What changed in this filing

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Item 1. Financial Statements

2020-02-11 compared with 2019-11-19 · 183 added, 158 removed, 536 unchanged (39% of the section changed)

1 unchanged sentence

CAPITAL CORPORATION

of September 30, 2019 (Unaudited) and June 30, 2019

Note Payable - Roran, net of debt discount

Interest Payable

of June 30, 2019 and December 31, 2019 (Unaudited)

June 30, 2019

LIABILITIES & EQUITY

Current Liabilities

Stock $1.00 par value, 10,000,000 authorized, 1,915,548 shares issued and outstanding

Paid-In Capital

Accounts Payable

Convertible Note Payable - Roran, net

of debt discount

Accrued Interest

Total Current Liabilities

Total Liabilities

Common Stock $1.00 par value, 10,000,000

authorized, 1,915,548 shares issued and outstanding

Additional Paid-In Capital

Accumulated Deficit

(17,685,223 )

(17,747,575 )

LIABILITIES & EQUITY

TOTAL LIABILITIES & EQUITY

the accompanying Notes, which are an integral part of these unaudited Financial Statements

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OF OPERATIONS

the Three Months Ended September 30, 2019 and 2018

September 30,

the Three and Six Months Ended December 31, 2019 and 2018

Three Months Periods Ended

Six Months Periods Ended

Administrative Expenses

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Total Expense

Net Loss from Operating Activities

Weighted Average Number of Common Shares Outstanding- Basic and Diluted

Net Income (Loss) Per Share- Basic and Diluted

Net Loss from Operations

Weighted Average Number of Common Shares Outstanding- Basic

Net Loss Per Share- Basic and Diluted

the accompanying Notes, which are an integral part of these unaudited Financial Statements

1 unchanged sentence

OF STOCKHOLDERS’

the Three Months Ended September 30, 2019 and 2018 (Unaudited)

the Three and Six Months Ended December 31, 2019 and 2018

($1 Par Value)

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$ (17,720,680 )

($1 Par Value)

Beneficial conversion feature

Net Loss for the period

Balance at December 31, 2019

$ (17,747,575 )

Balance at June 30, 2018

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$ (10,668,308 )

Beneficial conversion feature

Net Loss for the period

Balance at December 31, 2018

$ (28,190,625 )

$ (10,708,597 )

the accompanying Notes, which are an integral part of these unaudited Financial Statements

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OF CASH FLOWS

the Three Months Ended September 30, 2019 and 2018

the Six Months Ended December 31, 2019 and 2018

OPERATING ACTIVITIES

Adjustments to reconcile Net

loss to net cash used in operations:

Adjustments to reconcile Net loss to net cash used in

Debt discount

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FINANCING ACTIVITIES

from convertible Note payable - from Roran Capital

Net cash provided by Financing Activities

Proceeds from convertible Note

payable - from Roran Capital

Net cash provided by Financing

Net cash increase for period

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Supplemental Non-cash Investing and Financing Activities

Intrinsic value of embedded beneficial conversion option on convertible note payable

Intrinsic value of embedded beneficial conversion option on convertible note

the accompanying Notes, which are an integral part of these unaudited Financial Statements

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Capital Corporation (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end

investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Corporation

investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company

(“SBIC”).

The Company previously made equity investments in, and provided loans to, small businesses to finance their

growth, expansion, and development.

The Company previously made equity investments in, and provided loans to, small businesses to finance

their growth, expansion, and development.

Under applicable SBA regulations, the Company was restricted to investing only in qualified

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SBA was appointed receiver effective May 28, 2014.

Company effectively stopped conducting an active business upon the appointment of the SBA as receiver and the commencement of

the court ordered receivership (the “

Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver and the commencement

of the court-ordered receivership (the “

Receivership ”).

Over the course of the Receivership the activity of the

Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom

Over the course of the Receivership, the activity of

the Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom

to the SBA and for the expenses of the Receivership.

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Company has no operating assets of any value, and the Company no longer has the SBIC license from the SBA.

The Company is clearly

no longer operating as a registered investment company under the Investment Company Act.

The Company is no longer operating as a registered investment company under the Investment Company Act.

The Company will now seek to either (i)

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The Company responded to those comments with the filing of an Amended Application on June 4, 2018.

As of the date of this Quarterly Statement, the Company has filed its Fourth Amended Application and expects to reach resolution

in the near future.

As of the date of this Quarterly Statement, the Company has filed its Fifth Amended Application and expects to reach a

resolution in the near future.

unaudited financial statements herein have been prepared by the Company pursuant to the rules and regulations of the United States

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Accordingly, note disclosures which would substantially duplicate the disclosures

contained in the June 30, 2019 audited financial statements have been omitted from these interim unaudited financial statements.

contained on June 30, 2019, audited financial statements have been omitted from these interim unaudited financial statements.

The Company evaluated all subsequent events and transactions through the date of filing this report.

information and note disclosures normally included in financial statements prepared in accordance with United States generally

information and note disclosures normally included in financial statements prepared in accordance with the United States generally

accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.

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Operating results

for the three months ended September 30, 2019, are not necessarily indicative of the results that may be expected for the year

ending June 30, 2020.

for the three and six months ended December 31, 2019, are not necessarily indicative of the results that may be expected for the

year ending June 30, 2020.

For further information, refer to the audited financial statements and notes for the year ended June

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The issuance of the convertible debt described in Note 3 generated a beneficial conversion feature

(“BCF”), which arises when a debt or equity security is issued with a non-seperated embedded conversion option that

(“BCF”), which arises when a debt or equity security is issued with a non-separated embedded conversion option that

is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is

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November 20, 2013, the SBA filed a complaint in the United States District Court for the Eastern District of Virginia seeking,

among other things, receivership for the Company and a judgment in the amount outstanding under the Note Agreement plus continuing

among other things, receivership for the Company and judgment in the amount outstanding under the Note Agreement plus continuing

The complaint alleged that as of October 31, 2013, there remained an outstanding balance of $11,762,634 under the Note

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that the court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent

receiver of the Company for the purpose of liquidating all of the Company’s assets and satisfying the claims of its creditors

in the order of priority as determined by the court.

receiver of the Company to liquidate all of the Company’s assets and satisfy the claims of its creditors in the order of

priority as determined by the court.

Company initially took steps to contest the legal action initiated by the SBA and to oppose the receivership action.

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Order ”).

The Order appointed the SBA receiver of the Company for the purpose of marshaling

and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America,

on behalf of the SBA, against the Company in the amount of $11,770,722.

Such amount represents $11,700,000 in principal and $70,722

in accrued interest.

The Order appointed the SBA receiver of the Company to marshal and liquidate

in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on behalf

of the SBA, against the Company in the amount of $11,770,722.

Such amount represents $11,700,000 in principal and $70,722 in accrued

The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.

June 28, 2017, the Receivership was terminated and a final order entered by the Court provided Roran with control of

As of June 30, 2019, the Company’s outstanding judgment payable totaled $0, as the judgment had

been satisfied in full.

Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017.

As such, all amounts

due under the outstanding judgment payable are now owed to Roran rather than the SBA.

June 28, 2017, the Receivership was terminated and a final order entered by the Court provided Roran with control of the Company.

As of June 30, 2019, the Company’s outstanding judgment payable totaled $0, as the judgment had been satisfied in full.

purchased the Company’s outstanding judgment payable owed to the SBA from the SBA in July 2017.

As such, all amounts due

under the outstanding judgment payable were owed to Roran rather than the SBA.

Upon purchase, the Company began to accrue

interest that was due under the original terms of the judgment payable.

On May 16, 2019, Roran forgave the entire principal

amount and interest due thereon of $10,609,635.

On May 16, 2019, Roran forgave the entire principal amount

and interest due thereon of $10,609,635.

September 19, 2017, the Company entered into a Convertible Loan Agreement with Roran (the “Loan Agreement”).

to the Loan Agreement, Roran agreed to loan to the Company an amount not to exceed a total of $150,000 in principal over 18-months.

to the Loan Agreement, Roran agreed to loan the Company an amount not to exceed a total of $150,000 in principal over 18-months.

On June 17, 2019, the Company amended the Loan Agreement increasing the loan amount to $200,000 and extending the maturity date

to September 19, 2019.

Each advance under the Loan Agreement will be documented under a Convertible Promissory Note issued

by the Company in favor of Roran (the “Note”).

The Note bears interest at the rate of 12% per annum and is due in

Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a

conversion price equal to 60% of the share price.

As a result of the advances made pursuant to the Loan Agreement, the Company

has incurred total obligations of $184,338 as of September 30, 2019.

The Company recorded a BCF due the conversion option

of $116,800, which has been fully amortized as of September 30, 2019.

The debt discount has been amortized as interest

expense through September 30, 2019.

Roran has agreed to extend the loan and advance additional funds until further negotiations have been concluded.

Each advance under the Loan Agreement will be documented under a Convertible Promissory Note issued by

the Company in favor of Roran (the “Note”).

The Note bears interest at the rate of 12% per annum.

Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion

price equal to 60% of the share price.

As a result of the advances made pursuant to the Loan Agreement, the Company has incurred

total obligations of $190,768 as of December 31, 2019.

The Company recorded a BCF due to the conversion option of $116,800, which

has been fully amortized as of September 30, 2019.

The debt discount has been amortized as interest expense through September

On December 13, 2019, the Company amended its Loan Agreement and Promissory Note with Roran as follows:

the total amount to be loaned was increased to $250,000, and (ii) the maturity date was extended to June 19, 2020.

CAPITAL CORPORATION

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following amounts were owed to related parties, affiliated with the CEO and Chairman of the Board, at the dates indicated:

September 30, 2019

December 31, 2019

Convertible Note Payable (See Note 3)

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Company has evaluated all events that occurred after the balance sheet date through the date of the filing of this Quarterly Report

on Form 10-Q to determine if they must be reported, and there are no subsequent events to be reported except that Roran has

agreed to extend the convertible note payable until negotiations have been concluded.

on Form 10-Q to determine if they must be reported, and there are no subsequent events to be reported except that Roran has agreed

to extend the convertible note payable until negotiations have been concluded.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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of those terms.

The forward-looking statements specified in the following information have been compiled by our management on

the basis of assumptions made by management and considered by management to be reasonable.

Our future operating results, however,

are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

Statements in this report concerning the following, without limitation, are forward looking statements:

Our management has compiled the forward-looking statements specified in the following information based on assumptions

made by management and considered by management to be reasonable.

Our future operating results, however, are impossible to predict

and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

Statements in this report

concerning the following, without limitation, are forward-looking statements:

financial and operating results;

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except as required by law.

following discussion of the results of operations for the three months ended September 30, 2019 and 2018, respectively, should

be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in

this Quarterly Report on Form 10-Q.

Our discussion includes forward-looking statements based upon current expectations that involve

risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could

differ materially from those anticipated in these forward-looking statements because of a number of factors.

An investment in

our common stock involves a high degree of risk.

Readers of this Quarterly Report on Form 10-Q should carefully consider the risks

set forth in the Risk Factors and Business sections of our Annual Report on Form 10-K for the year ended June 30, 2019, filed

with the SEC on September 30, 2019.

The forward-looking statements specified in the following information have been compiled by

our management on the basis of assumptions made by management and considered by management to be reasonable.

Our future operating

results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking

following discussion of the results of operations for the three and six months ended December 31, 2019, and 2018, respectively,

should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere

in this Quarterly Report on Form 10-Q.

Our discussion includes forward-looking statements based upon current expectations that

involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of

events could differ materially from those anticipated in these forward-looking statements because of a number of factors.

An investment

in our common stock involves a high degree of risk.

Readers of this Quarterly Report on Form 10-Q should carefully consider the

risks set forth in the Risk Factors and Business sections of our Annual Report on Form 10-K for the year ended June 30, 2019,

filed with the SEC on September 30, 2019.

Our management has compiled the forward-looking statements specified in the following

information based on assumptions made by management and considered by management to be reasonable.

Our future operating results,

however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of

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The Company consented to a court order appointing the SBA as receiver of the

Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets.

That order also

entered judgment in favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722.

The SBA was appointed receiver effective May 28, 2014.

Company to marshal and liquidate in an orderly manner all of the Company’s assets.

That order also entered judgment in favor

of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722.

The SBA was appointed

receiver effective May 28, 2014.

the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the

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On June 28, 2017, the Receivership was terminated.

Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders

c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order.

termination of the Receivership, Roran took possession of all books and records made available to it by the SBA, and Roran has

expended, and continues to expend, its own funds to maintain the viability of the Company.

With no assets and no SBIC license

from the SBA, no income, and liabilities in excess of $10,000,000, it became clear to the Company that continuing to operate as

a registered investment company was impossible.

Roran provided assurances that it would fund reasonable expenses of the Company

so long as progress was being made to reorganize the Company and seek a new business to undertake or to merge with an existing

The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its

shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order.

termination of the Receivership, Roran took possession of all books and records made available to it by the SBA.

With no assets

and no SBIC license from the SBA, no income, and liabilities, at that time, in excess of $10,000,000, it became clear to the Company

that continuing to operate as a registered investment company was impossible.

The Company and Roran entered in to a Convertible

Loan Agreement on September 19, 2017, as amended, to fund the Company’s expenses while it sought a new business to

undertake or to merge with an existing business.

The New Board has continued to work toward achieving that goal.

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intends to continue to engage, qualified professionals and personnel in order to bring the Company current in its SEC filings

Roran paid for the Company to file all delinquent SEC filings as a registered investment company.

The Company filed all delinquent SEC filings as a registered investment company.

The Company believes

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Application on June 4, 2018.

As of the date of this Quarterly Statement, the Company has submitted a Fourth Amended Application

As of the date of this Quarterly Statement, the Company has submitted a Fifth Amended Application

and expects resolution soon.

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Unless otherwise discussed

herein, management of the Company has determined that these recent accounting pronouncements will not have a material impact on

the financial position or results of operations of the Company.

herein, the management of the Company has determined that these recent accounting pronouncements will not have a material impact

on the financial position or results of operations of the Company.

Accounting Policies

Accounting Policies and Significant Judgments and Estimates

management’s discussion and analysis of our financial condition and results of operations is based on our financial statements

which we have been prepared in accordance with U.S.

management’s discussion and analysis of our financial condition and results of operations are based on our financial statements

which we have been prepared in accordance with the U.S.

generally accepted accounting principles.

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prepares the Company’s financial statements on the basis that the Company will continue as a going concern, which contemplates

continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

However, given

our current financial position and lack of liquidity, there is substantial doubt about our ability to continue as a going concern.

continuity of operations, the realization of assets, and liquidation of liabilities in the normal course of business.

given our current financial position and lack of liquidity, there is substantial doubt about our ability to continue as a going

Financial Instruments

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measurement of the instrument.

involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of

competitive, free-market dealings may not exist.

Representations about transactions with related parties, if made, shall not imply

that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions

unless such representations can be substantiated.

involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive,

free-market dealings may not exist.

Representations about transactions with related parties, if made, shall not imply that the

related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless

such representations can be substantiated.

Tax Assets and Income Taxes Provision

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assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”)

carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more

likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance.

Management made this assumption based on (a) the Company has incurred recurring losses and presently has no revenue-producing

business, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way

of a public or private offering, among other factors.

of Three Months Ended September 30, 2019 And 2018

the three month periods ended September 30, 2019 and 2018, the Company did not have any operations and therefore there were no

Expenses were limited to maintaining the Company in good standing and staying current, respectively, in its filing obligations

with the SEC.

carryforwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely

than not and accordingly, a full valuation allowance offsets the potential tax benefits of the net loss carry-forwards.

made this assumption based on (a) the Company has incurred recurring losses and presently has no revenue-producing business, (b)

general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public

or private offering, among other factors.

of Three and Six Months Ended December 31, 2019, And 2018

the three and six month periods ended December 31, 2019, and 2018, the Company did not have any operations, and therefore, there

were no revenues.

Expenses were limited to maintaining the Company in good standing and staying current, respectively, in its

filing obligations with the SEC.

Administrative

fees totaled $12,796 for the three months ended September 30, 2019 compared to $8,223 for the three months ended September 30,

The increase was primarily due to more activity in the current period as the current comparable period required more expenditures

for professional services to bring the Company current in its SEC filings.

expense totaled $22,661 for the three months ended September 30, 2019 compared to $21,165 for the three months ended September

The increase was primarily due to an increase in borrowing under the convertible loan facility.

reported a net loss of $35,547 during the three months ended September 30, 2019 compared to a net loss of $29,388 in the comparable

period of 2018.

The increase was due to higher interest expenses and professional fees.

fees totaled $19,655 and $21,876 for the three months ended December 31, 2019, and 2018.

The decrease in professional fee expense

was primarily due to more efficient use of professionals.

fees totaled $32,452 and $30,100 for the six months ended December 31, 2019, and 2018.

The increase in professional fee expense

was primarily due to the fees expended in converting the issuer from a 1940 Act Company to a 1934 Act Company.

expense totaled $7,239 and $28,412 for the three months ended December 31, 2019, and 2018.

The decrease in interest expense was

due to the loan forgiveness of the judgement payable which reduced the amount of interest due.

expense totaled $29,900 and $49,577 for the six months ended December 31, 2019, and 2018.

The decrease in interest expense was

due to the loan forgiveness of the judgement payable which reduced the amount of interest due.

reported a net loss of $26,895 and $50,288 during the three months ended December 31, 2019, and 2018.

The decrease in net loss

was directly attributable to the decrease in interest expense.

reported a net loss of $62,352 and $79,677 during the six months ended December 31, 2019, and 2018.

The decrease in net loss was

directly attributable to the decrease in interest expense.

and Capital Resources

have incurred recurring operating losses and negative operating cash flows in fiscal 2018 and through September 30, 2019, and

we expect to continue to incur operating losses and negative operating cash flows at least through the near future.

have incurred recurring operating losses and negative operating cash flows in fiscal 2018 and through December 31, 2019, and we

expect to continue to incur operating losses and negative operating cash flows at least through the near future.

We have obtained

funding through a convertible loan facility of up to $200,000 in order to partially meet our most critical cash requirements,

and of this amount, we have drawn approximately $184,338 as of September 30, 2019.

Roran has agreed to extend the loan

until negotiations have been concluded.

funding through a convertible loan facility of up to $250,000 to meet our most critical cash requirements, and of this

amount, we have drawn approximately $190,768 as of December 31, 2019.

The loan facility matures on June

a result of the aforementioned factors, management has concluded that there is substantial doubt about our ability to continue

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raised substantial doubt about our ability to continue as a going concern.

Our financial statements as of and for the three months

ended September 30, 2019 do not contain any adjustments for this uncertainty.

In response to our Company’s cash needs, we

raised funding as described in our financial statements.

Any additional amounts raised will be used for our future investing and

operating cash flow needs.

Our financial statements as of and for the period ended

December 31, 2019, do not contain any adjustments for this uncertainty.

In response to our Company’s cash needs, we raised

funding as described in our financial statements.

Any additional amounts raised will be used for our future investing and operating

cash flow needs.

However, there can be no assurance that we will be successful in raising additional amounts of financing.

Management’s

plan is to seek, investigate, and consummate a merger or other business combination, purchase of assets or other strategic transaction

a merger) with a corporation, partnership, limited liability company or other operating business entity, or enter into a

new business (collectively, a “Business Target”) desiring the perceived advantages of becoming a publicly reporting

plan to seek, investigate, and consummate a merger or other business combination, purchase of assets or other strategic transaction

(i.e., a merger) with a corporation, partnership, limited liability company or other operating business entity, or enter into

a new business (collectively, a “Business Target”) desiring the perceived advantages of becoming a publicly reporting

and publicly held corporation.

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consummating a transaction with a Business Target.

We believe we will be able to meet these costs through use of funds borrowed

We believe we will be able to meet these costs through the use of funds borrowed

from Roran, or other amounts to be loaned to or invested in us by other investors.

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into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing

financial or operating difficulties and is in need of additional capital.

In the alternative, a business combination may involve

the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish

a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of

voting control which may occur in a public offering.

financial or operating difficulties and needs additional capital.

In the alternative, a business combination may involve the acquisition

of, or merger with, a company which does not require substantial additional capital, but which desires to establish a public trading

market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which

may occur in a public offering.

Zelmanovitch is our president, secretary, and our chief financial officer.

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Business Targets.

September 30, 2019, we had only $11,197 cash on hand.

Since we have no revenue or plans to generate any revenue, we will

be dependent upon loans to fund expenses incurred in excess of our cash.

Also, Related party obligations totaling $212,541

are due and payable as of September 30, 2019.

December 31, 2019, we had only $10,333 cash on hand.

Since we have no revenue or plans to generate any revenue, we will be dependent

upon loans to fund expenses incurred in excess of our cash.

Also, related party obligations totaling $224,781, which includes

convertible note outstanding and accrued interest payable, are due and payable as of December 31, 2019.

Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements