Alternative Investment Corp - Quarter Report: 2018 December (Form 10-Q)

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Item 1.  Financial Statements

ALTERNATIVE INVESTMENT CORPORATION

Balance Sheets

(Unaudited)

The accompanying notes are an integral part of the condensed financial statements.

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ALTERNATIVE INVESTMENT CORPORATION

STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of the condensed financial statements.

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ALTERNATIVE INVESTMENT CORPORATION

Statements of Cash Flows

(Unaudited)

The accompanying notes are an integral part of the condensed financial statements.

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ALTERNATIVE INVESTMENT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2018

NOTE 1 – NATURE OF BUSINESS, PRESENTATION AND GOING CONCERN

The unaudited condensed financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed financial statements and notes are presented as permitted on Form 10-Q and do not contain certain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the September 30, 2018 Form 10-K filed with the SEC, including the audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts is in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These unaudited condensed financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

Organization

Alternative Investment Corporation (the "Company") was incorporated in Nevada on March 26, 2007 under the name of China Digital Ventures Corporation. The principal business of the Company was its web-based telecom and IPTV businesses, both of which were disposed of during the year ended September 30, 2010. As of the date hereof, the Company has no operations.

The Company is focused on new investment opportunities which lie in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments as well as other technologies in the biotech sector. On July 17, 2018, Alternative Investments Corporation (AIKO) (the “Company”) entered into a binding Term Sheet (“the Agreement”) with Anew Biotechnology Inc., a private company (“ANEW”) to formulate a merger between the two. Under the terms of the Agreement, the parties shall enter into a merger agreement by way of share exchange or asset purchase whereby ANEW would be merged into a newly-formed subsidiary of the Company. The newly configured entity shall bear the name “Anew Biotechnology Inc.”. Upon execution of a Definitive Agreement, Dr. Joseph Sinkule the CEO of ANEW, shall be appointed as CEO, and ANEW shall appoint all other Directors to the Board.

On November 22, 2018, the Company and ANEW mutually agreed to postpone the execution date of the definitive agreement to occur no later than December 31, 2018.  The parties further agreed that the closing of the capital raise simultaneous to the merger was to occur on or before January 17, 2019.  Both parties continue to work together to close this deal and amend the agreement further to execute the agreement in the Company’s second fiscal quarter of the 2019 fiscal year.

On January 13, 2019, the Company and ANEW mutually agreed to postpone the execution date of the definitive agreement to occur no later than February 28, 2019.  The parties further agreed that the closing of the capital raise simultaneous to the merger was to occur on or before March 15, 2019.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC.

Basis of Presentation

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses of $60,647 and $452,765 for the three months ended December 31, 2018 and year ended September 30, 2018, respectively, and had an accumulated deficit of $1,888,712 at December 31, 2018. The Company had stockholders’ deficit of $673,109 at December 31, 2018. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.  The ability of the Company to continue as a going concern is dependent upon its ability to develop and sustain a viable business model capable of generating sufficient revenues to support ongoing operations and overhead and to continue to raise investment capital through the sale of Company stock.

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ALTERNATIVE INVESTMENT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2018

NOTE 1 – NATURE OF BUSINESS, PRESENTATION AND GOING CONCERN (CONTINUED)

No assurance can be given that the Company will be successful in these efforts.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.  No assurance can be given that the Company will be successful in these efforts.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates in the accompanying financial statements include the valuation of share-based payments and the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2018 and September 30, 2018, the Company had no cash equivalents.

Earnings (Loss) Per Share

The Company computes income (loss) per share in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) ASC Topic 260, “Earnings Per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period.

Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares for periods in which the Company incurs losses as their effect is anti-dilutive.  As of December 31, 2018 and September 30, 2018, respectively, there were no common share equivalents outstanding which would be deemed as dilutive.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. The reclassifications had no effect on the net loss or cash flows of the Company.

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” which addresses accounting for issuance of all share-based payments on the same accounting model. Previously, accounting for share-based payments to employees was covered by ASC Topic 718 while accounting for such payments to non-employees was covered by ASC Subtopic 505-50. As it considered recently issued updates to ASC 718, the FASB, as part of its simplification initiatives, decided to replace ASC Subtopic 505-50 with Topic 718 as the guidance for non-employee share-based awards. Under this new guidance, both sets of awards, for employees and non-employees, will essentially follow the same model, with small variations related to determining the term assumption when valuing a non-employee award as well as a different expense attribution model for non-employee awards as opposed to employee awards. The ASU is effective for public business entities beginning in 2019 calendar years and one year later for non-public business entities. The Company is assessing the impact, if any, of implementing this guidance on its financial position and results of operations.

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ALTERNATIVE INVESTMENT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2018

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In February 2016, the FASB issued ASU 2016-02, "Leases." ASU 2016-02 significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet. The lessor model stays substantially the same; however, there were modifications to conform lessor accounting with the lessee model, eliminate real estate specific guidance, further define certain lease and non-lease components, and change the definition of initial direct costs of leases requiring significantly more leasing related costs to be expensed upfront. ASU 2016-02 is effective for the Company in the first quarter of fiscal 2020, and we are currently assessing the impact this standard will have on the Company's financial statements.  The Company is currently party to a long-term lease that is being considered relative to the adoption of this standard (See NOTE 5).

The Company has evaluated all other new ASU's issued by FASB and has concluded that these updates do not have a material effect on the Company's financial statements as of December 31, 2018.

NOTE 4 – RELATED PARTIES

As of December 31, 2018 and September 30, 2018, $ 231,973, was due to Canton. This is an unsecured loan, non-interest bearing and there is no repayment date. Interest has been calculated at an imputed interest rate of 3% and reflected as interest expense and as an increase to additional paid in capital in the amount of $1,754 and $9,304 for the three months ended December 31, 2018 and year ended September 30, 2018, respectively.  On April 1, 2018, Canton elected to convert $80,000 of the amount due into 94,118 common restricted shares of the Company ($0.85 per share).  On August 16, 2018, the shares were issued.

On February 2, 2016, the Company entered into an expense sharing agreement with Fingi Inc., a company of which Canton may be deemed a controlling person. Under the expense sharing agreement, the Company shares the rent and utility expenses incurred in connection with occupancy of office space that is being leased by Fingi Inc. During the year ended September 30, 2018, amount due for rent was $5,684 per month. For the three months ended December 31, 2018 and year ended September 30, 2018 rent and utilities expenses amounted to $18,548 and $72,927, respectively. The rent due under expense sharing agreement for future periods is as follows:

Related party transactions are not necessarily indicative of an arm’s length transaction or comparable to a transaction that had been entered into with independent parties.

As of December 31, 2018 and September 30, 2018, the Company had a liability due to its former Chief Executive and Chief Financial Officer, Daniel Otazo in the amount of $6,000.  The amount was reflected in accounts payable on the Company’s financial statements. Amounts are due under a compensation for services provided agreement.  Mr. Otazo resigned from the Company in all official capacities on November 30, 2017.  As of December 31, 2018, the Company has a liability to its current Chief Financial and Chief Executive Officer, Antonio Treminio of $60,051.  As of December 31, 2018, the Company had a total liability due to its current and former Chief Executive and Chief Financial Officers totaling $66,051.

NOTE 5 – LOANS AND NOTES PAYABLE

Notes payable to companies consisted of the following as of:

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ALTERNATIVE INVESTMENT CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

DECEMBER 31, 2018

NOTE 5 – LOANS AND NOTES PAYABLE (CONTINUED)

(a) On January 31, 2017, the Company entered into a six-month 8% loan agreement with Basil and Barns Capital Inc. in the amount of $50,000.  The note had a maturity date of July 31, 2017.  The Company is currently trying to cure the default under this note.  As of December 31, 2018, this note had accrued interest of $7,660.  On June 15, 2018, Basil and Barns Capital Inc. assigned this note to Alternative Strategy Partners Pte. Ltd.

(b) On November 30, 2016, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $35,000. The note had a maturity date of May 30, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of December 31, 2018, this note had accrued interest of $5,838.

(c) On January 3, 2017, the Company entered into a six-month 8% loan agreement with JIFM in the amount of $4,000. The note had a maturity date of July 3, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of December 31, 2018, this note had accrued interest of $637.

(d) On January 17, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $35,000. The note had a maturity date of July 17, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of December 31, 2018, this note had accrued interest of $5,470.

(e) On January 19, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $7,000. The note had a maturity date of July 19, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of December 31, 2018, this note had accrued interest of $1,091.

(f) On January 23, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $5,000. The notes had a maturity date of July 23, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of December 31, 2018, this note had accrued interest of $775.

(g) On September 1, 2017, the Company entered into a loan agreement with JIFM LLC.  The loans will be treated as a line of credit bearing 8% interest and each drawdown will have a one-year term.  The drawdowns will carry a default interest rate of lower of 1.5% per month or the maximum interest rate allowable by law.  The initial drawdown in the amount of $9,000 and was funded on September 29, 2017.  During the three months ended December 31, 2018, the Company repaid the $9,000 advance.

(h) On October 30, 2017, the Company received a loan advance pursuant to a loan agreement with JIFM LLC dated September 1, 2017 (see g above).  The amount of the advance was $17,500. During the three months ended December 31, 2018, the Company repaid the $17,500 balance of this loan.

(i) During the year ended September 30, 2018, the Company received $26,000 from Alternative Strategy Partners in the form of advances under three promissory notes bearing an interest rate of 8%.  On October 3, 2018, the Company was advanced an additional $7,000.  As of December 31, 2018, accrued interest was $783.

NOTE 6 – STOCKHOLDERS’ DEFICIT

The Company has authorized 1,600,000,000 shares of Common Stock, $0.001 par value.  At December 31, 2018 and September 30, 2018, the Company had 432,192 shares issued and 431,991 shares outstanding.

Fiscal year 2019

No shares were issued during the three months ended December 31, 2018.

NOTE 7 – SUBSEQUENT EVENTS

The Company has analyzed its operations subsequent to December 31, 2018 to the date these financial statements were issued and has not found any transactions or events requiring disclosure.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements made in this Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "potential," "estimate," "encourage," "opportunity," "growth," "leader," "expect," "intend," "plan," "expand," "focus," "through," "strategy," "provide," "offer," "allow," commitment," "implement," "result," "increase," "establish," "perform," "make," "continue," "can," "ongoing," "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 and in our subsequent filings with the Securities and Exchange Commission

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations describes the principal factors affecting the results of operations, liquidity and capital resources of the Company and critical accounting estimates. This discussion should be read in conjunction with the accompanying quarterly unaudited Condensed Consolidated Financial Statements contained in this Form 10-Q and our Annual Report on Form 10-K, for the year ended September 30, 2018 (“Annual Report”). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties associated with our financial and operating results.

Company Overview

Alternative Investment Corporation (the "Company") was incorporated in Nevada on March 26, 2007 under the name of China Digital Ventures Corporation.  The principal business of the Company was its web-based telecom and IPTV businesses, both of which were disposed of during the year ended September 30, 2010. As of the date hereof, the Company has no operations.

On July 23, 2010, the Company experienced a change in control.  Canton Investments Ltd (“CIL” or “Canton”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between CIL and Wireless One International Limited (“Wireless One”), Bing HE and Ning HE, the Company’s former directors, and other various shareholders. On the closing date, July 23, 2010, pursuant to the terms of the Stock Purchase Agreement, CIL purchased from Wireless One and Bing HE and Ning HE 575,000 shares of the Company’s outstanding common stock for $205,750. Also on July 23, 2010, CIL purchased 122,000 shares of the Company’s outstanding common stock for $36,600 from various shareholders. As a result of the change in control, CIL owned a total of 697,000 shares of the Company’s common stock representing 91.54%.  CIL contributed 600,000 shares of common stock to the Company’s treasury on September 10, 2012. The Company immediately retired and canceled these shares. As a result of the contribution of shares, CIL owns a total of 97,000 shares of the Company’s common stock representing 60%.

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On September 18, 2015, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Alternative Investment Corporation.

On November 30, 2017, Mr. Daniel Otazo, Director, Chief Executive Officer and interim Chief Financial Officer, resigned. Mr. Otazo’s resignation was not a result of any disagreement with the Company.

On December 1, 2017, the Shareholders of the Corporation voted to elect Mr. Antonio Treminio as Director and CEO of the Company. Mr. Treminio, 46, has over 20 years of experience in the financial markets with special focus on corporate financing for private and public companies.

The Company is focused on new investment opportunities which lie in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments as well as other technologies in the biotech sector. On July 17, 2018, Alternative Investments Corporation (AIKO) (the “Company”) entered into a binding Term Sheet (“the Agreement”) with Anew Biotechnology Inc., a private company (“ANEW”) to formulate a merger between the two. Under the terms of the Agreement, the parties shall enter into a merger agreement by way of share exchange or asset purchase whereby ANEW would be merged into a newly-formed subsidiary of the Company. The newly configured entity shall bear the name “Anew Biotechnology Inc.”. Upon execution of a Definitive Agreement, Dr. Joseph Sinkule the CEO of ANEW, shall be appointed as CEO, and ANEW shall appoint all other Directors to the Board.

On November 22, 2018, the Company and ANEW mutually agreed to postpone the execution date of the definitive agreement to occur no later than December 31, 2018.  The parties further agreed that the closing of the capital raise simultaneous to the merger was to occur on or before January 17, 2019.  Both parties continue to work together to close this deal and amend the agreement further to execute the agreement in the Company’s send fiscal quarter of the 2019 fiscal year.

Plan of Operation

The Company is focused on new investment opportunities in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments.

Results of Operations

For the Three Months Ended December 31, 2018 and 2017

Revenues

The Company had no revenue for the three months ended December 31, 2018 and 2017.

General and administrative expenses

For the three months ended December 31, 2018 and 2017 total operating expenses were $54,949 and $58,904 resulting in a decrease of $3,955. The decrease in operating expense is primarily a result of a decrease of consulting fees related to the advisory of management.

Professional fees

For the three months ended December 31, 2018 total professional fees were $3,500 compared to $18,000 for the three months ended December 31, 2017 resulting in a decrease of $14,500. The decrease in professional fees primarily relates to decreases in legal and accounting fees.

Other income (expense)

For the three months ended December 31, 2018 total other expense was $2,198 compared to $230 for the same period in the prior year.  The higher other expense in the prior year was due to lower interest income.

Net loss

Our net loss to shareholders for the three months ended December 31, 2018 and 2017 was $60,647 and $77,834 respectively.  The decrease in net loss was due to lower operating expenses.

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Liquidity and Capital Resources

Overview

As of December 31, 2018 and September 30, 2018, the Company had cash of $1,045 and $5,620 and a deficit in working capital of $673,109 and $614,216, respectively. Historically, our operating expenses have been funded and paid by CIL and by the issuance of notes payable and sale of our common stock.

We do not have sufficient resources to effectuate our business plan. We expect to incur a minimum of $1,600,000 in expenses and acquisitions during the next twelve months of operations.

Liquidity and Capital Resources during the Three Months Ended December 31, 2018 compared to the Three Months ended December 31, 2017

We used cash for operating activities of $11,575 and $47,821 for the three months ended December 31, 2018, and 2017, respectively. The elements of cash flow used in operations for the three months ended December 31, 2018 included a net loss of $60,647, decrease in largely by an increase in accounts payable of $39,533. The elements of cash flow used in operations for the three months ended December 31, 2017 included a net loss of $77,834, increase in interest and miscellaneous receivables of $18,467, offset by an increase in accounts payable and other accruals of $43,538, an increase in deferred revenue $4,536 as well as a reduction in prepaid expenses in the amount of $406.

The Company neither received nor used cash from investing activities for the three months ended December 31, 2018.  We received principal re-payment of $100,000 and accrued interest re-payment of $28,624 from the investment in commercial paper during the three months ended December 31, 2017.

Cash provided by financing activities was $7,000 proceed from a third-party loan compared to $18,000 from the issuance of a note payable for the three months ended December 31, 2017.

We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently only have one small arrangements with JIFM LLC and Alternative Strategy Partners as way to obtain any operating capital.  We have no other arrangements or understandings to obtain funds through bank loans, lines of credit or any other sources. Since we have no other arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

Going Concern

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the audited financial statements for the year ended September 30, 2018 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

Item 4.  Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of December 31, 2018. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company's management concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.  As of February 18, 2019, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company, threatened against or affecting our company or our common stock in which an adverse decision could have a material adverse effect.

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Item 1A.  Risk Factors

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the quarter ended December 31, 2018.

Item 3.  Defaults Upon Senior Securities.

On January 31, 2017, the Company entered into a six-month 8% loan agreement with Basil and Barns Capital Inc. in the amount $50,000.  The loan had a maturity date of July 31, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

On November 30, 2016, the Company entered into a six-month 8% loan agreement in the amount of $35,000. The loan had a maturity date of May 30, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

On January 3, 2017, the Company entered into a six-month 8% loan agreement in the amount of $4,000. The loan had a maturity date of July 3, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

On January 17, 2017, the Company entered into a six-month 8% loan agreement in the amount of $35,000. The loan had a maturity date of July 17, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

On January 19, 2017, the Company entered into a six-month 8% loan agreement in the amount of $7,000. The loan had a maturity date of July 19, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

On January 23, 2017, the Company entered into a six-month 8% loan agreement in the amount of $5,000. The loan had a maturity date of July 23, 2017.  Since this note is still outstanding, it is currently in default.  The Company is currently trying to cure the default under this note.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information.

None.

Item 6.  Exhibits

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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