Reliant Holdings Inc
For the period ended Sep 30, 2024. Filed Dec 20, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Dec 20, 2024
ONARStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001477932-24-004870
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-12-20.
0001477932-24-008245
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 54 current paragraphs.
35 unchanged; 9 reworded; 10 added; 26 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
We had revenue of $898,797 for the three months ended September 30, 2024, compared to revenue of $668,432 for the three months ended September 30, 2023, an increase of $230,365 or 34% from the prior period. The increase in revenues was primarily due to drive by the acquisition of Reliant Holdings and its related pool business.
Current report
We had operating expenses of $1.1 million for the three months ended September 30, 2024, compared to operating expenses of $536,581 for the three months ended September 30, 2023, representing an increase of $552,987 or 103%. This increase was related to costs of compliance related to our acquisition of Reliant Holdings and the impairment of certain accounts receivable due from affiliated entities whose financial condition deteriorated during the period which resulted in collection of the balance being in doubt.
Current report
For the Nine months Ended September 30, 2024, compared to the Nine months Ended September 30, 2023
Current report
We had revenue of $2.2 million for the nine months ended September 30, 2024, compared to revenue of $2.2 million for the nine months ended September 30, 2023, a decrease of $37,900 or 2% from the prior period. Our revenues from our marketing business declined during the period, which was offset by the acquisition of Reliant Holdings during the third quarter of 2024. Declines in our core marketing business were the result of select clients no longer being serviced by the Company in favor of seeking more profitable clients.
Current report
We had operating expenses of $1.9 million for the nine months ended September 30, 2024, compared to operating expenses of $1.2 million for the nine months ended September 30, 2023. The increase was the result of management’s continued efforts to reduce overhead through the strategic reduction of costs during the period but was offset by the impairment of certain accounts receivable due from affiliated entities whose financial condition deteriorated during the period which resulted in collection of the balance being in doubt.
Current report
We had merger and transaction related expenses of $281,525 for the nine months ended September 30, 2024 and compared to $85,827 for the nine months ended September 30, 2023. This increase is the result of additional costs incurred for the acquisition of Reliant Holdings during the period as well as the investigation of other potential acquisitions none of which resulted in any binding commitments.
Current report
We had total and current liabilities of $4.2 as of September 30, 2024, including accounts payable of $159,233 and accrued expenses of $998,232, contract liabilities, relating to billings in excess of costs and estimated earnings on uncompleted jobs of $80,229, and notes payable maturing within one year of $2.7.
Current report
We had a working capital deficit of $3.5 as of September 30, 2024, compared to a working capital deficit of $1.7 as of December 31, 2023.
Current report
We had $68,775 of cash used in investing activities for the nine months ended September 30, 2024, primarily driven by our acquisition of Reliant Holdings, Inc. We had $563,262 of net cash used in investing activities for the nine months ended September 30, 2023, which was due primarily by a loan made to a non-executive employee of the Company and the acquisition of intangible assets during the period
Current report
We had $1.8 million of cash provided by financing activities for the nine months ended September 30, 2024, primarily driven by the issuance of new debt instruments offset by repayments of previous balances and the repayment of advances form related parties and shareholders. We had $1.3 of net cash provided by financing activities for the nine months ended September 30, 2023, which was driven primarily by the issuance of debt instruments to related parties and contributions from members
Removed paragraphs (26)
Previous report
Custom Homes
Previous report
On October 10, 2018, the Company incorporated a new wholly-owned subsidiary in Texas, Reliant Custom Homes, Inc. and is attempting to expand its operations in the Austin, Texas area as a custom home builder. To date, the Company has engaged a consultant in connection with custom home builder services, and has purchased land located in Lago Vista, Texas, in the Texas Hill Country, outside of Austin, Texas, on which it has started constructing a custom home which it then plans to sell. Current plans are for the custom home to be approximately 2,300 square feet. In April 2020, the Company obtained a construction loan for $221,000 for the construction costs associated with the build, of which $186,404 was outstanding as of December 31, 2022 and $220,309 was outstanding as of December 31, 2023, which funds were used for building materials purchases. The loan has been renewed and has been extended through July 28, 2024. On May 17, 2024, the Company closed on the sale of the custom home for net proceeds of $495,049 after deducting commissions and other fees.
Previous report
We currently anticipate building custom homes on a build-to-order basis where we do not begin construction of the home until we have a signed contract with a customer. However, we may in the future also build speculative (“spec”) homes, which would allow us to compete with existing homes available in the market, especially for homebuyers that require a home within a short time frame.
Previous report
We intend on winding down the custom homes business during the 3 rd quarter.
Previous report
Results of operations for ONAR will be reflected in the third quarter.
Previous report
Separately, management is exploring, and we may enter into, strategic transactions in the future, as discussed in greater detail below under “Review of Strategic Alternatives”.
Previous report
We had revenue of $951,177 for the three months ended June 30, 2024, compared to revenue of $380,289 for the three months ended June 30, 2023, an increase of $570,888 or 150.1% from the prior period. We recognize revenue based on the percentage that a job is complete rather than upon completion for our Pools business. As such, total revenue recognized for each period may be different than the product of total completed pools during each period multiplied by the average pool contract price of each pool during such period, as the construction of certain pools may have started in one period and ended in another. Revenue increased to $411,177 during the current period from $380,289 due to an increase in pools completed in the current period. In addition, we have revenues of $540,000 from the sale of our first custom home which closed in the three months ended June 30, 2024. We had no comparable sales in the same period 2023.
Previous report
Our cost of goods sold related to our pool business increased by $59,506 during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. For the six months ended June 30, 2024, we had costs of goods sold related to custom homes of $451,730. We had no cost of goods sold related to custom homes for the six months ended June 30, 2023.
Previous report
Cost of goods sold of our pool business represents our pool construction costs, including raw materials, outsourced labor, installed equipment, tile and coping expenses, excavation costs and permit expenses. We anticipate our cost of goods sold increasing in approximate proportion to increases in revenue and decreasing in approximate proportion to decreases in revenue, moving forward, as our cost of goods sold are factored into the price we charge for our pools and represent the cost of pool construction, the majority of which is not fixed and varies depending on the total number of pools and construction projects we complete during each period and the size and complexity of such projects.
Previous report
Cost of goods sold of our home business represents our home construction costs, including land, outsourced labor, building materials, paint and finishings, and related closing costs. We do not expect to incur similar costs in the future as we wind down our home business.
Previous report
We had a gross margin of $229,825 for the three months ended June 30, 2024, compared to a gross margin of $170,173 for the three months ended June 30, 2023, an increase of $59,652 or 35.1% from the prior period due to the reasons described above. Gross margin as a percentage of revenue was 24.2% and 44.7% for the three months ended June 30, 2024, and 2023, respectively. Gross margin for our pool business as a percentage of revenue was 34.4% and 44.7% for the three months ended June 30, 2024, and 2023, respectively
Previous report
We had operating expenses consisting solely of general and administrative expenses of $343,528 for the three months ended June 30, 2024, compared to operating expenses consisting solely of general and administrative expenses of $228,448 for the three months ended June 30, 2023, representing an increase of $115,080 or 50.4%. This increase was related to commission paid upon closing of the custom home.
Previous report
We had net loss of $111,696 for the three months ended June 30, 2024, compared to a net loss of $59,899 for the three months ended June 30, 2023, an increase in net loss of $51,797 mainly due to increased operating expenses derived from custom home sales.
Previous report
For the Six Months Ended June 30, 2024, compared to the Six Months Ended June 30, 2023
Previous report
We had revenue of $1,526,935 for the six months ended June 30, 2024, compared to revenue of $1,176,139 for the six months ended June 30, 2023, an increase of $350,796 or 29.8% from the prior period. We recognize revenue of our pools business based on the percentage that a job is complete rather than upon completion. As such, total revenue recognized for each period may be different than the product of total completed pools during each period multiplied by the average pool contract price of each pool during such period, as the construction of certain pools may have started in one period and ended in another. Revenue decreased to 986,935 during the current period compared to $1,176,139 due to a decrease in pools completed in the current period resulting from a downturn in the demand for in ground swimming pools after the increasing interest rates and the increasing costs making pools un-affordable for most residents in the Company’s operating area. In addition, we have revenues of $540,000 from the sale of our first custom home which closed in the six months ended June 30, 2024. We had no comparable sales in the same period 2023.
Previous report
Although our cost of goods sold related to our pool business actually decreased by $185,074, we had no cost of goods sold related to custom homes for the six months ended June 30, 2023. For the six months ended June 30, 2024, we had costs of goods sold related to custom homes of $451,730.
Previous report
Cost of goods sold represents our pool construction costs, including raw materials, outsourced labor, installed equipment, tile and coping expenses, excavation costs and permit expenses. We anticipate our cost of goods sold increasing in approximate proportion to increases in revenue and decreasing in approximate proportion to decreases in revenue, moving forward, as our cost of goods sold are factored into the price we charge for our pools and represent the cost of pool construction, the majority of which is not fixed and varies depending on the total number of pools and construction projects we complete during each period and the size and complexity of such projects.
Previous report
We had a gross margin of $531,307 for the six months ended June 30, 2024, compared to a gross margin of $447,167 for the six months ended June 30, 2023, an increase of $84,140 or 18.8% from the prior period due to the reasons described above. Gross margin as a percentage of revenue was 34.8% and 38.0% for the six months ended June 30, 2024, and 2023, respectively. Gross margin for our pool business as a percentage of revenue was 34.4% and 44.7% for the three months ended June 30, 2024, and 2023, respectively
Previous report
We had operating expenses consisting solely of general and administrative expenses of $506,406 for the six months ended June 30, 2024, compared to operating expenses consisting solely of general and administrative expenses of $473,901 for the six months ended June 30, 2023. This was a nominal change in our general and administrative expenses.
Previous report
We had net income of $13,605 for the six months ended June 30, 2024, compared to a net loss of $29,930 for the six months ended June 30, 2023, an increase in net income of $43,535 mainly due to increased revenues derived from custom home sales.
Previous report
We had total liabilities of $318,573 as of June 30, 2024, which included current liabilities of $258,023, including accounts payable and accrued liabilities of $47,635, accrued liabilities related parties of $68,138, contract liabilities, relating to billings in excess of costs and estimated earnings on uncompleted jobs of $108,206, current portion of note payable of $7,650, and current portion of right-of-use liability of $26,394, and long-term liabilities consisting of a long-term note payable, net of current portion, of $48,740 relating to certain vehicles (discussed below) and $11,810 of right-of-use liability.
Previous report
On February 11, 2020, we purchased a Hyundai Genesis G80. The Vehicle had a total purchase price of $50,616, including $11,000 which was paid as a down payment in cash. We entered into a term note, secured by the vehicle, for the remaining amount of the purchase price, which amount accrues interest at the rate of 3.99% per annum and is payable at the rate of $660 per month through maturity on February 27, 2025.
Previous report
On October 26, 2021, we purchased a Nissan Rogue for use by Mr. May. The vehicle had a total purchase price of $29,931, including $10,000 which was paid as a down payment in cash. We entered into a term note, secured by the vehicle, for the remaining amount of the purchase price, which amount accrues interest at the rate of 6.54% per annum and is payable at the rate of $336 per month through maturity on May 26, 2027.
Previous report
On April 28, 2020, the Company secured a construction loan from First United Bank and Trust Company to be used to develop the land purchased in the third quarter of 2019. The loan bears interest at the rate of 6.25% per annum and is currently due on April 28, 2024. On May 17, 2024, the Company closed on the sale of the custom home and was able to repay the balance of the construction loan in full along with all interest. As of June 30, 2024, the Company had $0 amounts owed under the construction loan.
Previous report
We had working capital of $137,144 as of June 30, 2024, compared to working capital of $133,503 as of December 31, 2023.
Previous report
We had $226,157 of cash used in financing activities for the six months ended June 30, 2024, which was due $220,309 in repayment of the construct loan and $5,848 from payments on the notes payable. We had $9,978 of net cash provided by financing activities for the six months ended June 30, 2023, which was due to $29,508 of proceeds from construction loan offset by 6,834 of payments on note payable and $12,696 of payments on right-of-use liability.
Reworded paragraphs (9)
Previous wording
Our principal executive offices are located at 8605 Santa Monica Boulevard, PMB 36522, Los Angeles, CA 90069, and our telephone number is (512) 407-2623.
Current wording
Our principal executive offices are located at 8605 Santa Monica Boulevard, PMB 36522, Los Angeles, CA 90069, and our telephone number is (213) 437-3081.
Previous wording
We had working capital of $137,144 as of June 30, 2024. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we don’t currently anticipate the need for additional funding in order to continue our operations at their current levels and to pay the costs associated with being a public company for the next 12 months. We may, however, require additional funding in the future to expand or complete acquisitions. Our plan for the next twelve months is to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand our operations organically or through acquisitions as funding and opportunities arise, and, as discussed above, we have closed on the sale of our custom home. As our business continues to grow, customer feedback will be integral in making small adjustments to improve the product and overall customer experience. We plan to raise additional required funding when required through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues.
Current wording
We had working capital deficit of $3.5 million as of September 30, 2024. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we currently anticipate the need for additional funding in order to continue our operations at their current levels and to pay the costs associated with being a public company. Our plan for the next twelve months is to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand our operations organically or through acquisitions as funding and opportunities arise. We plan to raise additional required funding through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, the Company may be unable to continue to operate and may need to wind down operations.
Previous wording
We had cost of goods sold of $721,352 for the three months ended June 30, 2024, compared to cost of goods sold of $210,116 for the three months ended June 30, 2023, an increase of $511,236 or 243.3% from the prior period.
Current wording
We had cost of goods sold of $679,891 for the three months ended September 30, 2024, compared to cost of goods sold of $360,613 for the three months ended September 30, 2023, an increase of $319,278 or 89% from the prior period. This increase is primarily due to the acquisition of Reliant Holdings during the period.
Previous wording
We had interest expense of $3,135 for the three months ended June 30, 2024, compared to interest expense of $3,065 for the three months ended June, 30 2023, due to interest paid in connection with loans for Company vehicles, including a car used by our Chief Executive Officer and amounts outstanding on our construction loan, each as described in greater detail under “Liquidity and Capital Resources” below.
Current wording
We had interest expense of $153,409 for the three months ended September 30, 2024, compared to interest expense of $36,300 for the three months ended September 30, 2023, due to interest costs in connection with new loans during 2024 to fund operations as described in greater detail under “Liquidity and Capital Resources” below.
Previous wording
We had cost of goods sold of $995,628 for the six months ended June 30, 2024, compared to cost of goods sold of $728,972 for the six months ended June 30, 2023, an increase of $266,656 or 36.6% from the prior period.
Current wording
We had cost of goods sold of $1.5 million for the nine months ended September 30, 2024, compared to cost of goods sold of $1.7 million for the nine months ended September 30, 2023, a decrease of $229,365 or 13% from the prior period. The decline was largely the result of decreases in workflow during the period and corresponds to the decrease in revenue.
Previous wording
We had interest expense of $11,192 for the six months ended June 30, 2024, compared to interest expense of $3,722 for the six months ended June, 30 2023, due to interest paid in connection with loans for Company vehicles, including a car used by our Chief Executive Officer and amounts outstanding on our construction loan, each as described in greater detail under “Liquidity and Capital Resources” below.
Current wording
We had interest expense of $301,581 for the nine months ended September 30, 2024, compared to interest expense of $56,907 for the nine months ended September 30, 2023, due to interest costs in connection with new loans during 2024 to fund operations as described in greater detail under “Liquidity and Capital Resources” below.
Previous wording
We had total assets of $509,624 as of June 30, 2024, consisting of total current assets of $395,167, which included cash of $394,667 and accounts receivable of $500. We also had net equipment assets of 76,348 and right-of-use asset of 38,109. Equipment relates to the vehicle discussed below.
Current wording
We had total assets of $3.1 as of September 30, 2024, consisting of total current assets of $701,760, which included cash of $463,424, and accounts receivable of $131,903.
Previous wording
We had $311,447 of net cash provided by operating activities for the six months ended June 30, 2024, as compared to $278,263 of net cash used in operating activities for the six months ended June 30, 2023. Net cash provided by operating activities for the 2024 period was mainly due to net income of $13,605 and $446,427 from the sale of house and real estate inventory offset by $167,045 in contract liabilities. For the 2023 period, net cash used in operating activities was mainly due to a loss of 29,930 and $251,423 in contract liabilities mainly offset by $36,000 in stock based compensation and contract assets of $28,900.
Current wording
We had $1.3 million of net cash used in operating activities for the nine months ended September 30, 2024, as compared to $746,171 of net cash used in operating activities for the nine months ended September 30, 2023. Net cash used in operating activities for the 2024 period was mainly due to our net loss for the period. For the 2023 period, net cash used in operating activities was mainly due to a net loss for the period.
Previous wording
In the future, we or our majority stockholders (including Claude Zdanow, our sole officer and director and Michael Chavez, a significant shareholder of the Company), may enter into transactions with parties seeking to merge and/or acquire us and/or our operations. While we have not entered into any definitive binding acquisition agreements with any such parties to date, in the event that we do enter into such a definitive binding transaction or transactions in the future, our majority stockholders will likely change and new shares of common stock or preferred stock could be issued resulting in substantial dilution to our then current stockholders. As a result, our new majority stockholders may change the composition of our Board of Directors (currently consisting solely of Mr. May) and replace our current management. Any future transaction may also result in a change in our business focus. We have not entered into any definitive acquisition agreements relating to any strategic transaction involving the Company as of the date of this filing and may not enter into such agreements in the future. Any future strategic transaction involving the Company or its operations may have a material effect on our operations, cash flows, results of operations, prospects, plan of operations, the quotation of our common stock on the OTCQB Market, our officers, directors and majority stockholders, and ultimately the value of our securities.
Current wording
In the future, we or our majority stockholders (including Claude Zdanow, our sole officer and director and Michael Chavez, a significant shareholder of the Company), may enter into transactions with parties seeking to merge and/or acquire us and/or our operations. While we have not entered into any definitive binding acquisition agreements with any such parties to date, in the event that we do enter into such a definitive binding transaction or transactions in the future, our majority stockholders will likely change and new shares of common stock or preferred stock could be issued resulting in substantial dilution to our then current stockholders. As a result, our new majority stockholders may change the composition of our Board of Directors (currently consisting solely of Mr. Zdanow) and replace our current management. Any future transaction may also result in a change in our business focus. We have not entered into any definitive acquisition agreements relating to any strategic transaction involving the Company as of the date of this filing and may not enter into such agreements in the future. Any future strategic transaction involving the Company or its operations may have a material effect on our operations, cash flows, results of operations, prospects, plan of operations, the quotation of our common stock on the OTCQB Market, our officers, directors and majority stockholders, and ultimately the value of our securities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
For both the six months ended June 30, 2024 and June 30, 2023, we had nominal income from interest.