Business Context and Reporting Period
Company: clickNsettle.com, Inc. (CLIK)
Filing Type: Form 10-QSB (Quarterly Report)
Reporting Period: Three months ended September 30, 2007
Business Status: The Company is a shell company with no operating business. It sold its Alternative Dispute Resolution (ADR) business in January 2005. Management is actively seeking a merger or acquisition with an operating company. A change of control occurred on September 26, 2007, following the sale of restricted securities to new investors.
Key Financial Metrics
| Metric | Q3 2007 | Q3 2006 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(92,833) | $(25,074) |
| Operating Expenses | $94,087 | $26,392 |
| Cash and Cash Equivalents | $1,543,528 | $108,003 |
| Total Liabilities | $92,393 | Filing text does not provide a clear value |
| Working Capital | $1,454,948 | Filing text does not provide a clear value |
| Shares Outstanding | 55,402,762 | Filing text does not provide a clear value |
Cash Flow: Net cash used in operating activities was $(43,269). Net cash provided by financing activities was $1,504,700, primarily driven by proceeds from the sale of common stock ($1,541,500).
Material Changes vs. Prior Period
- Change of Control: On September 26, 2007, the Company sold 44,921,054 shares of restricted common stock for $1,567,000, resulting in a change of control and a significant increase in cash reserves.
- Expense Increase: Operating expenses increased from $26,392 in Q3 2006 to $94,087 in Q3 2007. This increase is attributed to professional fees of approximately $91,300 related to the change of control transaction.
- Net Loss: Net loss increased from $(25,074) to $(92,833) due to the aforementioned transaction costs.
- Liquidity: Cash balances increased significantly from $108,003 to $1,543,528 following the equity raise.
Outlook, Risks, and Management Commentary
Plan of Operation: Management intends to devote efforts to consummating a merger or acquisition with an operating business. The transaction may utilize common stock, cash on hand, or other funding sources. There are currently no contractual commitments for an acquisition.
Liquidity Outlook: The Company believes it has sufficient funds to cover expenses for at least the next twelve months. Cash is invested in money market accounts.
Risk Factors:
- No Operating Business: The Company has no revenues and cannot generate income until a business combination is effected.
- Dilution: Future acquisitions are expected to be accomplished through the issuance of stock, resulting in significant dilution to existing shareholders.
- Penny Stock Rules: The stock trades on the OTC Electronic Bulletin Board and is subject to penny stock rules (price < $5.00), which may limit liquidity and marketability.
- Uncertainty: There are no assurances that a business combination will be consummated or that the combined operation will be profitable.
Investor Verification Checklist
- Verify the status of the change of control transaction and the identity of the new controlling investors.
- Confirm the timeline and progress of the search for a target operating business for merger or acquisition.
- Review the terms of the restricted stock sale to ensure compliance with Section 4(2) of the Securities Act of 1933.
- Monitor the burn rate of the $1.54 million cash reserve against ongoing professional and administrative fees.
- Assess the potential dilution impact on current shareholders given the Company's strategy to use stock for future acquisitions.