U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for the quarterly period ended: March 31, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from ___ to ____
COMMISSION FILE NUMBER 000-22281
---------------------------------------------
24HOLDINGS INC.
(Exact name of small business issuer as specified in its charter)
Delaware 33-0726608
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Kirk M. Warshaw
47 School Avenue
Chatham, New Jersey 07928
------------------- -----
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code:
(973) 635-4047
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of issuer's common equity as of the last
practicable date: As of May 12, 2006, there were 96,147,396 shares of common
stock outstanding.
Transactional Small Business Disclosure Format (Check One): Yes [ ] No [X]
24HOLDINGS INC.
Quarterly Report on Form 10-QSB
Quarter Ended March 31, 2006
INDEX TO FINANCIAL STATEMENTS
PART I. FINANCIAL INFORMATION
Page
ITEM 1. FINANCIAL STATEMENTS ----
Balance Sheets as of March 31, 2006 (unaudited) and December 31, 2005 3
Statement of Operations for the Three Months Ended
March 31, 2006 and 2005 (unaudited) 4
Statement of Cash Flows for Three Months Ended
March 31, 2006 and 2005 (unaudited) 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10
ITEM 3. CONTROLS AND PROCEDURES 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS 12
SIGNATURES 13
FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" regarding the plans and objectives of management
for future operations and market trends and expectations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are
based on current expectations that involve numerous risks and uncertainties. Our
plans and objectives are based, in part, on assumptions involving the continued
expansion of our business. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Although we believe that our assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved. We undertake
no obligation to revise or update publicly any forward-looking statements for
any reason. The terms "we", "our", "us", or any derivative thereof, as used
herein refer to 24Holdings Inc., a Delaware corporation, and its predecessors.
2
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
24HOLDINGS INC.
BALANCE SHEETS
ASSETS
- ------
MARCH 31, 2006 DECEMBER 31, 2005
(UNAUDITED)
Current Assets:
Cash and cash equivalents $ 66,811 $ 100,000
Other receivable - related party -- 7,500
------------ ------------
Total Current Assets 66,811 107,500
------------ ------------
Total Assets $ 66,811 $ 107,500
============ ============
LIABILITIES AND STOCKHOLDER'S DEFICIT
- -------------------------------------
Current Liabilities:
Accrued expenses $ 8,000 $ 35,640
------------ ------------
TOTAL CURRENT LIABILITIES 8,000 35,640
Convertible Preferred stock; $0.001 par value, 5,000,000
authorized, 594,879 and 344,879 shares issued and 249,628 230,878
outstanding, respectively ------------ ------------
TOTAL LIABILITIES 257,628 266,518
SHAREHOLDERS' DEFICIT:
Common stock, $.001 par value; 100,000,000 shares
authorized, 96,147,396 and 94,147,396 shares issued and 36,742 36,742
outstanding, respectively
Additional paid-in capital 10,362,233 10,362,233
Accumulated Deficit (10,589,792) (10,557,994)
------------ ------------
TOTAL SHAREHOLDERS' DEFICIT (190,817) (159,018)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 66,811 $ 107,500
============ ============
The accompanying notes are an integral part of these financial statements.
3
24HOLDINGS INC.
STATEMENT OF OPERATIONS
(unauditied)
THREE MONTHS ENDED MARCH 31,
2006 2005
------------ ------------
Revenues $ -- $ --
Expenses
General and administrative 31,799 10,443
------------ ------------
Total operating expenses 31,799 10,443
------------ ------------
Loss from continuing operations (31,799) (10,443)
Loss from discontinued operations, net of taxes -- (195,015)
Net loss per share - basic and diluted, continuing
and discontinued operations $ (31,799) $ (205,458)
============ ============
Weighted average number of shares outstanding - basic and diluted 96,147,396 96,147,396
Net loss per share:
basic and diluted common share $ (0.00) $ (0.00)
============ ============
The accompanying notes are an integral part of these financial statements.
4
24HOLDINGS INC
STATEMENT OF CASH FLOWS
(unaudited)
THREE MONTHS ENDED MARCH 31,
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (31,799) $(206,072)
Depreciation -- (7,039)
Foreign currency translation -- (674)
Preferred shares issued for services 18,750
Changes in operating assets and liabilities:
Accounts receivable 7,500 26,017
Prepaid expenses -- (9,177)
Inventory -- 150,044
Decrease in accrued expenses (27,640) (206,384)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (33,189) (253,285)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments/advances on credit facility -- 79,935
Proceeds from related party loan -- 80,903
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 160,838
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (33,189) (92,447)
========= =========
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 100,000 95,032
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 66,811 $ 2,585
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ -- $ --
Income taxes paid $ -- $ --
The accompanying notes are an integral part of these financial statements.
5
24HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(unaudited)
NOTE 1 - DESCRIPTION OF COMPANY:
24Holdings Inc. is a Delaware corporation formerly known as Scoop, Inc.
("24Holdings" or the "Company"). In April 2001 Scoop, Inc. amended its
Certificate of Incorporation to change its name to 24Holdings Inc. Prior to
September 30, 2005, 24Holdings was a holding company which owned 100% of the
capital stock of 24STORE (Europe) Limited, a company incorporated under the laws
of England formerly known as 24STORE.com Limited ("24STORE"). 24STORE commenced
business operations in 1996 and focused on the sale of media products and
business information services. Commencing in July 1998, the Company underwent
voluntary reorganization under Chapter 11 of the United States Bankruptcy Code.
In accordance with the Plan of Reorganization approved by the Bankruptcy Court,
in December 1999, InfiniCom, AB, a Swedish registered company, acquired 91% of
the outstanding stock of the Company in exchange for 100% of the stock of
24STORE. Subsequent to Infinicom, AB's acquisition in 1999 and until September
30, 2005, the business operations of 24STORE, which represented all of the
Company's operations, were devoted to supplying business customers with computer
and electronics products.
The interim financial information as of March 31, 2006 and for the three-month
periods ended March 31, 2006 and 2005 has been prepared without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"SEC"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although we believe that the disclosures made are adequate to
provide for fair presentation. These financial statements should be read in
conjunction with the financial statements and the notes thereto, included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2005,
previously filed with the SEC.
In the opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present a fair statement of financial position as of
March 31, 2006, and results of operations and cash flows for the three months
ended March 31, 2006 and 2005, as applicable, have been made. The results of
operations for the three months ended March 31, 2006 are not necessarily
indicative of the operating results that may be expected for the full fiscal
year or any future periods.
CHANGE OF OWNERSHIP TRANSACTIONS
On May 26, 2005, we entered into a series of agreements with Infinicom, AB in
connection with our sale of all of the outstanding stock of 24STORE (the
"24STORE Sale") and separately, the assignment and transfer of all rights and
title to certain trademarks and domain names (the "IP Assets") that we held (the
"IP Assignment"). Pursuant to the terms of the 24STORE Sale, Infinicom, AB paid
us $100,000 for our 24STORE shares and pursuant to the IP Assignment, we agreed
transfer the IP Assets in consideration for a set-off against all outstanding
and contingent liabilities then owed to Infinicom, AB, determined as of the
closing date of the 24STORE Sale.
On May 26, 2005, we also entered a Preferred Stock Purchase Agreement with
Infinicom AB, (the "Preferred Stock Agreement") pursuant to which we agreed to
sell to Infinicom, AB, 344,595 shares of our series A convertible preferred
stock, par value $0.001 (the "Series A Preferred Stock") in exchange for the
discharge of $230,879 of outstanding debt owed to Infinicom, AB. Each share of
the Series A Preferred Stock is convertible into 100 shares of our common stock
at the holder's option.
On February 1, 2006, a total of 250,000 shares of Series A Preferred Stock were
authorized for issuance to two individuals who provided services to the Company.
Upon the Company effectuating an amendment to increase the number of shares of
preferred shares designated as Series A Preferred Stock from 500,000 to 600,000,
it will issue 150,000 shares of the Series A Preferred Stock to Arnold Kling and
100,000 shares of the Series A Preferred Stock to Kirk Warshaw for their work as
the Company's President and Chief Financial Officer, respectively. Each share of
Series A Preferred Stock is convertible, at the holder's option, into 100 shares
of our common stock. Mr. Kling's services were valued at $11,250 and Mr.
Warshaw's services were valued at $7,500. Such preferred shares were also
recorded as a liability pursuant to EITF 00-19 until the Company increases the
authorized shares of common stock.
Our authorized capitalization currently consists of 100,000,000 common shares;
as a result we do not have adequate shares to facilitate the conversion of all
these preferred shares outstanding into the 59,487,900 shares of common stock
that they are convertible. Since such conversion terms of the Series A Preferred
Stock will require more common shares to be issued than are currently
authorized, the $249,628 of indebtedness converted to Series A Preferred Stock
has been recorded on our balance sheet March 31, 2006 as a long term liability.
This will be reclassified, pursuant to EITF 00-19, in the event that the Company
increases its authorized common shares.
6
24HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(unaudited)
NOTE 1 - DESCRIPTION OF COMPANY (continued):
On May 26, 2005, Infinicom, AB, the Company, Moyo Partners, LLC ("Moyo") and R&R
Biotech Partners, LLC ("R&R", and together with Moyo, the "Purchasers") entered
into a Common Stock Purchase Agreement (the "Common Stock agreement") pursuant
to which, Infinicom agreed to sell to the Purchasers an aggregate of 109,171,181
shares of common stock of the Company (which included shares issuable upon
conversion of the Series A Preferred Stock) which would represent approximately
83.6% of the then issued and outstanding shares of common stock of the Company
(the "Infinicom Sale"). In turn, the Purchasers would pay to Infinicom (i)
$500,000 in cash, and (ii) cause the issuance of shares of common stock of the
Company which would represent 1% of the issued and outstanding shares of common
stock of the Company on a fully diluted basis, upon the closing of a merger with
one or more as yet unidentified private unaffiliated operating companies that
the Purchasers intended to cause the Company to enter into subsequent to the
closing of the Sale. The consummation of the Infinicom Sale was contingent on
the contemporaneous closing of the 24STORE Sale and the IP Assignment.
On September 30, 2005, the Company and Infinicom AB completed the transactions
contemplated in the 24STORE Sale, the IP Assignment and the Preferred Stock
Agreement as described above. Infinicom, AB, agreed to forgive $603,830 of debt
the Company owed to them in consideration of the IP Assignment.
Effective September 30, 2005, Infinicom completed the sale to the Purchasers of
74,711,681 shares of common stock of the Company (which represented 77.7% of the
96,147,395 shares of common stock then outstanding) and 344,595 shares of Series
A Preferred Stock, constituting 83.6% in the aggregate of the then issued and
outstanding common stock of the Company, assuming the conversion of the Series A
Preferred Stock into 34,459,500 shares of common stock. As a result, the
Purchasers acquired control of the Company from Infinicom, with R&R beneficially
owning 87,336,945 shares of common stock (assuming the conversion by R&R of
275,676 shares of Series A Preferred Stock into 27,567,600 shares of common
stock) constituting 66.9% of the then issued and outstanding shares of common
stock of the Company, and Moyo beneficially owning 21,834,236 (assuming the
conversion by Moyo of 68,919 shares of Series A Preferred Stock into 6,891,900
shares of common stock) constituting 16.7% of the then issued and outstanding
shares of common stock of the Company.
Effective September 30, 2005 Urban von Euler resigned as our President and a
Director but remained our Chief Executive Officer. Also, effective September 30,
2005, Larsake Sandin resigned as a Director and each of Arnold Kling and Kirk
Warshaw were appointed as Directors of the Company. On November 21, 2005,
effective with the filing of our September 30, 2005 Form 10-Q, Mr. von Euler
resigned as Chief Executive Officer and Mr. Kling was appointed President and
Mr. Warshaw was appointed Chief Financial Officer and Secretary. As of that same
date, we relocated our headquarters to Chatham, New Jersey.
THE COMPANY TODAY
Since September 30, 2005, our purpose has been to serve as a vehicle to acquire
an operating business and is currently considered a "shell" or blank check
company inasmuch as we are not generating revenues, do not own an operating
business, and have no specific plan other than to engage in a merger or
acquisition transaction with a yet-to-be identified company or business. We have
no employees and no material assets.
Commencing with the quarter ended June 30, 2004, all of the Company's computer
related business services activities have been accounted for as Discontinued
Operations. As such, all of the prior activity has been shown in the financials
as one line item that is labeled "Income (Loss) from Discontinued Operations,
net of taxes." The activities of the Company since September 2005 are shown in
the income statement under the section labeled "Loss from Continuing
Operations." These amounts are for expenses incurred since September 30, 2005
and are of the nature we expect to incur in the future, whereas the Income
(loss) from Discontinued Operations are from activities we are no longer engaged
in.
7
24HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(unauditied)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with accounting principles
generally accepted in the United States of America (U.S.). Outlined below are
those policies considered particularly significant.
(a) Principles of Consolidation:
The accompanying consolidated financial statements include the accounts
of 24Holdings Inc. and subsidiary. All significant intercompany
transactions and accounts have been eliminated. The financial statements
of the entities owned outside the U.S. are generally measured using the
local currency as the functional currency.
Accordingly, assets and liabilities are translated at year-end exchange
rates and operating statement items are translated at average exchange
rates prevailing during the year. The resulting translation adjustments
are recorded as other comprehensive income. Exchange adjustments
resulting from foreign currency are included in the determination of net
income (loss).
As discussed, the Company sold its subsidiary on September 30, 2005 and
is reporting consolidated information for the reporting periods of 2005
only.
(b) Revenue Recognition
All revenue is generated by 24Store, the UK subsidiary, and therefore is
included in Discontinued Operations.
(c) Use of Estimates:
In preparing financial statements in accordance with accounting
principles generally accepted in the United States of America,
management makes certain estimates and assumptions, where applicable,
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results could differ
from those estimates, management does not expect such variances, if any,
to have a material effect on the financial statements.
(d) Statements of Cash Flows:
For purposes of the statements of cash flows the Company considers all
highly liquid investments purchased with a remaining maturity of three
months or less to be cash equivalents.
(e) Earnings (Loss) Per Share:
Basic earnings (loss) per share has been computed on the basis of the
weighted average number of common shares outstanding during each period
presented according to the provisions of SFAS No. 128 "EARNINGS PER
SHARE". Diluted earnings (loss) per share has not been presented as the
effect of the common stock purchase warrants outstanding, on such
calculation, would have been anti-dilutive. Such securities could
potentially dilute basic earnings per share in the future.
(f) Income Taxes:
The asset and liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized
for operating loss and tax credit carry forwards and for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those
8
24HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the results of operations in the period that includes
the enactment date. A valuation allowance is recorded to reduce the
carrying amounts of deferred tax assets unless it is more likely than
not that such assets will be realized.
(g) Financial Instruments
The estimated fair values of all reported assets and liabilities which
represent financial instruments, none of which are held for trading
purposes, approximate their carrying value because of the short term
maturity of these instruments or the stated interest rates are
indicative of market interest rates.
NOTE 3 - SHAREHOLDERS' EQUITY
On February 1, 2006, a total of 250,000 shares of Series A Preferred Stock were
authorized for issuance to two individuals who provided services to the Company.
Upon the Company effectuating an amendment to increase the number of preferred
shares designated as Series A Preferred Stock from 500,000 to 600,000, it will
issue 150,000 shares of Series A Preferred Stock to Arnold Kling and 100,000
shares of Series A Preferred Stock to Kirk Warshaw for their work as the
Company's President and Chief Financial Officer, respectively. Each share of
Series A Preferred Stock is convertible, at the holder's option, into 100 shares
of our common stock. Mr. Kling's services were valued at $11,250 and Mr.
Warshaw's services were valued at $7,500. Such preferred shares were also
recorded as a liability pursuant to EITF 00-19 until the Company increases the
authorized shares of common stock.
As a result on March 31, 2006, the Company has authorized 5,000,000 shares of
preferred stock, par value $0.001 of which there are issued and outstanding
594,879 shares (including the 250,000 issuable to Messrs. Kling and Warshaw).
The Company has authorized 100 million shares of common stock, par value $0.001
per share. There are issued and outstanding 96,147,396 shares of common stock.
All shares of preferred stock and common stock currently outstanding are validly
issued, fully paid and non-assessable.
The authorized common shares are only 100,000,000 hence the conversion of such
preferred shares outstanding into 59,487,900 shares of common stock is not
possible since such conversion would exceed the authorized common shares by
55,635,296 shares. Since such conversion terms of the Series A Preferred Stock
will require more common shares to be issued than authorized, the $249,628 of
indebtedness converted to Series A Preferred Stock will be recorded as a long
term liability until the Company increases the authorized common shares pursuant
to EITF 00-19.
NOTE 4 - SUBSEQUENT EVENT
As disclosed in Notes 1 and 3 above, on February 1, 2006, the Company's Board
approved and authorized a grant of an aggregate of 250,000 shares of Series A
Preferred Stock, valued at approximately $18,750, to Arnold P. Kling and Kirk M.
Warshaw, the Company's President and Chief Financial Officer, respectively, for
services rendered. Such preferred shares were also recorded as a liability
pursuant to EITF 00-19 until we increase the authorized shares of common stock.
In addition, the issuance of such preferred shares has been delayed until the
Company effectuated an amendment to increase the number of preferred shares
designated as Series A Preferred Stock from 500,000 to 600,000.
On May 12, 2006, the Company effectuated a Certificate of Amendment to the
Certificate of Designation for the Series A Preferred Stock with the Secretary
of State of the State of Delaware to increase the number of preferred shares
designated as Series A Preferred Stock from 500,000 to 600,000 shares.
9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
Since September 30, 2005 our purpose is to effect a business combination with an
operating business which we believe has significant growth potential.. We are
currently considered to be a "shell" company in as much as we have no
operations, revenues or employees. We have no plans, arrangements or
understandings with any prospective business combination candidates and have not
targeted any business for investigation and evaluation nor are there any
assurances that we will find a suitable business with which to combine. The
implementation of our business objectives is wholly contingent upon a business
combination and/or the successful sale of securities in 24Holdings. We intend to
utilize the proceeds of any offering, any sales of equity securities or debt
securities, bank and other borrowings or a combination of those sources to
effect a business combination with a target business which we believe has
significant growth potential. While we may, under certain circumstances, seek to
effect business combinations with more than one target business, unless and
until our warrants are exercised or additional financing is obtained, we will
not have sufficient proceeds remaining after an initial business combination to
undertake additional business combinations.
A common reason for a target company to enter into a merger with a shell company
is the desire to establish a public trading market for its shares. Such a
company would hope to avoid the perceived adverse consequences of undertaking a
public offering itself, such as the time delays and significant expenses
incurred to comply with the various Federal and state securities law that
regulate initial public offerings.
As a result of our limited resources, we expect to have sufficient proceeds to
effect only a single business combination. Accordingly, the prospects for our
success will be entirely dependent upon the future performance of a single
business. Unlike certain entities that have the resources to consummate several
business combinations or entities operating in multiple industries or multiple
segments of a single industry, we will not have the resources to diversify our
operations or benefit from the possible spreading of risks or offsetting of
losses. A target business may be dependent upon the development or market
acceptance of a single or limited number of products, processes or services, in
which case there will be an even higher risk that the target business will not
prove to be commercially viable.
Our officers are only required to devote a small portion of their time (less
than 10%) to our affairs on a part-time or as-needed basis. We expect to use
outside consultants, advisors, attorneys and accountants as necessary, none of
which will be hired on a retainer basis. We do not anticipate hiring any
full-time employees so long as we are seeking and evaluating business
opportunities.
We expect our present management to play no managerial role in 24Holdings
following a business combination. Although we intend to scrutinize closely the
management of a prospective target business in connection with our evaluation of
a business combination with a target business, our assessment of management may
be incorrect. We cannot assure you that we will find a suitable business with
which to combine.
Continuing Operational Expenses for the Three months ended March 31, 2006
compared to three months ended March 31, 2005
Because we currently do not have any business operations, we have not had any
revenues during the three months ended March 31, 2006 and the three months ended
March 31, 2005. Total expenses from Continuing Operations for the three months
ended March 31, 2006 increased to $31,799 as compared to $10,443 for the 2005
period. These expenses constituted professional and filing fees and were more
than the professional and filing fees incurred during the 2005 period and
because of the aforementioned expense of $18,750 incurred when 250,000 Preferred
Shares were issued for services rendered.
Liquidity and Capital Resources
24Holdings does not have any revenues from any operations absent a merger or
other combination with an operating company and no assurance can be given that
such a merger or other combination will occur or that 24Holdings can engage in
any public or private sales of 24Holdings's equity or debt securities to raise
working capital. 24Holdings is dependent upon future loans from its present
stockholders or management and there can be no assurances that its present
stockholders or management will make any loans to 24Holdings. At March 31, 2006,
24Holdings had cash of $66,811 and working capital of $56,811.
24Holdings's present material commitments are professional and administrative
fees and expenses associated with the preparation of its filings with the
Securities and Exchange Commission and other regulatory requirements. In the
event that 24Holdings engages in any merger or other combination with an
operating company, it will have additional material commitments, although
24Holdings presently is not engaged in any discussions regarding any merger or
other combination with an operating company and cannot offer any assurances that
it will engage in any merger or other combination with an operating company
within the next twelve months.
10
Commitments
We do not have any commitments which are required to be disclosed in tabular
form as of March 31, 2006.
Subsequent Event
As disclosed in the footnotes to the financial statements included elsewhere in
this report, on February 1, 2006, our Board approved and authorized a grant of
an aggregate of 250,000 shares of 24Holding's Series A Convertible Preferred
Stock ("Series A Preferred") valued at approximately $18,750 to Arnold P. Kling
and Kirk M. Warshaw, our President and Chief financial Officer, respectively,
for services rendered to 24Holdings. Such preferred shares were also recorded as
a liability pursuant to EITF 00-19 until we increase the authorized shares of
common stock. In addition, the issuance of such preferred shares has been
delayed until we effectuated an amendment to increase the number of preferred
shares designated as Series A Preferred from 500,000 to 600,000.
On May 12, 2006, we effectuated a Certificate of Amendment to the Certificate of
Designation for the Series A Preferred with the Secretary of State of the State
of Delaware to increase the number of preferred shares designated as Series A
Preferred from 500,000 to 600,000 shares.
ITEM 3. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of the President and chief financial
officer, carried out an evaluation of the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of 1934 (the
"Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the period
covered by this report (the "Evaluation Date"). Based upon that evaluation, the
President and chief financial officer, who are our the sole officers and
directors, concluded that, as of the Evaluation Date, our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act (i) is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms and (ii) is accumulated and communicated to our
management, including our President and chief financial officer, as appropriate
to allow timely decisions regarding required disclosure.
(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during our fiscal first quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 1, 2006, our Board approved and authorized a grant of an
aggregate of 250,000 shares of Series A Preferred valued at approximately
$18,750 to Arnold P. Kling and Kirk M. Warshaw, our President and Chief
financial Officer, respectively, for services rendered to 24Holdings. Such
preferred shares were also recorded as a liability pursuant to EITF 00-19 until
we increase the authorized shares of common stock. In addition, the issuance of
such preferred shares has been delayed until we effectuated an amendment to
increase the number of preferred shares designated as Series A Preferred from
500,000 to 600,000.
On May 12, 2006, we effectuated a Certificate of Amendment to the
Certificate of Designation for the Series A Preferred with the Secretary of
State of the State of Delaware to increase the number of preferred shares
designated as Series A Preferred from 500,000 to 600,000 shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
- ---------
Exhibit No. Description
----------- -----------
3.6 Certificate of Amendment to the Certificate of Designations,
Rights and Preferences of Series A Preferred Stock $.001 Par
Value of 24Holdings Inc, effective as of May 12, 2006.
31.1 Certification of the President pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the President pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Reports On Form 8-K:
- --------------------
We filed a current report on form 8-K on March 13, 2006 in response to
Item 4.01 with respect our change in auditing firms.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
24Holdings Inc
Dated: May 12, 2006 /s/ Arnold P. Kling
--------------------------------------------
Arnold P. Kling, President
(Principal Executive Officer)
Dated: May 12, 2006 /s/ Kirk M. Warshaw
--------------------------------------------
Kirk M. Warshaw, Chief Financial Officer
(Principal Financial and Accounting Officer)
13