NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On
October 31, 2011 (the “Closing Date”), China Advanced Technology acquired Goliath Film and Media International, a
California corporation, by issuing 47,000,000 shares of its Common Stock, constituting 70.1% of the outstanding shares after giving
effect to their issuance and the cancellation of 15,619,816 shares held by China Advanced Technology’s prior control person.
Immediately following the Closing, 67,100,000 shares were issued and outstanding, including the 100,000 shares sold as described
in Note 7. On the Closing Date, the name of China Advanced Technology was changed to Goliath Film and Media Holdings (“Goliath”
or “the Company”). All share numbers herein have been adjusted for an eight-for-1 forward stock split affected as
of the Closing Date. The forward stock split was reflected in the trading market on February 13, 2012. The transaction was accounted
for as a reverse acquisition in which Goliath Film and Media International is deemed to be the accounting acquirer, and the prior
operations of Goliath (formerly China Advanced Technology) are consolidated for accounting purposes. Since Goliath had no operations,
assets, or liabilities as of the Closing, no audit of that entity was required under the materiality thresholds of Regulation
S-X Rule 8-04.
Organization,
Nature of Business and Trade Name
The
Company is engaged in the distribution of films and pictures. The Company has not realized revenues from its planned principal
business purpose.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts
and transactions have been eliminated.
Basis
of Presentation
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ
from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing
and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal
accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions
are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present
fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.
Use
of Estimates
The
preparation of financial statements in accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. A change in managements’ estimates or assumptions could have a material impact on the Company’s financial
condition and results of operations during the period in which such changes occurred.
Actual
results could differ from those estimates. The Company’s financial statements reflect all adjustments that management believes
are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
Accounts
Receivable
Accounts
receivable, if any are carried at the expected net realizable value. The allowance for doubtful accounts, when determined, will
be based on management’s assessment of the collectability of specific customer accounts and the aging of the accounts receivables.
If there were a deterioration of a major customer’s creditworthiness, or actual defaults were higher than historical experience,
our estimates of the recoverability of the amounts due to us could be overstated, which could have a negative impact on operations.
The
Company currently does not have any accounts receivable. The above accounting policies will be adopted upon the Company carrying
accounts receivable.
Intangible
Assets
The
Company’s intangible assets consist of intellectual property, principally motion pictures. The Company periodically reviews
its long lived assets to ensure that their carrying value does not exceed their fair market value. There was no amortization expense
or impairment for the years ended April 30, 2014 and 2013 as the useful life is not estimable.
Revenue
Recognition
We
will recognize revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff
Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”.
Under
SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists,
(ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably
assured. The Company provides for an allowance for doubtful account based history and experience considering economic and industry
trends. The Company does not have any off-Balance Sheet exposure related to its customers.
Goliath
Film and Media International, intends to develop and license for distribution quality motion picture and television content. Revenue
is recognized when the company receives a contract for the license of its content and its content is delivered to the customer.
The
Company currently does not have a means for generating revenue. Revenue and cost recognition procedures will be implemented based
on the type of properties required and sale contract specifications.
Advertising
Advertising
expenses are recorded as general and administrative expenses when they are incurred. Advertising expense was $2,625 and $0, for
the years ended April 30, 2014 and 2013, respectively.
Research
and Development
All
research and development costs are expensed as incurred. There was no research and development expense for the years ended April
30, 2014 and 2013.
Income
tax
We
account for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) No. 740, Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC
740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
Non-Cash
Equity Transactions
Shares
of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on
the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash
sale of stock.
Fair
Value Measurements
Effective
beginning second quarter 2010, the FASB ASC Topic 825,
Financial Instruments
, requires
disclosures about fair value
of financial instruments in quarterly reports as well as in annual reports. For the Company, this statement applies to certain
investments and long-term debt. Also, the FASB ASC Topic 820,
Fair Value Measurements and Disclosures
, clarifies the definition
of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about
the use of fair value measurements.
Various
inputs are considered when determining the value of the Company’s investments and long-term debt. The inputs or methodologies
used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These
inputs are summarized in the three broad levels listed below.
●
|
Level
1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.
|
|
|
●
|
Level
2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk,
etc.).
|
|
|
●
|
Level
3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of
investments).
|
The
Company’s adoption of FASB ASC Topic 825 did not have a material impact on the Company’s consolidated financial statements.
The
carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs.
The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods.
Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial
statement is prepared. The Company had no financial assets and/or liabilities carried at fair value on a recurring basis at April
30, 2014, assets and liabilities approximate fair value due to their short term nature.
The
availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including
the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For
many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted
by market participants, and the valuation does not require significant management discretion. For other financial instruments,
pricing inputs are less observable in the market and may require management judgment. As of April 30, 2014, the Company had no
assets other than other receivable – related party.
Basic
and diluted earnings per share
Basic
earnings per share are based on the weighted-average number of shares of common stock outstanding. Diluted Earnings per share
is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may
be issued as a result of the following types of potentially dilutive instruments:
●
|
Warrants,
|
|
|
●
|
Employee
stock options, and
|
|
|
●
|
Other
equity awards, which include long-term incentive awards.
|
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
The
FASB ASC Topic 260,
Earnings Per Share
, requires the Company to include additional shares in the computation of earnings
per share, assuming dilution.
Diluted
earnings per share is based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying
the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained
thereby were used to purchase common stock at the average market price during the period.
Basic
and diluted earnings per share are the same as there were no potentially dilutive instruments for the years ended April 30, 2014
and 2013.
Concentrations,
Risks, and Uncertainties
The
Company did not have a concentration of business with suppliers or customers constituting greater than 10% of the Company’s
gross sales during 2014 and 2013.
Stock
Based Compensation
In
accordance with ASC No. 718,
Compensation – Stock Compensation
(“ASC 718”), we measure the compensation
costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements
over the period during which employees are required to provide services. Share-based compensation arrangements include stock options,
restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation
cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective
vesting periods of the option grant. We apply this statement prospectively. Equity instruments (“instruments”) issued
to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505,
Equity
Based Payments to Non-Employees
(“ASC 505”)
defines the measurement date and recognition period for such
instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier
of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments
is recognized over a period based on the facts and circumstances of each particular grant as defined in the ASC 505.
Accounting
for Derivative Financial Instruments
We
evaluate financial instruments using the guidance provided by ASC 815 and apply the provisions thereof to the accounting of items
identified as derivative financial instruments not indexed to our stock.
NOTE
2 – RECENTLY ENACTED ACCOUNTING STANDARDS
The
Company has evaluated new accounting pronouncements that have been issued and are not yet effective for the Company and determined
that there are no such pronouncements expected to have an impact on the Company’s future financial statements.
NOTE
3 – INTANGIBLE ASSET
Investment
in Documentary
On
July 29, 2012, the Company acquired a 30% exclusive interest for three years of a documentary on the career of former National
Basketball Association star, A.C. Green.
The
Company paid $7,085 to acquire this interest, of which a deposit of $2,550 was paid as of April 30, 2012 and the remaining $4,535
has been paid as of July 29, 2012.
There
was no amortization expense or impairment for the years ended April 30, 2014 and 2013 as the useful life is not estimable.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
On
April 14, 2014, the Company sold the interest in the documentary to an affiliate of the Company for $7,085, resulting in no gain
or loss. As of May 31, 2014, the Company had received deposits totaling $2,000, with the remaining $5,085 recorded as a receivable.
NOTE
4 – GOING CONCERN
The
Company’s 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. However, the Company does not have significant cash or other current assets, nor does it have an established source
of revenues sufficient to cover its operating costs, which raises substantial doubt about our ability to continue as a going concern.
Under
the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither
the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations.
Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge
its liabilities in the normal course of business.
Management
expects to seek potential business opportunities for merger or acquisition of existing companies. Currently the Company has yet
to locate any merger or acquisition candidates. Management is not currently limiting their search for merger or acquisition candidates
to any industry or locations. Management, while not especially experienced in matters relating to public company management, will
rely upon their own efforts and, to a much lesser extent, the efforts of the Company’s shareholders, in accomplishing the
business purposes of the Company.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described
in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any
adjustments that may be necessary if the Company is unable to continue as a going concern.
During
the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its
business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the
payment of expenses associated with reviewing or investigating any potential business ventures. The Company may experience a cash
shortfall and be required to raise additional capital.
Historically,
the Company has relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and
growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through
loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s
failure to do so could have a material and adverse effect upon its and its shareholders.
In
the past year, the Company funded operations by using cash proceeds received through the issuance of common stock. For the coming
year, the Company plans to continue to fund the Company through debt and securities sales and issuances, focus on a possible joint
venture or merger until the company generates revenues through the operations of such merged company or joint venture as stated
above.
NOTE
5 – RELATED PARTY TRANSACTIONS
During
the year ended April 30, 2014, the Company sold 1,601,333 restricted common shares to an affiliate shareholder pursuant to a private
placement memorandum in exchange for $39,000 and issued 495,000 restricted common shares to relieve debt of $24,750.
For
the year ended April 30, 2013, the Company sold 1,772,000 restricted common shares to two affiliate shareholders pursuant to a
private placement memorandum in exchange for $88,600.
During
the year ended April 30, 2013, the Company determined that it would be in the best interests of the Company to increase the amount
of shares to the consultant who performs accounting services for the Company, an additional 133,333 restricted common shares and
to the Chief Financial Officer, an additional 266,667 restricted common shares valued at historical price of the company on May
1, 2012, which is $0.09 per share.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
The
Company has consulting agreements with its Chief Financial Officer and another individual who performs accounting services for
the Company, under which they are compensated with restricted shares of the company’s common stock. The Chief Financial
Officer received a total of 5 million shares with a consulting contract expiring May 1, 2014. In addition, the individual providing
accounting services received 500,000 restricted common shares with a contract expiring on May 1, 2014.
The
Company issued 6,000,000 restricted common shares to our President and Chief Executive Officer, pursuant to his employment contract
dated May 1, 2012. Further, the Company issued 10,000,000 restricted common shares to our Chief Operating Officer pursuant to
her employment contract dated May 1, 2012.
Related
party transactions have been disclosed in the other notes to these financial statements.
NOTE
6 – INCOME TAXES
As
of April 30, 2014, the Company had net operating loss carryforwards of approximately $350,157, which expire in varying amounts
between 2018 and 2028. Realization of this potential future tax benefit is dependent on generating sufficient taxable income prior
to expiration of the loss carryforward. The deferred tax asset related to this (and other) potential future tax benefits has been
offset by a valuation allowance in the same amount. The amount of the deferred tax asset ultimately realizable could be increased
in the near term if estimates of future taxable income during the carryforwards period are revised.
Deferred
income tax assets of $146,716 at April 30, 2014, was offset in full by a valuation allowance.
The components
of the Company’s net deferred tax assets, including a valuation allowance, are as follows:
Deferred Tax Assets
|
|
As of April
30, 2014
|
|
|
As of April
30, 2013
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
350,157
|
|
|
$
|
262,014
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets before valuation
allowance
|
|
|
146,716
|
|
|
|
109,784
|
|
Less: Valuation allowance
|
|
|
(146,716
|
)
|
|
|
(109,784
|
)
|
Net deferred tax assets
|
|
|
0
|
|
|
|
0
|
|
A
reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income
tax rate to pre-tax loss is as follows:
|
|
As of April
30, 2014
|
|
|
As of April
30, 2013
|
|
|
|
|
|
|
|
|
Statutory federal income tax
|
|
|
(35.0
|
%)
|
|
|
(35.0
|
%)
|
Statutory state income tax
|
|
|
(6.9
|
%)
|
|
|
(6.9
|
%)
|
Change in valuation allowance on deferred
tax assets
|
|
|
(41.9
|
%)
|
|
|
(41.9
|
%)
|
Due
to the inherent uncertainty in forecasts and future events and operating results, the Company has provided for a valuation allowance
in an amount equal to gross deferred tax assets resulting in the above figures for the periods audited.
NOTE
7 – COMMON STOCK
The
Company has authorized 1,000,000 shares of preferred stock, $0.001 par value, with such rights, preferences and designation and
to be issued in such series as determined by the Board of Directors. No shares of preferred stock are issued and outstanding at
April 30, 2014 or 2013.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
The
Company has authorized 300,000,000 shares of par value $0.001 common stock, of which 93,361,667 and 91,265,334 shares are outstanding
at April 30, 2014 and 2013, respectively.
On
October 31, 2011 (the “Closing Date”), China Advanced Technology acquired Goliath Film and Media International, a
California corporation, by issuing 47,000,000 shares of its Common Stock, constituting 70.1% of the outstanding shares after giving
effect to their issuance and the cancellation of 15,619,816 shares held by China Advanced Technology’s prior control person.
Immediately following the Closing, 67,100,000 shares were issued and outstanding, including the 100,000 shares sold. On the Closing
Date, the name of China Advanced Technology was changed to Goliath Film and Media Holdings. All share numbers herein have been
adjusted for an eight-for-1 forward stock split affected as of the Closing Date. The forward stock split was reflected in the
trading market on February 13, 2012. The transaction was accounted for as a reverse acquisition in which Goliath is deemed to
be the accounting acquirer, and the prior operations of China Advanced Technology are consolidated for accounting purposes. Since
China Advanced Technology had no operations, assets, or liabilities as of the Closing, no audit of that entity was required under
the materiality thresholds of Regulation S-X Rule 8-04. In addition, the capital was retroactively adjusted to reflect the reverse
acquisition.
During
the year ended April 30, 2014, the Company entered into separate private placement memorandums with an affiliate shareholder under
which we issued 2,096,333 shares of our common stock, restricted in accordance with Rule 144, in exchange for $63,750. The issuance
was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar
with our operations at the time of the issuance of the shares.
For
the year ended April 30, 2013, the Company entered into separate private placement memorandums with two affiliate shareholders
under which we issued them 1,772,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $88,600.
The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated
and familiar with our operations at the time of the issuance of the shares.
On
May 1, 2012 the Company issued 250,000 restricted common shares to a non-affiliated third party pursuant to a consulting agreement
to assist the Company in the distribution of certain films. In addition, the Company issued 5,266,667 restricted common shares
to our Chief Financial Officer pursuant to his consulting contract dated October 27, 2011 and amended May 1, 2012. The Company
also issued 633,333 restricted common shares for professional services per consulting contracts dated October 27, 2011 and amended
May 1, 2012.
The
Company issued 6,000,000 restricted common shares to our President and Chief Executive Officer, pursuant to his employment contract
dated May 1, 2012. Further, the Company issued 10,000,000 restricted common shares to our Chief Operating Officer pursuant to
her employment contract dated May 1, 2012.
During
the year ended April 30, 2012, the Company sold 243,334 restricted common shares to an affiliate shareholder pursuant to a private
placement memorandum in exchange for $73,000. Further, the Company issued 100,000 restricted common shares to a non affiliated
third party pursuant to a private placement memorandum in exchange for $30,000. The issuance was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar with our operations at the time
of the issuance of the shares.
On
February 26, 2013, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary
of State of the State of Nevada to increase the number of authorized common shares from 149 million to 300 million.
On
February 26, 2013, through resolutions adopted by unanimous written consent of the board of directors, the Company approved the
increase of authorized common shares from 149 million to 300 million common shares.
During
the year ended April 30, 2014, the Company sold 1,601,333 restricted common shares to an affiliate shareholder pursuant to a private
placement memorandum in exchange for $39,000 and issued 495,000 restricted common shares to relieve debt of $24,750.
GOLIATH
FILM AND MEDIA HOLDINGS
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING APRIL 30, 2014 AND 2013
NOTE
8 – OPERATING LEASE
On
November 1, 2012, we entered into a 12-month lease for 135 square feet of office space. The rent is approximately $471 per month.
The
total rent and lease expense was $4,240 and $14,805 for the years ended April 30, 2014 and 2013, respectively.
NOTE
9 – LEGAL
The
Company is not a party to or otherwise involved in any legal proceedings.
In
the ordinary course of business, from time to time the Company may be involved in various pending or threatened legal actions.
The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse
effect upon the Company’s financial condition and/or results of operations. However, in the opinion of management, other
than as set forth herein, matters currently pending or threatened against the Company are not expected to have a material adverse
effect on its financial position or results of operations.
NOTE
10 – SUBSEQUENT EVENTS
On
July 1, 2014 the Company moved its corporate headquarters to 4640 Admiralty Way, Suite 500, Marina del Rey, California 90292.
We
issued 5,000,000 restricted common shares to John Ballard, our Chief Financial Officer pursuant to his consulting contract dated
May 1, 2014. We also issued 2,000,000 restricted common shares for professional services per consulting contracts dated May 1,
2014.
We
issued 2,000,000 restricted common shares to Lamont Roberts, our President and Chief Executive Officer, pursuant to his consulting
contract dated May 1, 2014. Further, we issued 25,000,000 restricted common shares to Mike Criscione, as a Director of the Company
and to manage sales and marketing activities for the Company pursuant to his consulting contract dated May 1, 2014.
Subsequent
to April 30, 2014, we issued a total of 1,287,500 restricted common shares to an affiliate in accordance with Rule 144, in exchange
for approximately $25,750. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and
the investor was sophisticated and familiar with our operations at the time of the issuance of the shares.