These condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2018 are not necessarily indicative of the results that can be expected for the full year.
Notes to Financial Statements
September 30, 2018
(Unaudited)
Note A - Basis of Presentation, Background and Description of Business
Basis of Presentation
The accompanying unaudited condensed financial statements of SMSA Crane Acquisition Corp. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, 2017, included in our Annual Report on Form 10-K for the year ended December 31, 2017.
In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the nine month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company", "we", "us" or "our" mean SMSA Crane Acquisition Corp.
Background and Description of Business
SMSA Crane Acquisition Corp. was organized on September 9, 2009 as a Nevada corporation to effect the reincorporation of Senior Management Services of Crane, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
The Company's emergence from Chapter 11 of Title 11 of the United States Code on August 1, 2007 caused a change in majority ownership and voting control - that is, loss of control by the then-existing stockholders, a court-approved reorganization, and a reliable measure of the entity's fair value - resulting in a fresh start, creating, in substance, a new reporting entity. Accordingly, the Company, post-bankruptcy, had no significant assets, liabilities or operating activities. Therefore, the Company, as a new reporting entity, qualified as a shell company as defined in Rule 405 under the Securities Act of 1933, and Rule 12b-2 under the Securities Exchange Act of 1934. The Company's Plan of Reorganization (the "Plan") was confirmed by the United States Bankruptcy Court, Northern District of Texas Dallas Division on August 1, 2007 and became effective on August 10, 2007. On November 5, 2010, the Company entered into a transaction with Carolyn C. Shelton, a resident of Tyler, Texas, pursuant to which she acquired 9,500,000 shares of our common stock for approximately $9,500 cash or $0.001 per share and a Certificate of Compliance with certain bankruptcy confirmation provisions was issued by the Bankruptcy Court on November 10, 2010.
On August 29, 2013, Coquí Radio Pharmaceuticals, Corp. ("Coquí") closed a transaction through which Coquí purchased 9,500,000 outstanding shares of common stock and agreed to purchase an additional 400,000 outstanding shares of common stock of the Company from existing shareholders in a private transaction in exchange for $280,000. The additional 400,000 shares were subsequently acquired on October 24, 2013 and Coquí became the majority controlling stockholder of the Company.
The Company's business plan is to pursue a business combination through the acquisition of, or merger with, an existing company seeking the perceived advantages of being a publicly traded corporation. The Company is not restricting its potential target companies to any specific business, industry or geographical location. No assurances can be given that the Company will be successful in locating or negotiating with any target company.
Note B - Change of Control
Coqui the principal shareholder of the Company entered the Stock Purchase Agreement, effective as of the 26th day of June, 2017, with Irwin Eskanos (Buyer). Coqui agreed to sell to the Buyer, and the Buyer agreed to purchase from Coqui, a total of 9,947,490 shares of common stock of the Company for a total purchase price of $250,000. These purchased shares represented approximately 99.00% of the Companys issued and outstanding shares of Common Stock. Also, concurrently with the sale of controlling interest, Coqui paid all outstanding liabilities of the Company as of the date of this sale. As a result, Coqui paid $130,000 of the Companys outstanding accounts payable through the attorneys escrow accounts and agreed to forgive all of its debts at the closing of this transaction. The Company recorded Coquis forgiveness of debt of $130,000 under Additional paid in capital, for the nine months ended September 30, 2017.
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On June 26, 2017, the board of directors appointed Irwin Eskanos as our new sole Director, President, Secretary, Treasurer, CEO, and CFO. Following these appointments, the board accepted the resignation of Carmen I. Bigles as our former sole officer and director.
Note C Going Concern
We have incurred recurring losses since inception and expect to continue to incur losses as a result of legal and professional fees and our corporate general and administrative expenses. Our net losses incurred for the nine months ended September 30, 2018 and September 30, 2017, amounted to $29,467 and $55,014, respectively, and working capital (deficits) was approximately $(57,000) and $(27,000), respectively, at September 30, 2018 and December 31, 2017. As a result, there is substantial doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company expects to seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available.
Note D - Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the valuation of deferred tax assets. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
Income taxes
The Company files income tax returns in the United States of America and various states, as appropriate and applicable.
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company has adopted the provisions of ASC 740-10 "Accounting for Uncertain Income Tax Positions". The Codification Topic requires the recognition of potential liabilities as a result of management's acceptance of potentially uncertain positions for income tax treatment on a "more-likely-than-not" probability of an assessment upon examination by a respective taxing authority. As a result of the implementation of Codification's Income Tax Topic, the Company did not incur any liability for unrecognized tax benefits.
Income (Loss) per share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock.
Common stock equivalents represent the dilutive effect of the assumed exercise of outstanding stock warrants, options or convertible securities by using the if-converted method, and only if the common stock equivalents are considered dilutive based upon the Company's net income (loss) position at the calculation date.
As of September 30, 2018 and December 31, 2017, the Company had no outstanding stock warrants, options or convertible securities which could be considered dilutive for purposes of the loss per share calculation.
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Recent Accounting Pronouncements
Management does not believe that any recently adopted or issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Note E - Fair Value of Financial Instruments and fair value measurements
The carrying amount of cash, accounts payable and accrued expenses and due to shareholder, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.
ASC Topic 820, "Fair Value Measurements and Disclosures," requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, "Financial Instruments," defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
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Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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Note F - Due to Shareholder
As of September 30, 2018 and December 31, 2017, the Company owes $39,115 and $39,115, respectively, to Mr. Irwin Eskanos, the principal shareholder of the Company, for the funding of its current operating expenses. The amount owing is unsecured, non-interest bearing, and due on demand.
Note G - Concentration of Credit Risk
At times cash deposited with financial institutions may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2018.
Note H - Contingencies
The Company was contemplating a possible merger by the Company and Coquí. The Company's business plan is now to pursue a business combination through the acquisition of, or merger with, an existing company seeking the perceived advantages of being a publicly traded corporation. No assurances can be given that the Company will be successful in pursuing a business combination in the near future or at all.
Note I - Stockholders' Deficit
Pursuant to our Articles of Incorporation, our board has the authority, without further stockholder approval, to provide for the issuance of up to 10,000,000 shares of our preferred stock in one or more series and to determine the dividend rights, conversion rights, voting rights, rights in terms of redemption, liquidation preferences, the number of shares constituting any such series and the designation of such series. Our board has the power to afford preferences, powers and rights (including voting rights) to the holders of any preferred stock preferences, such rights and preferences being senior to the rights of holders of common stock.
During January 2017 to March 2017, 48 shareholders of the Company, who previously acquired shares of the Companys common stock, par value of $0.001 per share (the SMSA Crane Shares), in a private placement with the Company, at price of $3.31 per share, enter into an share exchange agreement with Coqui. The 48 investors agreed to exchange their SMSA Crane Shares for an equal value of shares of Coquis common stock, par value of $0.1 per share (the Coqui Shares), and Coqui agreed to proceed with the proposed share exchange. As a result, 1,663,443 SMSA Crane Shares outstanding held by these 48 shareholders and 51,300 outstanding warrants held by Pariter, the placement agent, were exchanged for Coqui Shares and warrants and the Company cancelled these SMSA Crane shares and warrants.
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On May 16, 2017, the Board of Directors approved the issuance of 47,490 shares of its common shares to Coqui, based on the private placement share price of $3.31 in satisfaction for the total debt owed to Coqui of $157,195.
On June 26, 2017, our former controlling shareholder, Coqui Radio Pharmaceuticals Corp. (Coqui), sold 9,947,490 shares of common stock to Irwin Eskanos for a purchase price of $250,000. See Note B Changes of Control.
There were no common shares issued or cancelled during the nine months ended September 30, 2018.
There were no preferred shares issued and outstanding at September 30, 2018 and December 31, 2017. There was 10,047,495 of common stock issued and outstanding with a par value of $0.001 as of September 30, 2018 and December 31, 2017.
Note J - Subsequent Events
In accordance with ASC 855-10, Company management reviewed all material events through the date of the issuance of these financial statements and determined that there are no additional material subsequent events to report, except as noted.
During October 2019, the Company received a loan of $35,000 from Mr. Irwin Eskanos, the principal shareholder of the Company, for the funding of its current operating expenses. The amount owing is unsecured, non-interest bearing, and due on demand.
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