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MAZZAL HOLDING CORP. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

May 14, 2014

Results of Operations.

(a) Revenue.

The Company has earned no revenues since inception.

(b) General and Administrative Expenses.

The Company had general and administrative expenses of $0 for the three months ended March 31, 2014 and 2013.

The Company had general and administrative expenses of $27,323 for the period of January 23, 2013 (date of inception) through March 31, 2014. Cumulative general and administrative expenses consist of mainly of management fees, professional fees and various other office costs.

(3) Net Loss.

The Company had a net loss of $0 and profit of $1 for the three months ended March 31, 2014 and 2013, respectively.

The Company had a net loss of $27,319 for the period of January 23, 2013 (date of inception) through March 31, 2014.

Operating Activities.

Net cash used by operating activities was $1,000 for the three months ended March 31, 2014 compared to net cash provided by operating activities of $1 for the three months ended March 31, 2013, a change of $999. This change was the result of the director and stockholder repaying auditors fees out of pocket.

The net cash used in operating activities was $21,819 for the period of January 23, 2013 (date of inception) through March 31, 2014.

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Investing Activities.

Net cash used in investing activities was $0 for the three months ended March 31, 2014 and 2013.

Net cash used in investing activities was $24,000 for the period of January 23, 2013 (date of inception) through March 31, 2014, relating to costs capitalized to property held under development.

Financing Activities.

Net cash provided by financing activities was $1,000 for the three months ended March 31, 2014 and $42,200 for the three months ended March 31, 2013. A decrease of $41,200 due to proceeds from the issuance of common stock in the previous year.

Net cash provided in financing activities was $45,823 for the period of January 23, 2013 (date of inception) through March 31, 2014, which was mainly from issuance of common stock and proceeds from a related party loan.

Liquidity and Capital Resources.

As of March 31, 2014, the Company had total current assets of $4 and total current liabilities of $9,123 resulting in a working capital deficit of $9,119. The cash and cash equivalents was $4 as of March 31, 2014 and 2013.


We are a development stage company and have not started operations or generated or realized any revenues from our business operations.

Recent Developments


As of the date of this Quarterly Report, the Company was in the process of working with a market maker and applying for a ticker symbol so its shares could begin trading publicly.


Our auditors have issued an explanatory note regarding our ability to continue as a going concern. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. Our auditor's opinion is based on our suffering initial losses, having no operations, and having a working capital deficiency. The opinion results from the fact that we have not generated any revenues and no revenues are anticipated until we acquire the required licenses and complete our initial development. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations.

We have one officer, Nissim Trabelsi, President and Director. He is responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, Mr. Trabelsi, together with any other executive officers in place at that time, will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the Securities and Exchange Commission which ultimately could cause you to lose your investment.

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We must raise cash to implement our business plan. The amount of funds which the Company will need to raise that we feel will allow us to implement our business strategy is approximately $800,000. We feel if we cannot raise at least $500,000, the Company will not be able to accelerate the implementation of its business strategy and will be seriously curtailed.

The Company was incorporated on January 23, 2013, under the laws of the State of Nevada. The Company is a startup and has not yet realized any revenues. Our efforts have focused primarily on the development and implementation of our business plan. No development related expenses have been or will be paid to affiliates of the Company.

Generating revenues in the next six to twelve months is important to support our planned ongoing operations. However, we cannot guarantee that we will generate such growth. If we do not generate sufficient cash flow to support our operations over the next 12 to 18 months, we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern.

Our management does not anticipate the need to hire additional full or part- time employees over the next six months, as the services provided by our officers and directors appears sufficient at this time. We believe that our operations are currently on a small scale that is manageable by a few individuals. Our management's responsibilities are mainly administrative at this early stage. While we believe that the addition of employees is not required over the next six months, the professionals we plan to utilize will be considered independent sub-contractors. We do not intend to enter into any employment agreements with any of these professionals. Thus, these persons are not intended to be employees of our company.

Our management does not expect to incur research and development costs.

We do not have any off-balance sheet arrangements.

We currently do not own any significant plants or equipment that we would seek to sell in the near future.

We have not paid for expenses on behalf of our director. Additionally, we believe that this fact shall not materially change.

Plan of Operation

The Company's anticipated plan of operation is to construct multi-family dwellings in Massachusetts, both on the Property owned by the Company, and on additional parcels of property which the Company may purchase in the future.

Under the Company's plan, each subdivision takes approximately 3 years to complete, from purchase of the land, through development of the property, through construction of the units, and through sales of the units.

Management anticipates that the Company will need to raise between $500,000 and $800,000 to start and begin construction of one third of the units, approximately 15 units, which could be completed within approximately 12 months from start of construction. Once the first units are completed, from each unit that is sold in the first year, the revenues will be used to finance construction of the next phases and units. Management anticipates that at the end of the second year of operation, the Company will be able to complete an additional 15 units. Finally, management anticipates that the remaining 17 units will be built on during the third year, to meet the planned completion of 47 units in three years from commencement of construction.

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Upon completing this offering, we intend to commence development of our Property, provide infrastructure, and manage the process, within the state of Massachusetts. To begin these developments we will need to acquire the correct licenses to begin producing our homes. Mr. Trabelsi currently has all licenses that would be required to successfully engage in all activities envisioned in our business plan.

Management anticipates that the average construction price for the town homes will be approximately $180,000-$200,000, and the average selling price will be approximately $250,000, although there can be no guarantee that the Company will be able to construct all the town homes at this cost, or sell any or all of the town homes for the anticipated selling price.

As noted above, third-party lenders generally provide consumer financing for multi-family dwelling purchases. Our sales will depend in large part on the availability and cost of financing for multi-family home purchasers. The availability and cost of such financing is further dependent on the number of financial institutions participating in the industry, the departure of financial institutions from the industry, the financial institutions' lending practices, and the strength of the credit markets generally, governmental policies and other conditions, all of which are beyond our control. If additional third-party financing for the purchases of our Company's homes does not become available, our operations could be negatively affected.

Management anticipates that each unit will be approximately 1500 ft., and that the Company's building cost is roughly $100 for each square foot, for a total of $150,000 costs to build each unit. Additionally, the costs associated with the land are approximately $32,000 for each lot. Also, Management anticipates approximately $18,000 in commissions and soft costs for an approximate total cost of $200,000 to complete each unit. As noted above, the figures in the preceding sentences relating to construction costs are only estimates made by management, and are not based on surveys, third-party valuations, or other outside sources. These estimates are based on management's prior history and experience in construction in Massachusetts, and there can be no guarantee that the Company will be able to construct any of the units for the costs and amounts indicated.

The Company's ability to commence operations is entirely dependent upon its ability to raise additional capital, most likely through the sale of additional shares of the Company's common stock or other securities. As noted above, Management anticipates that the Company will need approximately $500,000 - $800,000 over the next twelve months to implement the Company's business plan and commence construction of multi-family dwellings.

Management believes that if the Company cannot raise the funds needed through equity offerings of the Company's securities, the Company likely will look to commercial or bank financing of its project for the capital needed. There can be no guarantee that the Company will be able to obtain such bank or commercial financing on terms that are acceptable to the Company, or at all.

The realization of revenues in the next twelve months is important in the execution of the plan of operations. However, if the Company cannot raise additional capital by issuing capital stock in exchange for cash, or through obtaining commercial or bank financing, in order to continue as a going concern, the Company may have to curtail or cease its operations. As of the date of this Report, there were no formal or informal agreements to attain such financing. The Company cannot assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for operations to continue.

Critical Accounting Policies

The SEC has issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company's most critical accounting policies include: (a) use of estimates; (b) real estate assets; (c) impairment long lived assets; (d) Real Estate Assets Held for Sale and Discontinued Operations; and (e) Share Based Payments. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.

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(a) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 or revenues and expenses during the reporting period. Actual results could differ from those estimates.

(b) Real estate assets

Real estate assets are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of properties are capitalized. Acquisition-related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.

Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.

The Company considers a construction project as substantially completed and held available for sale upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).

Depreciation is calculated using the straight-line method over the estimated useful lives of the properties. The estimated useful lives are as follows:

Buildings and improvements - 10 to 40 years Other building and land improvements - 20 years Furniture, fixtures and equipment - 5 to 10 years

(c) Impairment Long-Lived Assets

For purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company assesses the impairment of long-lived assets (including identifiable intangible assets) annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

When management determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we test for any impairment based on a projected undiscounted cash flow method. Projected future operating results and cash flows of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long-lived and intangible assets. The Company estimates the future cash flows of the long-lived assets using current and long-term financial forecasts. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this were the case, an impairment loss would be recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.

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(d) Real Estate Assets Held for Sale and Discontinued Operations

The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after the approval of the Company's board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying balance sheets. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated.

(e) Share based payments

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more readily determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.


On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company," we have the option to delay adoption of new or revised accounting standards until those standards would otherwise apply to private companies, until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period for complying with such new or revised accounting standards. We have elected to opt out of this extended transition period. As noted, this election is irrevocable.

To date, we have not earned any revenue from operations. Accordingly, our activities have been accounted for as those of a "Development Stage Company" as set forth in Financial Accounting Standards Board ASC 915. Among the disclosures required by ASC 915 are that the our financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity and cash flows disclose activity since the date of our inception.

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Off-Balance Sheet Arrangements




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Source: Edgar Glimpses

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