NOTE 1 CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Cherubim Interests Inc. (the "Company") without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at February 29, 2016 and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Companys August 31, 2014 and 2013 audited financial statements. The results of operations for the period ended February 29, 2016 are not necessarily indicative of the operating results for the full year.
NOTE 2 NATURE OF BUSINESS
Cherubim Interests Inc. ("Company") was organized September 27, 2006 under the laws of the State of Nevada for the purpose of selling new food products produced or developed by North American companies to foreign markets. On August 31, 2009, the Company discontinued its involvement in the sales of tea due to a strategic change in business focus by the acquisition of mineral rights as disclosed in the Company's 8-K filed with the SEC on September 2, 2009. The Company currently has limited operations or realized revenues from its planned principle business purpose and, in accordance with ASC 915, "Development Stage Entities", formerly known as SFAS 7, "Accounting and Reporting by Development State Enterprises ." is considered a Development Stage Enterprise. The Company was incorporated in the State of Nevada, United States of America on September 27, 2006 and its fiscal year end is August 31. The Company was engaged in sales of new food products produced or developed by North American companies to foreign markets and discontinued that business in August 2009. The Company previously operated in the oil and gas industry, focused on the exploration for and development of oil and gas properties. Cherubim Interests now targets alternative, commercial, single and multifamily dwelling opportunities for the purpose of investment purchase. It also provides renovation services to third party multifamily dwelling unit owners on a turn-key basis. Cherubim Interests specializes in covering the entire spectrum of development including due diligence, acquisition, planning, construction, renovation, and property management. This comprehensive expertise allows the company to provide complete beginning-to-end development programs for all acquisitions.
NOTE 3 GOING CONCERN
The Companys financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. The Company has accumulated deficit since inception of $6,267,498 and a negative working capital of $2,083,004 as of February 29, 2016. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has minimal cash and no material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the Company.
7
CHERUBIM INTERESTS INC.
Notes to Condensed Unaudited Financial Statements
February 29, 2016
NOTE 4 - CONVERTIBLE NOTES PAYABLE
On August 5th, 2014, the Company issued a convertible promissory note to LG Capital in the amount of $36,750. The note was due on August 5th, 2015 and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Companys common stock at a rate of 55% multiplied by the market price, which is the average of the lowest two (2) trading prices for the common stock during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. On April 27, 2015 $1,600 of principal debt along with $92 of accrued interest totaling $1,692 was converted into 205,118 common shares of the company, On July 21, 2015 $3,150 of principal debt along with $240 of accrued interest totaling $3,390 was converted into 112,074 common shares, On July 31, 2015 $4,000 of principal debt along with $314 of accrued interest totaling $4,314 was converted into 148,689 common shares of the company, On January 21, 2016 $6,500 of principal debt along with $757 of accrued interest totaling $7,257 was converted into 131,962,181 shares of the company. To date $15,250 of the principal debt of $36,750 has been converted into 132,428,062 common shares of the company.
On June 19, 2015 the Company issued a convertible promissory note to Gold Coast Capital, LLC in the amount of $25,000. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Companys common stock at a rate of 70% multiplied by the market price, which is the average of the lowest two (2) trading prices for the common stock during the forty-five (45) trading day period ending on the latest complete trading day prior to the conversion date. On September 15, 2015 $10,000 of principal debt was converted into 6,250,000 common shares, On September 24, 2015 $4,586 of principal debt was converted into 6,744,934 common shares, On October 9, 2015 $5,389 of principal debt was converted into 7,926,024 common shares. To date, $19,975 of the $25,000 of the debt has been converted into 20,920,958 shares. On December 10, 2015 the company entered into a debt settlement agreement with Gold Coast Capital LLC.
On July 31, 2015, the Company issued a convertible promissory note to Auctus Fund LLC. in the amount of $45,750. The note is due on May 1, 2016 and bears interest at 10% per annum. The loan becomes convertible 300 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Companys common stock at a rate of 50% multiplied by the lowest trading price during the previous twenty-five (25) day trading period ending on the latest complete trading day prior to the conversion date.
NOTE 5 DERIVATIVE LIABILITIES
In accordance with AC 815, the Company has bifurcated the conversion feature of their convertible notes and recorded a derivative liability on the date each note became convertible. The derivative liability was then revalued on each reporting date. The Company uses the Black-Scholes option pricing model to value the derivative liability. There was no derivative liability at February 29, 2016. Once the loans are fully converted, the remaining derivative liability is reclassified to equity as additional paid-in capital.
ASC 815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value as another income or expense item. The Companys only asset or liability measured at fair value on a recurring basis is its derivative liability associated with the above convertible debt. During the period ended February 29, 2016, the Company recorded a total change in the value of the derivative liabilities of $(396,735).
From inception to February 29, 2016 the Company has not granted any stock options.
8
CHERUBIM INTERESTS INC.
Notes to Condensed Unaudited Financial Statements
February 29, 2016
NOTE 6 - STOCKHOLDERS' EQUITY
The total number of common shares authorized that may be issued by the Company is 5,000,000,000 shares with a par value of $0.0001 per share and 50,000,000 preferred shares.
On December 10, 2015 $507,807 of the companys debt was converted, at a price of $2.50, into 20,312 warrants exercisable into Series B Preferred Stock at a price of $0.01 per share.
On September 12, 2015 1,578,947 shares were issued on conversion of a convertible promissory note.
On September 16, 2015 6,250,000 shares were issued on conversion of a convertible promissory note.
On September 22, 2015 2,924,390 shares were issued on conversion of a convertible promissory note.
On September 24, 2015 2,923,333 shares were issued on conversion of a convertible promissory note.
On September 29, 2015 2,918,182 shares were issued on conversion of a convertible promissory note.
On September 30, 2015 6,744,934 shares were issued on conversion of a convertible promissory note.
On October 1, 2015 2,924,731 shares were issued on conversion of a convertible promissory note.
On October 5, 2015 7,548,387 shares were issued on conversion of a convertible promissory note.
On October 8, 2015 7,548,387 shares were issued on conversion of a convertible promissory note.
On October 12, 2015 7,548,387 shares were issued on conversion of a convertible promissory note.
On October 13, 2015 15,474,411 shares were issued on conversion of a convertible promissory note.
On October 14, 2015, the Board of Directors of Cherubim Interests, Inc. (the Company) approved the amendment and restatement of the Companys Articles of Incorporation. The purpose of the Restatement was to:
i.
Increase the number of authorized shares of Common Stock to 5,000,000,000;
ii.
Increase the number of authorized shares of Preferred Stock to 50,000,000;
iii.
Set the par value of the Common and Preferred Stock to $0.00001;
iv.
Authorize the Board of Directors to issue blank check Preferred Stock and fix the rights, preferences, privileges, qualifications, limitations, and restrictions of any Preferred Stock issued by the Company, including the number of shares constituting any series or the designation of such series.
Also on October 14, 2015, the Board of the Company approved the amendment and restatement of the Certificates of Designation to the Articles of Incorporation of the Companys Series A and B Preferred Stock (the Preferred Classes). The rights, preferences, privileges, restrictions and characteristics of the Preferred Classes are detailed in the Amended Certificate of Designation to the Articles of Incorporation filed hereto as exhibits 3(ii) and 3(iii) to this filing.
On October 14, 2015, the Company declared a dividend of 1 Series B Preferred share per 100,000 shares of common stock to the owners of record as of the close of business on December 31, 2015.
On October 21, 2015 7,548,387 shares were issued on conversion of a convertible promissory note.
On October 22, 2015 7,494,048 shares were issued on conversion of a convertible promissory note.
On October 23, 2015 2,023,810 shares were issued on conversion of a convertible promissory note.
On October 26, 2015 7,500,000 shares were issued on conversion of a convertible promissory note.
9
On October 27, 2015 $15,000 of affiliate debt was converted into 300,000,000 restricted shares of the companys common stock.
On October 30, 2015 5,523,810 shares were issued on conversion of a convertible promissory note.
On November 3, 2015 7,547,945 shares were issued on conversion of a convertible promissory note.
On November 4, 2015 7,537,313 shares were issued on conversion of a convertible promissory note.
On November 6, 2015 25,037,313 shares were issued on conversion of a convertible promissory note.
On November 9, 2015 $90,000 of affiliate debt was converted into 1,800,000,000 restricted shares of the companys common stock.
On November 9, 2015 12,173,913 shares were issued on conversion of a convertible promissory note.
On November 10, 2015 7,537,313 shares were issued on conversion of a convertible promissory note.
On November 12, 2015 32,540,984 shares were issued on conversion of a convertible promissory note.
On November 18, 2015 7,542,857 shares were issued on conversion of a convertible promissory note.
On November 19, 2015 32,393,156 shares were issued on conversion of a convertible promissory note.
On November 21, 2015 6,846,154 shares were issued on conversion of a convertible promissory note.
On November 23, 2015 70,000,000 shares were issued on conversion of a convertible promissory note.
On November 24, 2015 100,000,000 shares were issued on conversion of a convertible promissory note.
On December 1, 2015 72,878,760 shares were issued on conversion of a convertible promissory note.
On December 7, 2015 100,000,000 shares were issued on conversion of a convertible promissory note.
On December 14, 2015 220,000,000 shares were issued on conversion of a convertible promissory note.
On December 29, 2015 200,000,000 shares were issued on conversion of a convertible promissory note.
On January 4, 2016 571,962,181 shares were issued on conversion of a convertible promissory note.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company has current loans totaling $639,108 to fund operations which carry varying interest rates. As of February 29, 2016 (August 31, 2015), the Company owed $639,108 ($995,698) of principal plus accrued interest of $202,387 ($532,454). The loans are unsecured and due on demand and as such are included in current liabilities.
NOTE 9 SUBSEQUENT EVENTS
On March 31, 2016 the Company acquired 100% of the membership interests of Golden Eagle Roofing LLC.
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2015 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:
·
the uncertainty of profitability based upon our history of losses;
·
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;
·
risks related to our international operations and currency exchange fluctuations;
·
risks related to product liability claims;
·
other risks and uncertainties related to our business plan and business strategy.
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.
Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our", the "Company" and "Cherubim" mean Cherubim Interests Inc., unless otherwise indicated.
Our Current Business
Cherubim Interests Inc. ("Company") was organized September 27, 2006 under the laws of the State of Nevada for the purpose of selling new food products produced or developed by North American companies to foreign markets. On August 31, 2009, the Company discontinued its involvement in the sales of tea due to a strategic change in business focus by the acquisition of mineral rights as disclosed in the Company's 8-K filed with the SEC on September 2, 2009. The Company currently has limited operations or realized revenues from its planned principle business purpose and, in accordance with ASC 915, "Development Stage Entities", formerly known as SFAS 7, "Accounting and Reporting by Development State Enterprises ." is considered a Development Stage Enterprise. The Company was incorporated in the State of Nevada, United States of America on September 27, 2006 and its fiscal year end is August 31. The Company was engaged in sales of new food products produced or developed by North American companies to foreign markets and discontinued that business in August 2009. The Company previously operated in the oil and gas industry, focused on the exploration for and development of oil and gas properties. Cherubim Interests now targets alternative, commercial, single and multifamily dwelling opportunities for the purpose of investment purchase. It also provides renovation services to third party multifamily dwelling unit owners on a turn-key basis. Cherubim Interests specializes in covering the entire spectrum of development including due diligence, acquisition, planning, construction, renovation, and property management. This comprehensive expertise allows the company to provide complete beginning-to-end development programs for all acquisitions.
11
On October 14, 2015, the Board of Directors of Cherubim Interests, Inc. (the Company) approved the amendment and restatement of the Companys Articles of Incorporation. The purpose of the Restatement was to:
i.
Increase the number of authorized shares of Common Stock to 5,000,000,000;
ii.
Increase the number of authorized shares of Preferred Stock to 50,000,000;
iii.
Set the par value of the Common and Preferred Stock to $0.00001;
iv.
Authorize the Board of Directors to issue blank check Preferred Stock and fix the rights, preferences, privileges, qualifications, limitations, and restrictions of any Preferred Stock issued by the Company, including the number of shares constituting any series or the designation of such series.
Also on October 14, 2015, the Board of the Company approved the amendment and restatement of the Certificates of Designation to the Articles of Incorporation of the Companys Series A and B Preferred Stock (the Preferred Classes). The rights, preferences, privileges, restrictions and characteristics of the Preferred Classes are detailed in the Amended Certificate of Designation to the Articles of Incorporation filed hereto as exhibits 3(ii) and 3(iii) to this filing.
On October 14, 2015, the Company declared a dividend of 1 Series B Preferred share per 100,000 shares of common stock to the owners of record as of the close of business on December 31, 2015.
On December 2015, the Company entered into a debt settlement agreement with Gold Coast Capital LLC
On February 9, 2016, holders of a majority of the voting rights of the Company approved a 30,000 to 1 reverse split of the Companys Common Stock (Reverse Split), meaning that each 30,000 shares of Common Stock will be consolidated into 1 share of Common Stock following the reverse split, provided however, that fractional shares would be rounded up to the nearest whole share. Notice of the action taken by holders of a majority of the voting rights of the Company was provided to non-consenting shareholders in accordance with Nevada law.
On February 29, 2016, Cherubim Interests, Inc., a Nevada corporation (the Company) entered into a share exchange agreement (the SPA), by and among the Company, Victura Construction Group Inc. , Inc., a Wyoming corporation (VICT), and the shareholders of VICT, pursuant to which the Company purchased all of the outstanding common stock of Victura Roofing LLC., and Cherubim Builders Group LLC. (Oklahoma) from Victura Construction Group Inc. in exchange for 60,000 shares of the companies Series C preferred stock, par value $0.00001 per share (the Series C Preferred Stock). Victura Roofing was a wholly owned subsidiary of Victura Construction Group Inc., and is led by industry professionals with a 20 year track record of success. Victura Roofing provides quality work for internal Victura subsidiaries Gregg Construction and WaterMasters Restoration as well as provides a platform for market business opportunities in the Dallas/Ft. Worth Metroplex.
Cherubim Builders Group LLC (Oklahoma) is a general contractor that focuses on opportunities in restoration and reconstruction as well as multi-family and new home construction in the Oklahoma City Region.
12
RESULTS OF OPERATIONS
The following is a discussion and analysis of our results of operation for the three month period ended February 29, 2016, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this quarterly report. Our financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.
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|
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|
|
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Three months ended
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Six months ended
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|
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February 29, 2016
|
|
February 29, 2015
|
|
February 29, 2016
|
|
February 29, 2015
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
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-
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|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
8,820
|
|
|
161,522
|
|
|
17,700
|
|
|
322,236
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Travel and promotion
|
|
|
-
|
|
|
3,049
|
|
|
4,225
|
|
|
21,774
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Bad debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Depreciation
|
|
|
1,221
|
|
|
-
|
|
|
2,441
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|
|
-
|
Other general and administrative
|
|
|
150,387
|
|
|
5,618
|
|
|
2,315,417
|
|
|
14,563
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Total operating expenses
|
|
|
160,428
|
|
|
170,189
|
|
|
2,339,783
|
|
|
358,573
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|
|
|
|
|
|
|
|
|
|
|
|
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Loss from operations
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|
|
(160,428)
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|
|
(170,189)
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|
|
(2,339,783)
|
|
|
(358,573)
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Revenue
Our gross revenue for the three and six month period ended February 29, 2016, was $0, compared to $0 for the same period in fiscal 2015.
Operating Expenses
The primary decrease in the operating expenses for the three months ended February 29, 2016 over the prior period was the decreased professional expenses. This was partially offset by the increase in other general and administrative expenses.
The primary increase in the operating expenses for the six months ended February 29, 2016 over the prior periods was the increase in other general and administrative expenses accrued and paid in shares. This was partially offset by the decreased professional expenses in the six months ended February 29, 2016.
Liquidity and Capital Resourc
e
|
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|
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February 29,
2016
|
|
August 31,
2015
|
|
|
(Unaudited)
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|
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ASSETS
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|
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Current assets
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|
|
|
|
|
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Cash
|
|
$
|
875
|
|
$
|
16,293
|
|
|
|
|
|
|
|
Total current assets
|
|
|
875
|
|
|
16,293
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
13,632
|
|
|
3,572
|
|
|
|
|
|
|
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Total assets
|
|
$
|
14,507
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|
$
|
19,865
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13
Cash Flows
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Six months ended
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February 29,
2016
|
|
February 28,
2015
|
|
|
|
|
|
|
|
Cash used in operating activities
|
|
$
|
(95,769)
|
|
$
|
(76,685)
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|
|
|
|
|
|
|
Cash flows used in investing activities
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|
|
(12,500)
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|
|
(20)
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|
|
|
|
|
|
|
Cash provided by financing activities
|
|
|
92,851
|
|
|
65,500
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
875
|
|
$
|
284
|
The Company had cash of $875; accounts payable and accrued liabilities of $28,985, notes payable totalling $100,273, related party notes totalling $639,108, a derivative liability of $35,558 and accrued interest of $539,013. We also had interest expense of $72,804 for the six months ended February 29, 2016 and an accumulated Net Loss of $6,267,498 as of February 29, 2016.
Cash used in operating activities
The Companys cash balance of $875 as of February 29, 2016, is a decrease of $15,418 during the six months ended as compared to $16,293 at August 31, 2015.
Cash flows used in investing activities
The Companys cash flows used in investing activities as of February 29, 2016, decreased by $12,500 as a result of revamping the corporate website to better reflect the current business model and overall operating strategy.
Cash flows provided by financing activities
The Companys cash flows provided by financing activities as of February 29, 2016, increased by $92,851 as a result of proceeds received from a related party loan.
Going Concern
The audited financial statements for the year ended August 31, 2015, included in our annual report on the Form 10-K filed with Securities and Exchange Commission, have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at February 29, 2016, our company has accumulated losses of $6,267,498 since inception. As we do not have sufficient funds for our planned operations, we will be required to raise additional funds for operations and expansion. Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended August 31, 2015, our independent registered auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent registered auditors.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Future Financings
The companys operating budget to maintain the public entity reporting requirements is approximately $50,000. We continue to present to various funding groups the current opportunities in attempts to secure additional capital.
14
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock to fund our marketing plan and operations. At this time, we cannot provide investors with any assurance that we will be able to secure sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing and continue to be dependent upon related party/shareholder funding. The company plans to secure additional capital by the use of Notes Payable, Convertible Notes Payable, Private Placements, and partnerships and revenue sharing in future opportunities. This financing activity may lead to stock dilution and changes in control.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.