |
| Item 4. (Removed and Reserved). | 20 |
| Item 5. Other Information | 20 |
| Item 6. Exhibits | 20 |
| SIGNATURES | 20 |
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
| Sabre Industrial, Inc. | |
| (f/k/a Environmental Digital Services, Inc.) | |
| Balance Sheet | |
| | | June 30. | | | March 31, | |
| | | 2010 | | | 2010 | |
| | | (unaudited) | | | | |
| | | | | | | |
| Assets | | | | | | |
| Current assets | | | | | | |
| Cash | | $ | 10,375 | | | $ | 12,372 | |
| Prepaid expenses | | | 0 | | | | 0 | |
| Total current assets | | | 10,375 | | | | 12,372 | |
| | | | | | | | | |
| Total Assets | | $ | 10,375 | | | $ | 12,372 | |
| | | | | | | | | |
| Liabilities and Stockholders' Deficiency | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable-trade | | $ | 16,747 | | | $ | 16,747 | |
| Accrued expenses | | | 0 | | | | 0 | |
| Due to related parties | | | 13,258 | | | | 13,258 | |
| Total current liabilities | | | 30,005 | | | | 30,005 | |
| | | | | | | | | |
| Stockholders' Deficiency: | | | | | | | | |
| Preferred "A" stock-10,000 issued & outstanding | | | 0 | | | | 25,000 | |
Common stock-300,000,000 authorized $001 par value 100,758,386 shares issued & outstanding | | | 100,758 | | | | 758 | |
| Additional paid-in capital | | | 37,644 | | | | 106,644 | |
| Deficit accumulated since quasi reorganization March. 31, 2007 | | | (158,032 | ) | | | (150,035 | ) |
| Total Stockholders' Deficiency | | | (19,630 | ) | | | (17,633 | ) |
| | | | | | | | | |
| Total Liabilities & Stockholders' Deficiency | | $ | 10,375 | | | $ | 12,372 | |
| See notes to unaudited interim financial statements. | |
| Sabre Industrial, Inc. | |
| (f/k/a Environmental Digital Services, Inc.) | |
| Statement of Operations | |
| (unaudited) | |
| Three Months Ended June 30, | |
| | | | | | | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| | | | | | | |
| Revenue | | $ | 0 | | | $ | 0 | |
| | | | | | | | | |
| Costs & Expenses: | | | | | | | | |
| Depreciation & Amortization | | | 0 | | | | 0 | |
| General & administrative | | | 7,997 | | | | 6,000 | |
| Interest | | | 0 | | | | 0 | |
| Total Costs & Expenses | | | 7,997 | | | | 6,000 | |
| | | | | | | | | |
| Loss from continuing operations before income taxes | | | (7,997 | ) | | | (6,000 | ) |
| | | | | | | | | |
| Income taxes | | | 0 | | | | 0 | |
| | | | | | | | | |
| Net Loss | | $ | (7,997 | ) | | $ | (6,000 | ) |
| | | | | | | | | |
| Basic and diluted per share amounts: | | | | | | | | |
| Continuing operations | | Nil | | | Nil | |
| Basic and diluted net loss | | Nil | | | Nil | |
| | | | | | | | | |
| Weighted average shares outstanding (basic & diluted) | | | 38,121,023 | | | | 758,386 | |
| See notes to unaudited interim financial statements. | | | | | | | | |
| Sabre Industrial, Inc. | |
| (f/k/a Environmental Digital Services, Inc.) | |
| Statement of Cash Flows | |
| (unaudited) | |
| Three Months Ended June 30, | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | |
| Net Loss | | $ | (7,997 | ) | | $ | (6,000 | ) |
| Adjustments required to reconcile net loss | | | | | | | | |
| to cash used in operating activities: | | | | | | | | |
| Fair value of services provided by related parties | | | 6,000 | | | | 6,000 | |
| Cash used by operating activities: | | | (1,997 | ) | | | 0 | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from issuance of preferred stock | | | 0 | | | | 0 | |
| Cash generated by financing activities | | | 0 | | | | 0 | |
| | | | | | | | | |
| Change in cash | | | (1,997 | ) | | | 0 | |
| Cash-beginning of period | | | 12,372 | | | | 25,000 | |
| Cash-end of period | | $ | 10,375 | | | $ | 25,000 | |
| See notes to unaudited interim financial statements. | | | | | | | | |
| Sabre Industrial, Inc. | |
| (f/k/a Environmental Digital Services, Inc.) | |
| Statement of Stockholders' Deficiency | |
| (Unaudited) | |
| | | | | | | | | | | | | | | | | | | |
| | | Preferred Stock | | | Common Stock | | | | |
| | | Shares | | | Amount | | | Shares | | | Common Stock | | | Additional paid-in capital | | | Deficit Accumulated since quasi reorganization March 31, 2007 | |
| Balance at March 31, 2008 | | | | | | | | | 758,386 | | | | 758 | | | | 58,644 | | | | (74,665 | ) |
| Fair value of services provided by related party | | | | | | | | | | | | | | | | | 24,000 | | | | | |
| Shares issued for cash | | | 10,000 | | | | 25,000 | | | | | | | | | | | | | | | �� | | |
| Net Loss | | | | | | | | | | | | | | | | | | | | | | | (38,719 | ) |
| Balance at March 31, 2009 | | | 10,000 | | | $ | 25,000 | | | | 758,386 | | | $ | 758 | | | $ | 82,644 | | | $ | (113,384 | ) |
| Fair value of services provided by related party | | | | | | | | | | | | | | | | | | | 24,000 | | | | | |
| Net Loss | | | | | | | | | | | | | | | | | | | | | | | (36,651 | ) |
| Balance at March 31, 2010 | | | 10,000 | | | $ | 25,000 | | | | 758,386 | | | $ | 758 | | | $ | 106,644 | | | $ | (150,035 | ) |
| Conversion of Preferred | | | (10,000 | ) | | | (25,000 | ) | | | 100,000,000 | | | | 100,000 | | | | (75,000 | ) | | | | |
| Fair value of services provided by related party | | | | | | | | | | | | | | | | | | | 6,000 | | | | | |
| Net Loss | | | | | | | | | | | | | | | | | | | | | | | (7,997 | ) |
| Balance at June 30, 2010 | | | 0 | | | | 0 | | | | 100,758,386 | | | $ | 100,758 | | | $ | 37,644 | | | $ | (158,032 | ) |
| See notes to unaudited interim financial statements. | | | | | | | | | |
SABRE INDUSTRIAL, INC.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation:
Effective March 31, 2007, the Company approved and authorized a plan of quasi reorganization and restatement of accounts to eliminate the accumulated deficit and related capital accounts on the Company’s balance sheet. The Company concluded its period of reorganization after reaching a settlement agreement with all of its significant creditors. The Company, as approved by its Board of Directors, elected to state its April 1, 2007, balance sheet as a “quasi reorganization”, pursuant to ARB 43. These rules require the revaluation of all assets and liabilities to their current values through a current charge to earnings and the elimination of any deficit in retained earnings by charging paid-in capital. From April 1, 2007 forward, the Company has recorded net income (and net losses) to retained earnings and (and net losses) to retained earnings and (accumulated deficit) .
The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our March 31, 2010 audited financial statements and should be read in conjunction with the Notes to Financial Statements which appear in that report.
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under diff erent assumptions or conditions.
In the opinion of management, the information furnished in these interim financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three-month period ended June 30, 2010 and 2009. All such adjustments are of a normal recurring nature. The financial statements do not include some information and notes necessary to conform with annual reporting requirements.
2. Recent Court Proceedings:
On August 14, 2007, in its Court Order, the Circuit Court for the 15th Judicial Circuit in and for Palm Beach County, Florida granted the application of Century Capital Partners, LLC to appoint a receiver. On October 1, 2007, following the submittal of detailed reports by the receiver the Court discharged the receiver and returned the Company to the control of its Board of Directors.
On March 28, 2008 after proper notice to all shareholders, the Company held an annual meeting for the purposes of the election of directors. At the meeting, Michael Anthony was elected the sole Director. Immediately following the shareholder meeting, Michael Anthony was appointed President, Secretary and Treasurer.
Resultant Change in Control: In connection with the Order and subsequent shareholder meeting, Michael Anthony became our sole director and President on March 28, 2008.
In exchange for an aggregate capital investment of approximately $8,700 by Century Capital Partners and Corporate Services International, Inc. on January 23, 2008 we issued 133,333 common shares to Century Capital Partners and 17,307 common shares to Corporate Services International, Inc. representing approximately 25.96% of our common stock outstanding on that date. The funds were used to pay ongoing administrative expenses, including but not limited to, outstanding transfer agent fees, state reinstatement and filing fees and all costs associated with conducting the shareholders meeting.
Mr. Anthony is the managing member of Century Capital Partners and has sole voting and dispositive control. Corporate Services International is a company in which our director, Michael Anthony, is a controlling shareholder.
3. Earnings/Loss Per Share:
Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of our Preferred Stock. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred March 31 , 2008.
4. New Accounting Standards:
In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.
In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements..
In June 2009, the FASB issued guidance now codified as ASC 105, Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s financial statements, but did eliminate references to pre-codification standards.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements
5. Related Party Transactions not Disclosed Elsewhere:
Due Related Parties: Amounts due related parties consist of corporate reinstatement expenses paid directly by and cash advances received by affiliates. These unpaid items totaled $3,258 at June 30, 2010.
Fair value of services: The principal stockholder provided, without cost to the Company, his services, valued at $1,800 per month and which totaled $5,400 for the three-month periods ended June 30, 2010 and 2009. The principal stockholder also provided, without cost to the Company, office space valued at $200 per month, which totaled $600 for the respective three-month periods ended June 31, 2010 and 2009. The total of these expenses was $6,000 for each period and was reflected in the statement of operations as general and administrative expenses with a corresponding contribution of paid-in capital.
Legal services previously provided to the company by Laura Anthony through Legal & Compliance, LLC (Michael Anthony’s spouse) were valued $10,000 and remains unpaid at June 30, 2010.
In May, 2010, Corporate Services International, Inc. converted its 10,000 shares of Series A Preferred Stock into 100,000,000 shares of common stock.
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Statement Regarding Forward-Looking Information
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe”, “expects”, “anticipates”, “intends”, “e stimates”, “projects”, “target”, “goal”, “plans”, “objective”, “should”, or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, the availability and pricing of additional capital to finance operations.
Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
The following discussion should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.
Background and History
Sabre Industrial, Inc., (the “Company” or "Sabre Industrial"), was originally incorporated on July 25, 1996 in the state of Florida as Environmental Digital Services, Inc. At the time of formation the Company was authorized to issue 50,000,000 no par value capital stock.
On August 21, 2001 the state of Florida administratively dissolved the Company for the failure to file its annual report and pay the associated franchise taxes. Sabre Industrial has not conducted any business operations since 2004.
Effective March 31, 2007 the Company approved and authorized a plan of quasi reorganization and restatement of accounts to eliminate the accumulated deficit and related capital accounts on the Company's balance sheet. The Company concluded its period of reorganization after reaching a settlement agreement with all of its significant creditors. The Company, as approved by its Board of Directors, elected to state its March 31, 2007 balance sheet as a "quasi reorganization", pursuant to ARB 43. These rules require the revaluation of all assets and liabilities to their current values through a current charge to earnings and the elimination of any deficit in retained earnings by charging paid-in capital. From April 1, 2007 forward, the Company has recorded net income (and net losses) to retained earnings and (and net l osses) to retained earnings and (accumulated deficit).
On August 14, 2007, in its Court Order, the Circuit Court for the 15th Judicial Circuit in and for Palm Beach County, Florida granted the application of Century Capital Partners, LLC to have a receiver appointed. The Court appointed Brian T. Scher, Esquire as receiver of the Company. The Court Order appointing Receiver empowered Mr. Scher to evaluate our financial status, to determine whether there are any options for corporate viability that could benefit our shareholders, to reinstate our corporation with the Florida Secretary of State, and to obtain copies of our shareholder records from our transfer agent.
Mr. Michael Anthony is the sole member of Century Capital Partners, LLC.
Under Mr. Scher’s receivership, and with funds supplied by Century Capital Partners, the Company reinstated its corporate charter and paid all past due franchise taxes; paid down the outstanding debt with the transfer agent; and made an analysis of the Company’s debts and potential for viability as a merger candidate. In addition, after acting as the sole temporary officer and director, on October 1, 2007, Mr. Scher appointed Michael Anthony as our sole Director, President, Secretary and Treasurer.
On October 1, 2007, following the submittal of reports by Mr. Scher, the Court discharged the receiver and returned the Company to the control of its Board of Directors.
On September 18, 2007, Environmental Digital Services, Inc. (now Sabre Industrial) was incorporated in Delaware for the purpose of merging with Environmental Digital Services, a Florida Corporation so as to effect a re-domicile to Delaware. The Delaware Corporation was authorized to issue 250,000,000 shares of $.001 par value common stock and 2,000,000 shares of $.001 par value preferred stock. On April 11, 2008, the certificate of incorporation for the Delaware Corporation was amended to increase the authorized capital stock to 310,000,000 of which 300,000,000 shares are common stock, $.001 par value and 10,000,000 shares are preferred stock, $.001 par value. In addition, the Company designated 10,000 shares of preferred stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into ten thousand (10,000) shares of common stock and carries ten thousand (10,000) votes on all matters brought to a shareholder vote. In addition, the majority holder of Series A Preferred Stock is entitled to elect the majority of the Directors and to amend the articles of incorporation.
On April 4, 2008, the Company filed Articles of Amendment to its Articles of Incorporation to add 10,000 shares of preferred stock to our authorized capital. On April 10, 2008, the Company designated 10,000 shares of preferred stock as Series A Preferred. Each share of Series A Preferred Stock is convertible into ten thousand (10,000) shares of common stock and carries ten thousand (10,000) votes on all matters brought to a shareholder vote. In addition, the majority holder of Series A Preferred Stock is entitled to elect the majority of the Directors and to amend the articles of incorporation.
In July, 2008 both Sabre Industrial the Florida corporation and Sabre Industrial the Delaware corporation signed and filed Articles of Merger with their respective states, pursuant to which the Florida Corporation's shareholders received one share of new (Delaware) common stock for every one share of old (Florida) common stock they owned. All outstanding shares of the Florida Corporation's common stock were effectively purchased by the new Delaware Corporation, effectively merging the Florida Corporation into the Delaware Corporation, and making the Delaware Corporation the surviving entity.
Effective March 26, 2010 the Company changed its name to Sabre Industrial, Inc., and enacted a 1:75 reverse split of its outstanding common stock. The Company’s name change is not meant to be reflective of any business plan or particular business industry but rather is thought by management to be neutral and therefore may assist in the Company’s current business plan as described herein.
Current Business Plan
Sabre Industrial is a shell company in that it has no or nominal operations and either no or nominal assets. At this time, Sabre Industrial's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may b e able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another. Management may sell its shares to a third party who subsequently will complete a transaction to bring the Company from a shell company to an operating entity.
Management has substantial flexibility in identifying and selecting a prospective new business opportunity. Sabre Industrial would not be obligated nor does management intend to seek pre-approval by our shareholders prior to entering into a transaction.
Sabre Industrial may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. Sabre Industrial may acquire assets and establish wholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
Sabre Industrial intends to promote itself privately. The Company anticipates that the selection of a business opportunity in which to participate will be complex and risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders, and other factors.
Sabre Industrial has, and will continue to have, little or no capital with which to provide the owners of business opportunities with any significant cash or other assets. At quarter end June 30, 2010 Sabre Industrial had a cash balance of $10,375. Management believes the Company will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing Form 8K's, 10K's, 10Q's and agreements and related reports and documents. The Securities Exchange Act of 1934 (the " 34 Act"), specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the '34 Act. Nevertheless, the officer and director of Sabre Industrial has not conducted market research and is not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under the supervision of, the officer and director of the Company, or successor management, with such outside assistance as he or they may deem appropriate. The Company intends to concentrate on identifying preliminary prospective business opportunities, which may be brought to its attention through present associations of the Company's officer and director. In analyzing prospective business opportunities, the Company will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of th at management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. The Company will not acquire or merge with any company for which audited financial statements are not available.
The foregoing criteria are not intended to be exhaustive and there may be other criteria that the Company may deem relevant.
The Officer of Sabre Industrial has some experience in managing companies similar to the Company and shall mainly rely upon his own efforts, in accomplishing the business purposes of the Company. The Company may from time to time utilize outside consultants or advisors to effectuate its business purposes described herein. No policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of the limited resources of the Company, it is likely that any such fee the Company agrees to pay would be paid in stock and not in cash.
Sabre Industrial does not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as the Company has successfully consummated such a merger or acquisition. Rather Sabre Industrial intends to borrow money from management related parties to finance ongoing operations.
Management intends to devote such time as it deems necessary to carry out the Company's affairs. We cannot project the amount of time that our management will actually devote to our plan of operation.
The time and costs required to pursue new business opportunities, which includes due diligence investigations, negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws, cannot be ascertained with any degree of certainty.
Sabre Industrial intends to conduct its activities so as to avoid being classified as an "Investment Company" under the Investment Company Act of 1940, and therefore avoid application of the costly and restrictive registration and other provisions of the Investment Company Act of 1940 and the regulations promulgated thereunder.
GOVERNMENT REGULATIONS
As a registered corporation, Sabre Industrial, Inc. is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "34 Act") which includes the preparation and filing of periodic, quarterly and annual reports on Forms 8K, 10Q and 10K. The 34 Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the `34 Act.
SABRE INDUSTRIAL IS A BLANK CHECK COMPANY
At present, Sabre Industrial is a blank check company with no revenues and has no specific business plan or purpose. Sabre Industrial's business plan is to seek new business opportunities or to engage in a merger or acquisition with an unidentified company. As a result, Sabre Industrial is a blank check company and any offerings of our securities would need to comply with Rule 419 under the Act. The provisions of Rule 419 apply to every registration statement filed under the Securities Act of 1933, as amended, by a blank check company. Rule 419 requires that the blank check company filing such registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account pending the execution of an agreement for an acquisition or merger. In addition, the registrant is required to file a post effective amendment to the registration statement containing the same information as found in a Form 10 registration statement, upon the execution of an agreement for such acquisition or merger. The rule provides procedures for the release of the offering funds in conjunction with the post effective acquisition or merger. Sabre Industrial has no current plans to engage in any such offerings.
SABRE INDUSTRIAL'S COMMON STOCK IS A PENNY STOCK
Sabre Industrial's common stock is a "penny stock," as defined in Rule 3a51-1 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as the common stock of Sabre Industrial is subject to the penny stock rules, it may be more difficult to sell our common stock.
ACQUISITION OF OPPORTUNITIES
Management owns 100,150,641 shares of common stock and accordingly management controls 99% of the total issued and outstanding shares of Sabre Industrial. As a result, management will have substantial flexibility in identifying and selecting a prospective new business opportunity. In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. It may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and shareholders of the Company will no longer be in control of the Company. In addition, the Company's directors may, as part of the terms of the acquisition transaction, re sign and be replaced by new directors without a vote of the Company's shareholders or may sell their stock in the Company. Moreover, management may sell or otherwise transfer his interest in the Company to new management who will then continue the Company business plan of seeking new business opportunities.
It is anticipated that any securities issued in any reorganization would be issued in reliance upon an exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after the Company has successfully consummated a merger or acquisition.
With respect to any merger or acquisition, negotiations with target company management are expected to focus on the percentage of the Company which the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a substantially lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's then shareholders.
Sabre Industrial will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.
Sabre Industrial does not intend to provide its security holders with any complete disclosure documents, including audited financial statements, concerning an acquisition or merger candidate and its business prior to the consummation of any acquisition or merger transaction.
Sabre Industrial has not expended funds on and has no plans to expend funds or time on product research or development.
COMPETITION
Sabre Industrial will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of Sabre Industrial's combined extremely limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors.
EMPLOYEES
Sabre Industrial currently has no employees. The business of the Company will be managed by its sole officer and director and such officers or directors which may join the Company in the future, and who may become employees of the Company. The Company does not anticipate a need to engage any fulltime employees at this time.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2010
COMPARED TO THREE MONTHS ENDED JUNE 30, 2009
Revenues
The Company had no revenues for either the three months ended June 30, 2010 or the three months ended June 30, 2009.
Operating Expenses
Operating expenses for the three months ended June 30, 2010 were $7,997 compared to $6,000 for the three months ended June 30, 2009. As a shell company operating expenses are limited and include items such as transfer agent fees, accounting fees, and EDGARization costs.
Loss From Operations
Loss from operations for the three months ended June 30, 2010 was $7,997 compared to $6,000 for the three months ended June 30, 2009.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2010 we had cash assets of $10,375 which also reflects our total assets. While we are dependent upon interim funding provided by management to pay professional fees and expenses, we have no written finance agreement with management to provide any continued funding. As of June 30, 2010 the Company had current liabilities of $16,747 of which $13,258 is due to related parties. Although we believe management will continue to fund the Company on an as needed basis, we do not have a written agreement requiring such funding. In addition, future management funding, will more than likely be in the form of loans, for which the Company will be liable to pay back.
The principal stockholder provided, without cost to the Company, his services, valued at $1,800 per month and which totaled $5,400 for the three-month periods ended June 30, 2010 and 2009. The principal stockholder also provided, without cost to the Company, office space valued at $200 per month, which totaled $600 for the respective three-month periods ended June 31, 2010 and 2009. The total of these expenses was $6,000 for each period and was reflected in the statement of operations as general and administrative expenses with a corresponding contribution of paid-in capital.
The Board of Directors of the Company has determined that the best course of action for the Company is to complete a business combination with an existing business. In the event that the Company cannot complete a merger or acquisition and cannot obtain capital needs for ongoing expenses, including expenses related to maintaining compliance with the securities laws and filing requirements of the Securities Exchange Act of 1934, the Company could be forced to cease operations.
Sabre Industrial currently plans to satisfy its cash requirements for the next 12 months though it’s current cash and by borrowing from its officer and director or companies affiliated with its officer and director and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated entities. Sabre Industrial currently expects that money borrowed will be used during the next 12 months to satisfy the Company's operating costs, professional fees and for general corporate purposes. The Company may explore alternative financing sources, although it currently has not done so.
Sabre Industrial will use its limited personnel and financial resources in connection with seeking new business opportunities, including seeking an acquisition or merger with an operating company. It may be expected that entering into a new business opportunity or business combination will involve the issuance of a substantial number of restricted shares of common stock. If such additional restricted shares of common stock are issued, the shareholders will experience a dilution in their ownership interest in the Company. If a substantial number of restricted shares are issued in connection with a business combination, a change in control may be expected to occur.
In connection with the plan to seek new business opportunities and/or effecting a business combination, the Company may determine to seek to raise funds from the sale of restricted stock or debt securities. The Company has no agreements to issue any debt or equity securities and cannot predict whether equity or debt financing will become available at acceptable terms, if at all.
There are no limitations in the certificate of incorporation on the Company's ability to borrow funds or raise funds through the issuance of capital stock to effect a business combination. The Company's limited resources and lack of recent operating history may make it difficult to borrow funds or raise capital. Such inability to borrow funds or raise funds through the issuance of capital stock required to effect or facilitate a business combination may have a material adverse effect on the Company's financial condition and future prospects, including the ability to complete a business combination. To the extent that debt financing ultimately proves to be available, any borrowing will subject the Company to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest, including debt of an acquired business.
The Company currently has no plans to conduct any research and development or to purchase or sell any significant equipment. The Company does not expect to hire any employees during the next 12 months.
Off-Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
Item 4. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
It is the responsibility of the chief executive officer and chief financial officer of Sabre Industrial, Inc. to establish and maintain a system for internal controls over financial reporting such that Sabre Industrial, Inc. properly reports and files all matters required to be disclosed by the Securities Exchange Act of 1934 (the “Exchange Act”). Michael Anthony is the Company’s chief executive officer and chief financial officer. The Company's system is designed so that information is retained by the Company and relayed to counsel as and when it becomes available. As the Company is a shell company with no or nominal business operations, Mr. Anthony immediately becomes aware of matters that would require disclosure under the Exchange Act. After conduct ing an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2010, he has concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by it in its reports filed or submitted under the Exchange Act is recorded, processed summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the "SEC").
This quarterly 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 temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.
There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to that evaluation, and there were no significant deficiencies or material weaknesses in such controls requiring corrective actions.
Evaluation of and Report on Internal Control over Financial Reporting
The management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
| | − | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
| | | |
| | − | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
| | | |
| | − | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inhe rent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
Based on its assessment, management concluded that, as of June 30, 2010, the Company’s internal control over financial reporting is effective based on those criteria.
This quarterly report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.
none
Item 3. Defaults Upon Senior Securities
none
Item 4. (Removed and Reserved).
Item 5. Other Information
none
Item 6. Exhibits
| EXHIBIT | |
| NUMBER | DESCRIPTION |
| | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Section 302 |
| | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 906 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By: /s/ Michael Anthony
Name: Michael Anthony
Title: Principal Executive Officer, President and Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, Director
Date: August 16, 2010
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