OZOP ENERGY SOLUTIONS, INC. - Quarter Report: 2018 January (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 quarter ended: January 31, 2018

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: 333-212821

NEWMARKT CORP.

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

As of January 31, 2018 there were 2,797,500 shares outstanding of the registrant’s common stock.

 2 

NEWMARKT CORP.

BALANCE SHEETS

(UNAUDITED)

See accompanying notes to financial statements.

 4  

NEWMARKT CORP.

STATEMENT OF OPERATIONS

(UNAUDITED)

See accompanying notes to financial statements.

 5  

 6  

NEWMARKT CORP.

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2018

(UNAUDITED)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Newmarkt Corp. (“the Company”, “we”, “us” or “our”) was incorporated on July 17, 2015, under the laws of the State of Nevada, for the purpose of the renting different kind of Segway and bicycles, dual wheels self-balancing electric scooter and related safety equipment.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern.  The Company had not generated sufficient revenue to cover its operating costs, has incurred losses from inception, and has an accumulated deficit of $78,029 at January 31, 2018. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it will be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES

Basis of presentation

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

Start-up costs

In accordance with ASC 720, “Start-up Costs”, the company expenses all costs incurred in connection with the start-up and organization of the company.

Fair Value of Financial Instruments

AS topic 820 "Fair Value Measurements and Disclosures" establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

The carrying value of cash and the Company’s loan from shareholder approximates its fair value due to their short-term maturity. The company has no assets or liabilities valued at fair value on a recurring basis.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

The  Company  considers  all  highly  liquid  investments  with  the  original  maturities  of  three  months  or  less  to be cash equivalents.

 7  

NEWMARKT CORP.

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2018

(UNAUDITED)

NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)

Depreciation, Amortization, and Capitalization

The Company records depreciation and amortization when appropriate using straight-line balance method over the estimated useful life of the assets. We estimate that the useful life of sport equipment (different kind of Segway and bicycles, dual wheels self-balancing electric scooter) is five years, related safety equipment is two years. Useful life of current version of web site is one year. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property's useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.

Income Taxes

Income taxes are computed using the asset and liability method.  Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Revenue Recognition

The Company recognizes revenue in accordance with ASC topic 605 “Revenue Recognition”. Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured. The Company rents its equipment on a short-term basis and records the revenue at the time the rental is completed.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718.  To date, the Company has not adopted a stock option plan and has not granted any stock options.

Basic Income (Loss) Per Share

The Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive income (loss) per share excludes all potential common shares if their effect is anti-dilutive. As of January 31, 2018 there were no potentially dilutive debt or equity instruments issued or outstanding.

Recent Accounting Pronouncements

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.

NOTE 4 – LOAN FROM RELATED PARTY

As of January 31, 2018, our sole director and shareholder has loaned to the Company $87,710. This loan is unsecured, non-interest bearing and due on demand.

The balance due to the director was $87,710 as of January 31, 2018.

 8  

NEWMARKT CORP.

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2018

(UNAUDITED)

NOTE 5 – EQUIPMENT

NOTE 6 – COMMON STOCK

The Company has 75,000,000, $0.001 par value shares of common stock authorized.

On January 20, 2016, the Company issued 2,000,000 shares of common stock to the Company’s founder for cash proceeds of $2,000 at $0.001 per share.

During November 2016, the Company issued 150,000 shares of common stock for cash proceeds of $5,970 at $0.04 per share.

During December 2016, the Company issued 500,000 shares of common stock for cash proceeds of $19,958 at $0.04 per share.

During January 2017, the Company issued 17,500 shares of common stock for cash proceeds of $700 at $0.04 per share.

On September 13, 2017 we have issued the additional certificates in amount of 130,000 shares.

There were total outstanding 2,797,500 shares; total restricted 2,130,000 shares; total non-restricted shares 667,500 as of January 31, 2018.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

We currently rent our physical property in Lithuania for a $400 monthly fee, starting on February 1, 2016 until February 1, 2018 and prolonged until February 1, 2020. This location serves as our primary office for planning and implementing our business plan. The Company has signed two additional lease agreements in Vilnius Lithuania, which commenced in June 2017, for $280 and $200 monthly fee.

 9  

NEWMARKT CORP.

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2018

(UNAUDITED)

NOTE 8 – INCOME TAXES

The Company has approximately $78,029 of net operating losses (“NOL”) available to be carried forward to offset taxable income, if any, in future years which expire in fiscal 2035. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

NOTE 9 – CONCENTRATIONS

For the nine months ended January 31, 2018 all revenue was earned from one customer, which represented 100% of total revenue. From inception to January 31, 2018 all revenue was earned from six customers, which represented 30%, 15%, 9%, 7%, 1% and 38% of total revenue for this period.

NOTE 10 – SUBSEQUENT EVENTS

Management has evaluated events subsequent to January 31, 2018 through the date these financial statements were available to be issued, and has determined that there are no events that would require disclosure in or adjustment to these financial statements.

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

This quarterly report and other reports filed by Newmarkt Corp.   (“we,” “us,” “our,” or the “Company”), from time to time contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.

ORGANIZATION

On July 17, 2015, the Company was incorporated under the laws of the State of Nevada. We are engaged in business of renting out bicycles and Segways.

 10  

Denis Razvodovskij has served as our President, Treasurer and as a Director, from July 17, 2015, until the current date. Our board of directors is comprised of one person: Denis Razvodovskij.

We are authorized to issue 75,000,000 shares of common stock, par value $0.001 per share. On January 20, 2016, Denis Razvodovskij, our President and a Director purchased an aggregate of 2,000,000 shares of common stock at $0.001 per share, for aggregate proceeds of $2,000.

IN GENERAL

We were incorporated on July 17, 2015 in the State of Nevada, USA. The Company’s business operations are located in Lithuania. Newmarkt Corp. since inception to the date of this filing has generated limited revenues in Lithuania. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings.

From inception until the date of this filing we have had limited operating activities, primarily consisting of the incorporation of our company, the initial equity funding by our sole officer and director, purchasing our equipment and entering into service agreements with our first customer, we also have leased three offices until the day of this filing and registered a webpage www.newmarktcorp.com and fill it in with basic initial information about us. We received our initial funding of $2,000 from our sole officer and director who purchased 2,000,000 shares of common stock at $0.001 per share.

Newmarkt Corp. is currently in negotiations with the potential customers Trav Lt and Around Lithuania travel agencies, which are interested in our service and we are planning to sign service agreements with them in the very near future, but there is no guarantee that we will reach agreements with these two potential customers.     

We are a company, which is in the business of renting out bicycles, Segways and related equipment. Denis Razvodovskij, our President and a Director, has agreed to loan the Company funds, however, he has no firm commitment, arrangement or legal obligation to advance or loan funds to the Company. The Company’s registration address is located at P.O. Box 1408, 5348 Vegas drive 89108 Las Vegas, Nevada, USA.

Our operations to date have been devoted primarily to start-up and development activities, which include:

(i)   Formation of the Company;

(ii)   Development of our 12 moth business plan;

(iii)  Leasing a place to offer, store and service our equipment;

(iv)  Purchasing our operating equipment;

(v)   Website creation;

(vi)  Signing service agreements with our first customers.

INITIAL FOCUS OF OUR BUSINESS

Newmarkt Corp. represents itself as bicycle and Segway renting out company. We are offering such service to touristic companies at the moment where tourists, friends, families can organize, plan, develop their own unique vacation on bikes and Segway for a long time, just for a day or for a couple of hours.

We are in the early stages of developing our growing plan to offer a rent bicycle service in Lithuania. We believe that the fact that the city of Vilnius, where we are starting our business, is popular among tourists gives the Company more opportunities to succeed.

We currently have some revenues and some operating history. The Company currently has two major customers to work with. We expect to get other customers and expand our service sales and our operations by the end of the fiscal year. Our plan of operations over the 12 month period following successful completion of our offering is to develop and establish our bicycles renting business by establishing our second and third office, developing our website, attempting to enter into more supply agreements with prospective distributors and manufacturers of bicycles and Segways, engage in advertising and marketing activities and hire personal and sales service specialist.

 11  

EQUIPMENT

We believe that rental bicycle has never been more in demand these days now that gas prices are rising, and tourists would rather rent bicycles rather than cars on a short distance of traveling. Our most obvious startup requirements for a renting business are bicycles, Segway and safety equipment. We consider the fact that cycling can be dangerous and in this case we will provide our customers with helmets and safety equipment. The Company does not maintain any liability insurance with customer injuries while renting the equipment.

The Company is planning to expand the range of offered equipment. There will be dual wheels self-balancing electric scooter, balancing electronic skateboards; additional safety equipment is accordance to purchased units of equipment and initial spare parts.

RESEARCH AND DEVELOPMENT EXPENDITURES

We have not incurred any research expenditures since our incorporation.

BANKRUPTCY OR SIMILAR PROCEEDINGS

There has been no bankruptcy, receivership or similar proceeding.

REORGANIZATIONS, PURCHASE OR SALE OF ASSETS

There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business.

COMPLIANCE WITH GOVERNMENT REGULATION

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities.

We do not believe that any existing or probable government regulation on our business, including any applicable export or import regulation or control imposed by China or the Lithuania will have a material impact on the way we conduct our business.

FACILITIES

We currently rent our physical property in Lithuania. Our current business address is Seimyniskiu g. 23 Vilnius 09200 Lithuania. Our telephone number is (705) 2078574. This location serves as our primary office for planning and implementing our business plan. The Company has signed two additional lease agreements in Vilnius Lithuania. New offices are currently serving as warehouses for our equipment and we are preparing the property for opening in July.

EMPLOYEES AND EMPLOYMENT AGREEMENTS

We have no employees as of the date of this prospectus. Our sole officer and director, Denis Razvodovskij, is an independent contractor to the Company and currently devotes approximately 20 hours per week to company matters. After receiving funding, Mr. Razvodovskij plans to devote, as much time to the operation of the Company as he determines is necessary for him to manage the affairs of the Company. As our business and operations increase, we will assess the need for full time management and administrative support personnel.

LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the three and nine months ended January 31, 2018 and 2017:

 12  

Revenue and cost of goods sold

For the three months ended January 31, 2018 and 2017 the Company generated total revenue of $0 and $4,920 respectively from renting out bicycles and Segway.

For the nine months ended January 31, 2018 and 2017 the Company generated total revenue of $21,440 and $21,970 respectively from renting out bicycles and Segway.

Operating expenses

Total operating expenses for the three months ended January 31, 2018 and 2017 were $28,035 and $22,469. The operating expenses for the three months ended January 31, 2018 included Accounting/Audit Fees of $(1,750); Depreciation Expense of $924; Bank Service Charges of $333; Professional Fees of $25,780; Rent Expense of $2,640.

Total operating expenses for the nine months ended January 31, 2018 and 2017 were $55,848 and $36,395. The operating expenses for the nine months ended January 31, 2018 included Accounting/Audit Fees of $3,500; Depreciation Expense of $2,773; Bank Service Charges of $1,035; Professional Fees of $36,350; Legal of $3,514; Rent Expense of $7,920; Repairs and Maintenance of $648;  Utilities of $108.

Net Income

The net loss for the  three months ended January 31, 2018 and 2017 was $28,035 and $17,549 respectively. 

The net loss for the  nine months ended January 31, 2018 and 2017 was $34,408 and $14,425 respectively. 

Liquidity and Capital Resources and Cash Requirements

At January 31, 2018, the Company had cash of $95 ($712 as of April 30, 2017). Furthermore, the Company had a working capital deficit of $57,546 ($25,912 as of April 30, 2017).

During the nine months ended January 31, 2018, the Company used $25,617 of cash in operating activities due to its net loss $34,408 and decrease in  Accrued expenses of $8500; increase in Prepaid expense of $6,183, decrease in Accounts receivable of $20,701 and Depreciation of $2,773.

During the nine months ended January 31, 2018 the Company has provided no cash from investing activities.

During the nine months ended January 31, 2018 the Company generated $25,000 cash in financing activities from proceeds of related party loan.

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a “smaller reporting company” as defined by Item 8 of Regulation S-X, we are not required to provide information required by this Item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a‐15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit 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 our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 13  

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of January 31, 2018. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of January 31, 2018 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO - 2013").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of January 31, 2018, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

1.      We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.

2.      We did not maintain appropriate cash controls – As of January 31, 2018, the Company has not maintained sufficient internal controls over financial reporting for cash, including failure to segregate cash handling and accounting functions, and did not require dual signatures on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in its bank accounts.

3.      We did not implement appropriate information technology controls – As at January 31, 2018, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of January 31, 2018 based on criteria established in Internal Control- Integrated Framework issued by COSO.

Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting occurred during the nine months ended January 31, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 14  

PART II.  OTHER INFORMATION

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

As a “smaller reporting company” as defined by Item 8 of Regulation S-X, we are not required to provide information required by this Item.

No unregistered sales of equity securities took place during the nine months ended January 31, 2018.

There were no senior securities issued and outstanding during the nine months ended January 31, 2018.

Not applicable to our Company.

There is no other information required to be disclosed under this item which was not previously disclosed.

The following exhibits are included as part of this report by reference:

 15  

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Vilnius, Lithuania March 6, 2018.

 16