ASTIKA HOLDINGS INC. - Quarter Report: 2019 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 000-54855
ASTIKA HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Florida
(State or other jurisdiction of incorporation or organization)
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27-4601693
(I.R.S. Employer Identification Number)
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Level 1, 725 Rosebank Road
Avondale, Auckland, 1348, New Zealand
(Address of principal executive offices)
(64) 9 929 0502
(Issuer’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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None
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N/A
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N/A
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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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(Do not check if smaller reporting company)
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Emerging growth company [ ]
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, as of January 17, 2020 was 29,890,066.
ASTIKA HOLDINGS, INC.
TABLE OF CONTENTS
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PAGE
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PART I. FINANCIAL INFORMATION
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3
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Item 1. Financial Statements (unaudited)
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3
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Balance Sheets
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3
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Statements of Operations
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4
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Statements of Cash Flows
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5
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Notes to Unaudited Interim Financial Statements
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6
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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11
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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14
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Item 4. Controls and Procedures
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14
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PART II. OTHER INFORMATION
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16
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Item 1. Legal Proceedings
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16
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Item 1A. Risk Factors
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16
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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16
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Item 3. Defaults Upon Senior Securities
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16
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Item 4. Mine Safety Disclosures
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16
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Item 5. Other Information
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16
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Item 6. Exhibits
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17
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SIGNATURES
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18
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ASTIKA HOLDINGS, INC.
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||||||||
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BALANCE SHEETS
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||||||||
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September 30,
2019
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December 31,
2018
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|||||||
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(Unaudited)
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(Audited)
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|||||||
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ASSETS
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||||||||
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Cash
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$
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-
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$
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-
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||||
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TOTAL ASSETS
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$
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-
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$
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-
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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||||||||
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Current Liabilities
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||||||||
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Accounts payable and accrued liabilities
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$
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33,295
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$
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115,325
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||||
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Loan payable and accrued interest
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3,646
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3,589
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Due to related party
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172,337
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5,807
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Total Current Liabilities
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209,278
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124,721
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Stockholders' Deficit
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||||||||
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Preferred Stock: 10,000,000 shares authorized; par value $0.001; 2,090,000 shares issued and outstanding as of September
30, 2019 and December 31, 2018
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2,090
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2,090
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||||||
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Common Stock: 140,000,000 shares authorized; par value $0.001; 29,890,066 shares issued and outstanding as of September 30,
2019 and December 31, 2018
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29,890
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29,890
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||||||
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Additional paid-in capital
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471,595
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471,595
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Accumulated deficit
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(712,853
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)
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(628,296
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)
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Total Stockholders’ Deficit
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(209,278
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)
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(124,721
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)
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$
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-
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$
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-
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ASTIKA HOLDINGS, INC.
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STATEMENTS OF OPERATIONS
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For The
Three Months Ended
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For The
Nine Months Ended
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September 30,
2019
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September 30,
2018
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September 30,
2019
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September 30,
2018
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|||||||||||||
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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REVENUE
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Revenue
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$
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-
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$
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-
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$
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-
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$
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-
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||||||||
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TOTAL REVENUE
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-
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-
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-
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-
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||||||||||||
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OPERATING EXPENSES
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General and administrative
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63,702
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7,667
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84,501
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26,950
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Total Operating Expenses
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63,702
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7,667
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84,501
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26,950
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OPERATING LOSS
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(63,702
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)
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(7,667
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)
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(84,501
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)
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(26,950
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)
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OTHER INCOME (EXPENSE)
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Interest expense, net
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(19
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)
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(18
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)
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(57
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)
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(53
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)
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Total Other Income (Expense)
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(19
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)
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(18
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)
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(57
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)
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(53
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)
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NET LOSS
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$
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(63,721
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)
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$
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(7,685
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)
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$
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(84,557
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)
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$
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(27,003
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)
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BASIC AND DILUTED NET LOSS PER COMMON SHARE
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$
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(0.00
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)
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$
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(0.00
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)
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$
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(0.00
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)
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$
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(0.00
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)
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BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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29,890,066
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29,890,066
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29,890,066
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29,890,066
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The accompanying notes are an integral part of these financial statements.
4
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ASTIKA HOLDINGS, INC.
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STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
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Preferred Stock
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Common Stock
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Additional
Paid In
Capital
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Accumulated
(Deficit)
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Total
Stockholders’
Deficit
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Shares
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Amount
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Shares
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Amount
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Balance at December 31, 2018 (Audited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(628,296
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)
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$
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(124,721
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)
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Net loss
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(5,377
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)
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(5,377
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)
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Balance at March 31, 2019 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(633,673
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)
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$
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(130,098
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)
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Net loss
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(15,459
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)
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(15,459
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)
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Balance at June 30, 2019 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(649,132
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)
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$
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(145,557
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)
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Net loss
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(63,721
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)
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(63,721
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)
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Balance at September 30, 2019 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(712,853
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)
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$
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(209,278
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)
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Preferred Stock
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Common Stock
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Additional
Paid In
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Accumulated |
Total
Stockholders’
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||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Capital
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(Deficit)
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Deficit
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||||||||||||||||||||||
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Balance at December 31, 2017 (Audited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(572,775
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)
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$
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(69,200
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)
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Net loss
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(11,634
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)
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(11,634
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)
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Balance at March 31, 2018 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(584,409
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)
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$
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(80,834
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)
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Net loss
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(7,685
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)
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(7,685
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)
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Balance at June 30, 2018 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(592,094
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)
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$
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(88,519
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)
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||||||||||||||
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Net loss
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(7,685
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)
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(7,685
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)
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||||||||||||||||||||||||
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Balance at September 30, 2018 (Unaudited)
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2,090,000
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$
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2,090
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29,890,066
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$
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29,890
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$
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471,595
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$
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(599,779
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)
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$
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(96,204
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)
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The accompanying notes are an integral part of these financial statements.
5
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ASTIKA HOLDINGS, INC.
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STATEMENTS OF CASH FLOWS
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For The
Nine Months Ended
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September 30,
2019
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September 30,
2018
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|||||||
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(Unaudited)
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(Unaudited)
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|||||||
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CASH FLOWS FROM OPERATING ACTIVITIES
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||||||||
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Net loss
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$
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(84,557
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)
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$
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(27,003
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||
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Changes in Operating assets & liabilities
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||||||||
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(Increase) decrease in prepaid expenses
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-
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42,101
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||||||
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Increase (decrease) in accounts payable and accrued liabilities
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(81,973
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)
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16,595
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|||||
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Net Cash Provided by (Used in) Operating Activities
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(166,530
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)
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31,693
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|||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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||||||||
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Payback to related party
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-
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(42,101
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)
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|||||
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Due to related party
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166,530
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10,408
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||||||
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Net cash provided by Financing Activities
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166,530
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(31,693
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)
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|||||
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||||||||
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NET INCREASE IN CASH
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-
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-
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||||||
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CASH AT BEGINNING OF PERIOD
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-
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-
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||||||
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CASH AT END OF PERIOD
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$
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-
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$
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-
|
||||
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CASH PAID FOR:
|
||||||||
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Interest
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$
|
-
|
$
|
-
|
||||
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Income taxes
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$
|
-
|
$
|
-
|
||||
The accompanying notes are an integral part of these financial statements.
6
ASTIKA HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS
Astika Holdings, Inc. (the “Company”, “we”, “us”, “our”) is a Florida corporation in the development stage. The Company is preparing to relaunch the Company through a variety of strategic acquisitions in the
textile, service, and/or industrial sectors to complement and capture the next wave of growth companies from Asia and New Zealand.
NOTE 2- GOING CONCERN ANALYSIS AND MANAGEMENT PLANS
The Company’s unaudited interim financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit and no cash flows from operating activities at September 30, 2019. The Company has
not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Company’s ability to continue as a
going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans focus is on a variety of strategic acquisitions in service,
agriculture and industrial companies to compliment and grow Astika Holdings, Inc.’s business. The Company is positioning to capture the next wave of growth companies from Asia. As the centerpieces for Astika Holdings in Asia, the focus is on rapid
economic growth and increased foreign investment sector companies which management believes is poised for accelerated economic growth with national modernization. Astika’s planned focus is also on adding value through successful project
development, efficient operations, and opportunistic acquisitions while maintaining a low risk profile through project diversification, astute financial management and operating in secure jurisdictions. Management’s plan to obtain such resources
for the Company include (i) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses; (ii) obtaining funding from outside sources through the sale of its debt and/or equity securities; and
(iii) completing a merger with or acquisition of an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
7
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for the
presentation of interim financial information, but do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying financial statements should be read in
conjunction with the December 31, 2018 financial statements that were filed in our annual report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. The operating results for interim periods are not necessarily indicative of results that may be expected for the year ended December 31, 2019.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Stock-Based Compensation
We recognize compensation cost for stock-based awards to employees in accordance with ASC Topic 718, over the requisite service period for each separately vesting tranche, as if
multiple awards were granted. Compensation cost is based on grant-date fair value using quoted market prices for our common stock. We recognize compensation cost for stock-based awards to nonemployees in accordance with ASC Topic 505.
The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings Per Share” (ASC 260). Under the provisions of ASC 260, basic earnings per share is
computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing the net income (loss) for the period by the
weighted average number of common and potentially dilutive shares of common stock outstanding during the period. The Company had net losses as of September 30, 2019 and 2018, as such, the diluted loss per share excludes all dilutive
potential shares because their effect is anti-dilutive.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825), requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair
value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to
measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or
liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active
markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
8
Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities.
The carrying values of cash, accounts payable, and accrued liabilities approximate fair value. Pursuant to ASC 820 and 825, the fair value of cash is determined
based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and
respective maturity dates or durations.
Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718
to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the
issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years
beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption
of ASU 2018-07 does not have a material impact on the Company’s financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair
Value Measurement (“ASU 2018-13”). The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing
disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for
recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is
effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2018-13 to have a material impact
on its financial statements.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 4 - LOAN TRANSACTION
The Company purchased a recorded music compilation from EuGene Gant for a purchase price of $5,000 pursuant to a Bill of Sale and Assignment dated June 15, 2012, an Exclusive
Songwriter Agreement dated June 15, 2012, and a Promissory Note that the Company concurrently executed and delivered to Mr. Gant on the same date. The Company made a payment to Mr. Gant in the amount of $1,000 on June 15, 2012 and $2,000 on
October 1, 2012, and $1,000 on June 15, 2013, and the remaining $1,000 principal amount under Promissory Note bears interest at five percent (5%) per annum, and there is one remaining principal installment payment in the amount of $1,162 due.
Accrued and unpaid interest on the Promissory Note is also due in the amount of $57 for the nine-months ended September 30, 2019, and $53 for the nine-months ended September 30, 2018. As of September 30, 2019 and December 31, 2018, total
outstanding short-term debt was $1,546 and $1,490, respectively. The note matured on June 15, 2013 and the loan is currently in default.
9
On October 22, 2015, Artfield Investment paid $2,100 in expenses on behalf of the Company. This loan is unsecured, due on demand, and carries no interest. As of September 30, 2019
and December 31, 2018, the total amount owed was $2,100 and $2,100, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company has entered into transactions with the related party, IQ Acquisition (NY), Ltd, owned by Mr. Richards, the CEO of the Company. IQ Acquisition (NY), Ltd, the major
shareholder of the Company, has paid expenses on behalf of the Company in the amount of $84,557 and $10,408 during the nine months ended September 30, 2019 and 2018, respectively. The Company reimbursed IQ acquisition (NY) in the amount of $0 and $42,101 during the nine-months ended September 30, 2019 and 2018, respectively. The balance due to related party as of September 30, 2019 and December 31, 2018 was $172,337 and $5,807, respectively. The advances are
unsecured, payable on demand, and carry no interest.
NOTE 6 - EQUITY BALANCES AND TRANSACTIONS
The Company has authorized 10,000,000 shares of Preferred Stock and 140,000,000 shares of Common Stock at par value of $0.001. As of September 30, 2019 and December 31, 2018, the
Company had 29,890,066 and 29,890,066 shares of common stock, and 2,090,000 and 2,090,000 preferred shares, issued and outstanding, respectively.
During the nine months ended September 30, 2019 and 2018, the Company did not issue any additional shares of common stock. As of September 30, 2019, no preferred shares have been
converted to shares of common stock.
Convertible Preferred Stock
In December 2017, the Company issued 1,210,000 shares of its Series B convertible preferred stock at a price of $0.30 per share for gross proceeds of $363,000 and issued 380,000
shares of its Series B convertible preferred stock at a price of $0.40 per share for gross proceeds of $152,000. In December 2017, the Company also issued 500,000 shares of its Series B convertible preferred stock to a third party as compensation,
totaling $160,000, for his consulting services. The Series B shareholders are entitled, at their option, at any time after the issuance of the Series B convertible preferred stock, to convert all or any lesser portion of their shares into the
Company’s common stock at a conversion ratio 0.2 and at a price of $1.59 per share.
The holders of the Series B convertible preferred stock have the following rights and privileges:
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Optional Conversion Rights
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Each share of Series B convertible preferred stock is convertible at the option of the holder into 0.2 shares of common stock at a price of $1.59 per
share. The conversion price per share for the convertible preferred stock shall be adjusted for certain recapitalizations, splits, combinations, and common stock dividends or as set forth in the Company’s amended and restated certificate of
incorporation. As of September 30, 2019, none of the Series B convertible preferred stock has been converted to common stock.
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Voting Rights
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Each share of convertible preferred stock has 0.2 votes equal to the number of shares of common stock into which it is convertible.
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Redemption Rights
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There are no redemption rights afforded to the holders of convertible preferred stock. Upon certain change in control events that are outside of the Company’s control, including
liquidation, sale or transfer of control of the Company, the convertible preferred stock is contingently redeemable.
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The holders of the Series B convertible preferred stock are not entitled to receive dividends and have the same liquidation rights that are possessed by the holders of the Company’s
common stock.
The Company evaluated whether or not the Series B convertible preferred stock above contained embedded conversion options, which meet the definition of derivatives under ASC Topic
815. The Company concluded that since the above convertible preferred shares had a fixed conversion rate, the convertible preferred shares were not derivative instruments.
The convertible preferred shares were analyzed to determine if the convertible preferred shares have an embedded beneficial conversion feature (BCF). Based on this analysis, the
Company concluded that the effective conversion price was greater than the fair value of the Company’s common stock on the issuance dates and therefore no BCF was recorded.
The Company recorded its convertible preferred stock at fair value on the dates of issuance, net of issuance costs. The total fair value of the convertible preferred stock on the date of issuance
and as of September 30, 2019 was $201,809. As of September 30, 2019, there are a total of 2,090,000 shares of Series B convertible preferred stock authorized, issued and outstanding.
NOTE 7 - SUBSEQUENT EVENTS
On December 4, 2019, the Company engaged a firm to act as a business development consultant (the “Consultant”) for the Company whereby the Consultant will prepare and assist the
Company in raising approximately US$20 million. The Consultant will attempt to recruit a lead licensed Broker or Dealer and other selling syndicate partners.
The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these financial statements and determined that no
other subsequent event requires recognition or disclosure to the financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing in this report and are hereby referenced.
The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is
important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations.
You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a
forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the
negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital
expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of
investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and
financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or
caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.
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The Company was incorporated under the laws of the State of Florida on January 13, 2011. We are refocusing and preparing to relaunch the Company through a variety of strategic
acquisitions in the textile, service, agricultural, and/or industrial sectors to complement and capture the next wave of growth companies from Asia and New Zealand. There can be no assurance that we will succeed in our efforts.
Results of Operations for the Three and Nine Months Ended September 30, 2019 Compared to the Three and Nine Months Ended September 30, 2018
Revenues
General and administrative expenses for the three months ended September 30, 2019 were $63,702 as compared to $7,667 for the three months ended September 30, 2018, and
$84,501 for the nine months ended September 30, 2019 as compared to $26,950 for the nine months ended September 30, 2018. General and administrative expenses increased primarily due to the higher consulting fees related to the Company’s
acquisition and financing activities.
Liquidity and Capital Resources
As of September 30, 2019 and December 31, 2018, we had working capital deficits of $209,278 and $124,721, respectively.
The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise
substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plans focus on a variety of strategic acquisitions in
service, agriculture and industrial companies to complement and grow its business. The Company is positioning to capture the next wave of growth companies from Asia. The Company’s planned focus is also on adding value through successful project
development, efficient operations, and opportunistic acquisitions while maintaining a low risk profile through project diversification, astute financial management and operating in secure jurisdictions. to obtain such resources for the Company
include (i) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses; (ii) obtaining funding from outside sources through the sale of its debt and/or equity securities; and (iii) completing a
merger with or acquisition of an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying financial statements do not include any
adjustments that might result from this uncertainty.
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Net Cash Used in Operating Activities
Net Cash Used in Investing Activities
The net cash used in investing activities during the nine months ended September 30, 2019 and 2018 was $0.
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the nine months ended September 30, 2019 was $166,530. Net cash used in financing
activities during the nine months ended September 30, 2018 was $31,693 due to payback of a related party’s loan in the amount of $42,101.
Availability of Additional Funds
Based on our working capital deficit as of September 30, 2019 and zero revenues, we expect to need additional equity and/or debt financing to continue our operations during
the next 12 months. We expect that our current cash on hand will not fund our operations through December 2020.
Critical Accounting Policies and Estimates
Our unaudited interim financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent
basis. The preparation of unaudited interim financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited interim financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these
estimates. Our significant estimates and assumptions include amortization, the fair value of our stock, and the valuation allowance relating to the Company’s deferred tax assets.
Material Commitments
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In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the
scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the
issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after
December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 does not have a
material impact on the Company’s financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU
2018-13”). The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement
uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the
reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for annual reporting periods and interim periods
within those annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its financial statements.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange
Act of 1934 (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 our
management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Treasurer, of the
effectiveness of the design and operation of our disclosure controls and procedures as of the end of our third fiscal quarter covered by this report. Based on the foregoing, our President and Treasurer concluded that our disclosure controls and
procedures were not effective at the reasonable assurance level as of September 30, 2019. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
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Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate the following series of measures once we
have the financial resources to do so:
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We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the
accounting function when funds are available to us. And, we plan to appoint one or more outside directors to an audit committee resulting in a fully functioning audit committee, which will undertake the oversight in the establishment and
monitoring of required internal controls and procedures, such as reviewing and approving estimates and assumptions made by management when funds are available to us.
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Management believes that the appointment of outside directors to a fully functioning audit committee would remedy the lack of a functioning audit committee.
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Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which were identified in connection with management’s
evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
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Item 6. Exhibits
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Exhibit No.
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Description
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31.1
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32.1
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101 INS
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XBRL Instance Document*
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101 SCH
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XBRL Schema Document*
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101 CAL
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XBRL Calculation Linkbase Document*
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101 LAB
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XBRL Labels Linkbase Document*
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101 PRE
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XBRL Presentation Linkbase Document*
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101 DEF
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XBRL Definition Linkbase Document*
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* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set
forth by specific reference in such filing or document.
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By:
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/s/ Mark W. Richards
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Mark W. Richards
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President, Chief Executive Officer,
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(Principal Executive Officer), Treasurer
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(Principal Financial and Accounting Officer), Chairman
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