Cautionary Note Regarding Forward Looking Statements
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements regarding
management's future plans for the Company including consummating a reverse
merger, our liquidity and ability to raise capital, our business strategy and
our future operations. All statements other than statements of historical facts
contained in this report, including statements regarding our future financial
position, liquidity, working capital sources, business strategy and plans and
objectives of management for future operations, are forward-looking statements.
The words "believe," "may," "estimate," "continue," "anticipate," "intend,"
"should," "plan," "could," "target," "potential," "is likely," "will," "expect"
and similar expressions, as they relate to us, are intended to identify
forward-looking statements. We have based these forward-looking statements
largely on our current expectations and projections about future events and
financial trends that we believe may affect our financial condition, results of
operations, business strategy and financial needs.
The results anticipated by any or all of these forward-looking statements might
not occur. Important factors, uncertainties and risks that may cause actual
results to differ materially from these forward-looking statements include the
future impact of the impact of future strains of COVID-19, the Russian invasion
of the Ukraine, inflation and Federal Reserve interest rate increases in
response thereto on the economy including the potential for a recession and a
resulting reduction in prospective target businesses to acquire, and our lack of
an operating history and revenue. Further information on the risk factors
affecting our business is contained in "Risk Factors" of our annual report on
Form 10-K for the fiscal year ended November 30, 2021. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as the result of new information, future events or otherwise.
Description of Business
Vado Corp., previously known as TradeFan, Inc., was incorporated in the State of
Nevada on February 10, 2017 and established a fiscal year end of November 30. We
have not generated material revenues, have minimal assets and have incurred
losses since inception. We were formed to engage in the embroidery business, but
in connection with the Change of Control described in the following paragraph,
the Company has terminated its plans in the embroidery business and wrote off
its assets. Since the Change of Control, we have been seeking new business
opportunities in the United States and abroad. Among other things, we may
acquire an ongoing business in a reverse merger.
On May 22, 2020, David Lelong purchased from Dusan Konc 6,000,000 shares of
common stock of the Company and a convertible promissory note with a face value
of $29,973 (the "Konc Related Party Note"), payable by the Company and
convertible into shares of common stock at $0.001 per share, for a total
purchase price of $100,000 (the "Change of Control"). The Change of Control was
effected pursuant to a Securities Purchase Agreement dated May 22, 2020 (the
"Purchase Agreement") by and among Mr. Lelong as the purchaser, the Company, and
Mr. Konc, the Company's majority shareholder, sole director and officer, as the
seller. The Konc Related Party Note was cancelled, and a new convertible note in
the amount of $29,973 was issued to Mr. Lelong (the "Lelong Related Party
Note"). On May 28, 2020, Mr. Lelong fully converted the Related Party Note into
89,919,000 shares of the Company's common stock.
On March 15, 2021, the Company changed its name to "TradeFan, Inc." in
connection with a contemplated share exchange transaction with which the Company
decided not to proceed. On August 23, 2021, the Company changed its name back to
Vado Corp.
On June 17, 2022, the Company entered into a non-binding term sheet with an
acquisition target setting forth the proposed terms of a potential reverse
merger transaction which if consummated would result in the shareholders of the
target owning approximately 95% of the Company's common stock. The term sheet
also envisions the Company raising $1.5 million from the sale of convertible
preferred stock, the terms of which have to be negotiated with investors. As of
the date of this report, no definitive agreement has been executed. There can be
no assurances that the reverse merger with the target will occur. Among other
conditions is completion of an audit of the financial statements of the target.
Plan of Operation
The Company has no operations or revenue as of the date of this report. We have
terminated our operations in the embroidery business, and are currently in the
process of developing a business plan. Management intends to explore and
identify viable business opportunities within the U.S. and abroad including
seeking to acquire a business in a reverse merger. See Note 1 to the unaudited
financial statements contained in this report. Our Chief Executive Officer has a
history of successfully achieving that goal, although no assurances can be given
that he can achieve this. Our ability to effectively identify, develop and
implement a viable plan for our business may be hindered by risks and
uncertainties which are beyond our control. For more information about the risk
of coronavirus on our business, see "Risk Factors" contained in our annual
report on Form 10-K for the fiscal year ended November 30, 2021.
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Results and Plan of Operations
Revenue, Cost of Revenue and Gross Profit
We had no revenue for the six months ended May 31, 2022 and 2021. We expect this
trend to persist until we can locate and acquire an operating business.
Operating Expenses
We incurred operating expenses of $37,297 and $108,464 during the six months
ended May 31, 2022 and 2021, respectively. The operating expenses were mainly
due to the professional fees related to the Company's filings under the
Securities Exchange Act of 1934 (the "Exchange Act") and search for an
acquisition target and general operating expenditures of running the Company.
Interest Expense
The Company recorded interest expense in the amount of $0 and $1,125 during the
six months ended May 31, 2022 and 2021, respectively. The 2021 interest expenses
were incurred in connection with the 2020 and 2021 Accelerated Online Agreements
described in Note 5 to the unaudited financial statements contained in this
report. The 2020 Accelerated Online Agreement was terminated effective January
4, 2021, and the 2021 Accelerated Online Agreement was terminated effective June
1, 2021.
Net Loss
During the six months ended May 31, 2022 and 2021, the Company recorded a net
loss of $37,297 and $109,589, respectively. The increase was due to additional
expenditures in connection with professional fees and our search for an
operating business to acquire.
Liquidity and Capital Resources
Cash used in Operating Activities:
For the six months ended May 31, 2022 and 2021, net cash used in operating
activities was $37,579 and $64,660, respectively.
Management intends to fund our working capital requirements through a
combination of our existing funds and future issuances of debt or equity
securities. Our working capital requirements are expected to increase in line
with the implementation of our business plan and commencement of operations,
which may be accomplished through a reverse merger in which we acquire an
operating business.
Based upon the ability of our principal shareholder to advance funds to us, we
have sufficient working capital to fund our operations over the next 12 months.
If we are able to close a reverse merger, it is likely we will need capital as a
condition of closing that acquisition. Because of the uncertainties, we cannot
be certain as to how much capital we need to raise or the type of securities we
will be required to issue. In connection with a reverse merger, we will be
required to issue a controlling block of our securities to the target's
shareholders which will be very dilutive.
Additional issuances of equity or convertible debt securities will result in
dilution to our current shareholders. Further, such securities might have
rights, preferences or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, we may not be
able to take advantage of prospective new business endeavors or opportunities,
which could significantly and materially restrict our business operations.
We anticipate that we will incur operating losses in the next 12 months. Our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development. Such
risks for us include, but are not limited to, an evolving and unpredictable
business model; recognition of revenue sources; and the management of growth. To
address these risks, we must, among other things, develop, implement and
successfully execute our business and marketing strategy, respond to competitive
developments, and attract, retain and motivate qualified personnel. There can be
no assurance that we will be successful in addressing such risks, and the
failure to do so could have a material adverse effect on our business prospects,
financial condition and results of operations.
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COVID-19 Update
To date, the COVID-19 pandemic has not had a material impact on the Company,
particularly due to our current lack of operations. If the United States
experiences another spread of the pandemic, it may, however, have an impact on
our ability to evaluate and acquire an operating entity through a reverse merger
or otherwise. See "Risk Factors" contained in our annual report on Form 10-K for
the fiscal year ended November 30, 2021 for more information. While the COVID-19
pandemic appears to no longer threaten the economy as it did, supply chain
shortages seem to have evolved from COVID-19. Moreover, the risk of a serious
new COVID-19 strain or other serious virus evolving, as well as the possibility
of reduced efficacy of vaccines over time and the possibility that a large
number of people decline to get vaccinated or receive booster shots, creates
inherent uncertainty as to the potential future impact of the pandemic on our
business, any acquisition target or industry and the economy in general.
Off-Balance Sheet Arrangements
As of the date of this report, we do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
Going Concern
The independent registered public accounting firm auditors' report accompanying
our November 30, 2021 financial statements contained an explanatory paragraph
expressing substantial doubt about our ability to continue as a going concern.
The financial statements have been prepared "assuming that we will continue as a
going concern," which contemplates that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.
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