SEC Filing Report: Ridgefield Acquisition Corp. (10-K)
Executive Summary
This report analyzes Ridgefield Acquisition Corp.’s (RDGA) Form 10-K filing for the year ended December 31, 2024. RDGA is a shell company actively seeking a merger, acquisition, or business combination. The company has minimal operations and has sustained losses. Key findings include a continued going concern uncertainty, reliance on related-party debt, and the absence of revenue. The company’s disclosure controls and procedures are deemed ineffective due to the lack of an audit committee and segregation of duties. Given the company’s current state, a strong recommendation cannot be made. The company’s future is entirely dependent on its ability to find and complete a suitable acquisition.
Company Overview
Ridgefield Acquisition Corp. is a Nevada corporation (formerly Colorado) established in 1983. It currently operates as a shell company, focusing on identifying and acquiring a viable operating business. The company has no revenue-generating activities and relies on related-party loans and equity infusions for funding. The company’s strategy is to find a merger or acquisition target that will provide long-term capital appreciation for shareholders.
Detailed Analysis
Financial Statement Analysis
Balance Sheet
The company’s assets are minimal, consisting primarily of cash and cash equivalents. Liabilities are dominated by related-party debt. The company has a significant accumulated deficit, resulting in a negative stockholders’ equity.
| Metric |
2024 |
2023 |
Change |
| Cash and Cash Equivalents |
$16,949 |
$24,415 |
-$7,466 |
| Total Assets |
$17,449 |
$24,415 |
-$6,966 |
| Related Party Note Payable |
$166,489 |
$142,911 |
+$23,578 |
| Total Liabilities |
$170,004 |
$159,418 |
+$10,586 |
| Total Stockholders’ Deficit |
($152,555) |
($135,003) |
-$17,552 |
Income Statement
The company generated no revenue in either 2024 or 2023. Operating expenses consist primarily of general and administrative costs. The net loss decreased slightly in 2024 compared to 2023 due to lower G&A expenses.
| Metric |
2024 |
2023 |
Change |
| Revenue |
$0 |
$0 |
$0 |
| General and Administrative Expenses |
($51,683) |
($60,082) |
+$8,399 |
| Net Loss |
($67,552) |
($72,982) |
+$5,430 |
Cash Flow Statement
The company used cash in operating activities and generated cash from financing activities, primarily through related-party loans and the issuance of common stock to the CEO. Cash decreased overall during the year.
| Metric |
2024 |
2023 |
| Net Cash Used in Operating Activities |
($67,466) |
($46,785) |
| Net Cash Provided by Financing Activities |
$60,000 |
$50,000 |
| Net Increase (Decrease) in Cash |
($7,466) |
$3,215 |
Management’s Discussion and Analysis (MD&A)
Management acknowledges the company’s status as a shell company and its focus on finding a suitable acquisition target. They highlight the competitive landscape and the need for additional funding to complete a transaction. The MD&A emphasizes the uncertainty surrounding the company’s ability to complete an acquisition and achieve long-term capital appreciation.
Risk Factors
The 10-K states that Item 1A, Risk Factors, is “Not required.” This is unusual for a 10-K filing and raises a red flag. While the company may be relying on its status as a shell company with limited operations, the absence of a risk factor section is a significant omission.
Uncommon Metrics
- Reliance on Related Party Debt: The company’s financial stability is heavily dependent on loans from its CEO and Qualstar Corporation, an entity controlled by the CEO. This creates a potential conflict of interest and raises concerns about the sustainability of the company’s funding.
- Lack of Operations: The company has suspended all operations since July 2000, except for administrative matters. This prolonged period of inactivity raises questions about the company’s ability to effectively evaluate and integrate an acquisition target.
- Ineffective Disclosure Controls: The company admits to material weaknesses in its internal control over financial reporting due to the lack of an audit committee and segregation of duties. This increases the risk of errors or fraud in financial reporting.
Conclusion and Actionable Insights
Ridgefield Acquisition Corp. is a high-risk investment. The company’s financial condition is precarious, and its future is entirely dependent on its ability to find and complete a suitable acquisition. The absence of a risk factor section, reliance on related-party debt, and ineffective disclosure controls are significant concerns. Investors should exercise extreme caution and carefully consider the risks before investing in RDGA.
Key Takeaways:
- Going Concern Uncertainty: The company’s ability to continue as a going concern is highly uncertain.
- Related Party Dependence: The company relies heavily on related-party funding, creating potential conflicts of interest.
- Operational Inactivity: The company has no ongoing business operations, raising concerns about its ability to execute its acquisition strategy.
- Internal Control Weaknesses: The company’s disclosure controls and procedures are ineffective, increasing the risk of financial reporting errors.
- Missing Risk Factors: The absence of a risk factor section is a significant omission and a red flag.