Business Context and Reporting Period
Company: Broadleaf Capital Partners, Inc. (Note: Request metadata listed "Red Cat Holdings," but the filing text identifies the issuer as Broadleaf Capital Partners, Inc.)
Filing Type: Form 10-KSB (Annual Report)
Period Ended: December 31, 2009
Business Overview: A Nevada corporation operating as a diversified investment holding company. The Company's primary asset is a 1% limited partnership interest in the Canyon Shadows Apartments project. The Company is actively seeking new investment opportunities in real estate and finance to utilize its substantial Net Operating Losses (NOLs). It is not a shell company but operates with minimal active business lines.
Key Financial Metrics (Year Ended Dec 31, 2009)
| Metric | Value |
|---|---|
| Revenues | $7,600 |
| Net Income (Loss) | $(84,038) |
| Accumulated Deficit | $(14,956,753) |
| Total Assets | $114,004 |
| Cash and Cash Equivalents | $31,342 |
| Total Liabilities | $1,065,378 |
| Stockholders' Deficit | $(951,374) |
| Working Capital Deficit | $(1,034,085) |
| Outstanding Shares | 140,473,605 |
Material Changes vs. Prior Period (2008)
- Revenue Decline: Revenues decreased to $7,600 from $45,500 in 2008. Management attributes this to the return to normal income flows from the Canyon Shadows investment, noting that 2008 included an unusual distribution.
- Expense Reduction: General and Administrative (G&A) expenses dropped to $16,578 from $27,654 in 2008, primarily due to reduced professional service fees.
- Interest Expense Increase: Interest expense rose to $36,577 from $26,833 in 2008 due to changes in debt settlement terms.
- Investment Write-down: The Company recorded an unrealized loss on investments of $38,483, reducing the carrying value of its sole significant investment (Canyon Shadows) from $121,145 to $82,662.
- Liquidity: Cash increased slightly to $31,342 from $28,378, but total liabilities increased by approximately $48,500.
Outlook, Risks, and Management Commentary
- Going Concern: Auditors issued a "going concern" opinion. The Company has an accumulated deficit of nearly $15 million and a working capital deficit. Continued operations depend on obtaining additional capital or generating sufficient revenue.
- Financing Needs: The Company explicitly states it may need to raise additional funds through equity offerings, debt securities, or bank financing. There is no assurance such financing will be available.
- Debt Status: As of December 31, 2009, the Company was in default on two notes payable. Accrued interest on these notes totaled $162,541. Note holders have not taken legal action to date.
- Internal Controls: Management concluded that disclosure controls and internal controls over financial reporting were ineffective as of December 31, 2009. Material weaknesses exist due to limited personnel, lack of segregation of duties, and absence of an audit committee.
- Stock Status: The common stock is quoted on the OTC Bulletin Board and is classified as a "penny stock," which limits liquidity and resale ability for investors.
Investor Verification Checklist
- Verify Going Concern Status: Confirm if the Company has secured the additional financing required to fund operations, as the auditors have expressed substantial doubt about its ability to continue.
- Review Debt Defaults: Investigate the status of the two defaulted notes payable and the $162,541 in accrued interest to assess potential legal risks or forced liquidation.
- Assess Investment Valuation: Verify the fair value of the sole remaining investment (Canyon Shadows Apartments), which was written down to $82,662, representing the majority of the Company's assets.
- Check Internal Controls: Evaluate the risk of financial misstatement given the admitted material weaknesses in internal controls and the lack of an audit committee.
- Confirm Share Count: Note that 10,313,680 shares were rescinded from the former interim president subsequent to the reporting period; verify current outstanding share counts.