Business Context and Reporting Period
Company: Broadleaf Capital Partners, Inc. (Note: Input metadata referenced "Red Cat Holdings," but the filing text identifies the registrant as Broadleaf Capital Partners, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Periods: The filing covers the quarterly periods ended March 31, June 30, and September 30, 2006, as well as the nine-month period ended September 30, 2006.
Business Overview: The Company is a Nevada corporation and a publicly traded diversified investment holding company. Its primary active asset is a 1% limited partnership interest in Canyon Shadows Apartments. Most subsidiaries are inactive. The Company previously operated as a Business Development Corporation (BDC) but rescinded its license in 2004/2005.
Key Financial Metrics
| Metric | Sept 30, 2006 | June 30, 2006 | March 31, 2006 | Dec 31, 2005 |
|---|---|---|---|---|
| Total Assets | $162,918 | $165,005 | $164,651 | $163,755 |
| Cash & Equivalents | $763 | $2,850 | $2,496 | $1,600 |
| Total Liabilities | $1,931,981 | $1,925,517 | $1,919,053 | $1,912,589 |
| Stockholders' Deficit | ($1,769,063) | ($1,760,512) | ($1,754,402) | ($1,748,834) |
| Accumulated Deficit | ($15,774,442) | ($15,765,891) | ($15,759,781) | ($15,754,213) |
Operating Results (Nine Months Ended Sept 30, 2006)
- Revenues: $5,697 (Significant decrease from $134,711 in the prior year period).
- General & Administrative Expenses: $6,534 (Decreased from $218,384 in the prior year period).
- Interest Expense: $19,392.
- Net Loss: $20,229.
- Net Loss Per Share: $(0.000).
Liquidity and Debt
- Current Liabilities: $1,931,981 (Exceeds current assets of $763).
- Notes Payable (Current): $1,292,308. The Company is in default on several notes, though creditors have not pursued collection proceedings.
- Accrued Interest: $66,763.
- Judgments Payable: $78,882.
Material Changes vs. Prior Period
- Revenue Decline: Revenues dropped significantly year-over-year (e.g., $5,697 vs. $134,711 for the nine months ended Sept 30). Management attributes this to a reduced role from general partner to limited partner in its primary investment (Canyon Shadows), resulting in lower distributions.
- Expense Reduction: General and administrative expenses decreased drastically (e.g., $6,534 vs. $218,384 for the nine months ended Sept 30) due to a reduction in company activity to basic core administrative costs following the 2005 fiscal year.
- Net Loss Improvement: Despite lower revenues, the net loss decreased significantly (e.g., $20,229 vs. $103,065 for the nine months ended Sept 30) primarily due to the sharp reduction in operating expenses.
- Cash Position: Cash balances remain critically low, fluctuating between $763 and $2,850 during the reporting periods.
Guidance, Outlook, Risks, and Contingencies
Going Concern Uncertainty
The filing explicitly states that the Company's recurring losses, negative cash flows, and substantial accumulated deficit raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might be necessary if the Company is unable to continue operations.
Management Plans
To continue operations, management plans to:
- Raise additional capital through sales of common stock.
- Convert promissory notes into common stock.
- Enter into acquisition agreements with profitable entities.
- Streamline operations and seek opportunities in real estate and financial management.
Risks and Contingencies
- Debt Default: The Company is in default on multiple notes payable totaling over $1.2 million. While no legal action has been taken by creditors, this poses a significant risk.
- Internal Controls: Management concluded that disclosure controls and internal controls over financial reporting were ineffective as of the reporting dates due to limited resources, lack of segregation of duties, and insufficient personnel.
- Litigation: While no open proceedings are listed, the Company has recorded liabilities for past judgments and settlements (e.g., Bank of Hemet, AMG Consulting) totaling $78,882 in judgments payable.
- Investment Valuation: The Company's primary asset (Canyon Shadows) is valued at cost less distributions. There is no active market for this investment, and valuation relies on management estimates.
Key Facts for Investor Verification
- Going Concern Status: Verify the Company's ability to secure immediate financing to cover operating losses and debt obligations, as cash on hand ($763) is insufficient.
- Debt Default Status: Confirm whether creditors have initiated collection proceedings on the $1.29 million in defaulted notes payable.
- Internal Control Weaknesses: Assess the impact of ineffective internal controls on the reliability of future financial reporting.
- Primary Asset Performance: Verify the current status and cash flow distribution from the Canyon Shadows Apartments investment, which is the sole source of revenue.
- Accumulated Deficit: Note the massive accumulated deficit of approximately $15.77 million, indicating a long history of losses.