The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
December 31, 2016 and April 30, 2016
NOTE 1 - BACKGROUND INFORMATION
Organization and Business
West Coast Ventures Group Corp. (our, us, we or the Company) was incorporated on June 16, 2011 in the State of Nevada for the purpose of developing, producing, and selling instructional tennis videos to the global tennis community
Since April 30, 2015 the Company has focused on investing in and acquiring technology companies within the United States and abroad, as well as, discovering existing synergies that offer the opportunity to expand the companys footprint in order to create revenues and profits. Through its wholly-owned subsidiary, GameRevz, Inc. ("GameRevz") the company has focused on the US based, online video gaming and entertainment industry.
On February 4, 2016, Energizer Tennis, Corp. filed Articles of Merger with the Nevada Secretary of State whereby it entered into a statutory merger with its wholly-owned subsidiary, West Coast Ventures Group Corp. The effect of such merger is that the Company was the surviving entity and changed its name to West Coast Ventures Group Corp.
On December 31, 2016, our board of directors approved a change in our company's fiscal year end, moving from April 30 to December 31 of each year. This Form 10-K is a transition report and includes financial information from May 1, 2016 to December 31, 2016 (the "Transition Period 2016").
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited consolidated financial statements presented herein have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP) of the United States (See Note 3 regarding the assumption that the Company is a going concern).
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, GameRevz, Inc., a Nevada corporation. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Companys most significant estimates relate to the valuation of its intangible assets and the valuation of its common stock.
Fiscal Year End
The Company has elected December 31 as its fiscal year end.
Commitments and Contingencies
18
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, other
risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating
history, foreign currency exchange rates and the volatility of public markets.
Earnings (Loss) Per Share
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260,
Earnings per Share
. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Diluted earnings per share is not presented separately since the effect of dilutive securities is anti-dilutive. There were no common stock equivalents as of December 31, 2016 and April 30, 2016.
|
|
|
|
|
| |
|
|
|
|
Transition Period
|
|
|
|
|
|
|
May 1, 2016 to
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
April 30,
|
|
|
|
|
2016
|
|
2016
|
Net Loss Per Common Share: Basic and Diluted
|
|
$
|
(0.03)
|
$
|
(4.86)
|
|
|
|
|
|
|
|
Weighted average number of Common Shares Outstanding: Basic and Diluted
|
|
|
11,843,646
|
|
88,426
|
Fair Value of Financial Instruments
The Companys balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
FASB Accounting Standards Codification ASC 820,
Fair Value Measurements and Disclosures
, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entitys own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the
19
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include prepaid expense, accounts payable and accrued expenses.
The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis.
Income Taxes
The Company accounts for income taxes under ASC 740,
Income Taxes
. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements 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 the enactment occurs.
A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The Company files income tax returns in the United States which are subject to examination by tax authorities in these jurisdictions. Generally, three years of returns remain subject to examination by major tax jurisdictions. The state impact, if any, of any federal changes to prior year remains subject to examination for a period of up to five years after formal notification to the states.
The Company has evaluated tax positions in accordance with ASC 740,
Income Taxes,
and has not identified any significant tax positions, other than those disclosed.
Intangible Assets
We account for intangible assets in accordance with ASC 350,
Intangibles-Goodwill and Other
("ASC 350"). ASC 350 requires that intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.
We completed an evaluation of intangibles at December 31, 2016 and April 30, 2016 and recognized an impairment loss of $160,208 during the year ended April 30, 2016. No impairment loss was recognized for the eight months ended December 31, 2016.
20
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Foreign Currency
The Companys functional currency is the United States Dollar (USD) and its reporting currency is also the USD. Foreign currency transactions, from our prior operations, were primarily undertaken in the British Pound (GBP).
The financial statements of the Company are translated to USD in accordance with ASC 830,
Foreign Currency Translation Matters
. Assets and liabilities are translated at the current exchange rate prevailing at the balance sheet date. Equity accounts are translated at historical amounts. Revenues and expenses are translated using average rates during the year.
Related parties
The Company follows ASC 850,
Related Party Disclosures,
for the identification of related parties and disclosure of related party transactions.
Recent Accounting Pronouncements
In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. Among other things, the amendments require a plans interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments also remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments. The amendments require all plans to disclose: (a) their master trusts other asset and liability balances; and (b) the dollar amount of the plans interest in each of those balances. Lastly, the amendments eliminate redundant investment disclosures (e.g., those required by Topics 815 and 820) relating to 401(h) account assets. Effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied retrospectively to each period for which financial statements are presented. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.
In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. Effective at the same time as the amendments in Update 2014-09, Revenue from Contracts with Customers (Topic 606). Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. All other entities may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may
21
apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance. An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update 2014-09. The Company is currently evaluating the potential impact this standard may have on its financial position and results of operations.
In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.
In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230
Statement of Cash Flows.
This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on the Companys results of operations, financial position or disclosures.
In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow- Scope Improvements and Practical Expedients (ASU 2016-12), which amends the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods with that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. The Company is currently evaluating the impact the adoption of this standard would have on its financial condition, results of operations and cash flows.
In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis
22
over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The adoption of this guidance is not expected to have a material impact
on the Companys results of operations, financial position or disclosures.
There were no other new accounting pronouncements during the eight months ended December 31, 2016 that we believe would have a material impact on our financial position or results of operations.
NOTE 3 - GOING CONCERN
The Companys 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. As of December 31, 2016, the Company does not have products available for sale or have established an ongoing source of revenue. As a result, the Company has a net loss, negative operating cash flow, and an accumulated deficit. 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.
Managements plan to obtain such resources for the Company include, obtaining loans from management and stockholders to meet its minimal operating expenses and raising equity funding, and/or merging with another company. As shown in Note 11 Subsequent Events, the Company plans a merger pursuant to certain closing conditions, with Nixon Restaurant Group, Inc. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 INTANGIBLES
Intangibles consisted of:
|
|
|
| |
|
|
December 31,
|
|
April 30,
|
|
|
2016
|
|
2016
|
Viralpwnage.com
|
|
$
89,792
|
|
$
89,792
|
Less accumulated amortization
|
85,486
|
|
83,333
|
Intangibles, net
|
|
$
4,306
|
|
$
6,459
|
The intangible assets are amortized over an estimated useful life of 3 years. Amortization expenses were $2,153 and $83,333 for the eight months ended December 31, 2016 and year ended April 30, 2016, respectively. We determined the implied fair value of intangibles was substantially below the carrying value being reported. Accordingly, we recognized an impairment loss of $160,208, for the year ended April 30, 2016. No impairment of intangibles was recognized for the eight months ended December 31, 2016.
NOTE 5 NOTES PAYABLE
Promissory Notes
During the eight months ended December 31, 2016, unrelated parties advanced funds in the amount of $19,137 to fund operations and provide working capital. Unpaid balances are due on demand and accrue an annual interest rate of 5%. During the year ended April 30, 2016, the Company acknowledged and agreed to issue the convertible note of $51,221 for payment of principal on the Promissory note of $51,221 (note 6).
23
As of December 31, 2016 and April 30, 2016, the promissory notes totaled $33,848 and $14,711, respectively.
During the transition period ended December 31, 2016 and year ended April 30, 2016, the interest expense was $633 and $1,567, respectively. As of December 31, 2016 and April 30, 2016, accrued interest was $2,316 and $1,683, respectively.
Note Payable
The Company had the following note payable outstanding as of December 31, 2016 and April 30, 2016:
|
|
|
| |
|
|
December 31,
|
|
April 30,
|
|
|
2016
|
|
2016
|
Note dated April 30, 2015, to Warwick Overseas, LLC, interest at 5%, due in two installments of $125,000 at the end of each year, term of two years
|
$
|
250,000
|
$
|
250,000
|
Total note payable
|
|
250,000
|
|
250,000
|
Less current portion of note payable
|
|
250,000
|
|
250,000
|
Long-term portion of note payable
|
$
|
-
|
$
|
-
|
On April 30, 2017, the Warwick Overseas, LLC, agreed to extend the note for an additional one year term to April 30, 2018.
During the transition period ended December 31, 2016 and year ended April 30, 2016, interest expense was $8,391 and $12,534, respectively. As of December 31, 2016 and April 30, 2016, accrued interest is $20,925 and $12,534, respectively.
NOTE 6 CONVERTIBLE NOTE
On January 31, 2016, the Company issued convertible notes of $51,221 for the payment of promissory notes of $51,211 (note 5). Unpaid balances are due on January 31, 2018 and accrue an annual interest at the rate of 4%. The Holders have the right, at any time to convert any part of outstanding Principal balance of this note into shares of the Companys common stock at a conversion rate of $0.01 per share.
During the year ended April 30, 2016, the Company recorded as discount on the convertible note due to a beneficial conversion feature of $51,221.
|
|
|
|
|
|
| |
|
|
|
December 31,
|
|
April 30,
|
|
|
|
2016
|
|
2016
|
Convertible Notes
|
|
$
|
51,221
|
|
$
|
51,221
|
Less unamortized notes discount
|
|
(27,743)
|
|
|
(44,818)
|
|
|
|
|
23,478
|
|
|
6,403
|
Less current portion of convertible notes
|
|
-
|
|
|
-
|
Long-term convertible notes payable
|
$
|
23,478
|
|
$
|
6,403
|
During the transition period ended December 31, 2016 and year ended April 30, 2016, the amortization on the convertible note discount recorded as interest expense is $17,074 and $6,403, respectively.
During the eight months ended December 31, 2016 and year ended April 30, 2016, the interest expense accrued on the convertible notes is $1,375 and $505, respectively. As of December 31, 2016 and April 30, 2016, the convertible notes had accrued interest of $1,880 and $505, respectively.
24
NOTE 7 - SHAREHOLDERS EQUITY
On February 4, 2016, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended its Articles of Incorporation to increase the Companys authorized number of shares of common stock from 100 million to 250 million and decrease all of its issued and outstanding shares of common stock at a ratio of one (1) share for every one thousand (1,000) shares held.
All relevant information relating to numbers of shares and per share information have been retroactively adjusted to reflect the reverse stock split for all periods presented.
Preferred Stock
The authorized preferred stock of the Company consists of 10,000,000 shares with a par value of $0.001. The Company has not issued any shares of Class A Convertible Preferred Stock as of December 31, 2016.
Holders are not entitled to pre-emptive or referential rights to subscribe to unissued stock or other securities. Holders do not have cumulative voting rights. Preferred stockholders of Class A Convertible Preferred Stock do not have a right to vote their shares except as determined by the Board of Directors.
Common Stock
The authorized common stock of the Company consists of 250,000,000 shares with a par value of $0.001. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On June 23, 2016, the Company issued 15,000,000 common shares, 7,500,000 shares each to the companys officer and board members, for their ongoing service and payment of $25,000 in accrued salaries, for a total value of $307,678.
On February 4, 2016, the Company issued 118 shares of common stock, for adjustment due to the stock split.
As at December 31 2016 and April 30, 2016, there are 15,088,544 and 88,426 shares of common stock issued and outstanding.
NOTE 8 - INCOME TAXES
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. As of December 31, 2016, the Company has incurred net losses of approximately $973,090, resulting in a net operating loss (NOL) for income tax purposes. NOLs begin expiring in 2032. The loss results in a deferred tax asset of approximately $341,000 at the effective statutory rate of 35%. The deferred tax asset has been off-set by an equal valuation allowance.
The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred income tax assets are as follows:
|
|
|
|
| |
|
|
December 31,
|
April 30,
|
|
|
2016
|
2016
|
Deferred tax asset, generated from net operating
loss at statutory rates
|
|
$
|
124,500
|
$
|
150,300
|
Valuation allowance
|
|
|
(124,500)
|
|
(150,300)
|
|
|
$
|
-
|
$
|
-
|
25
The reconciliation of the effective income tax rate to the federal statutory rate is as follows:
| |
Federal income tax rate
|
35.0%
|
Increase in valuation allowance
|
(35.0)%
|
Effective income tax rate
|
0.0%
|
The utilization of these NOLs may become subject to limitations based on past and future changes in ownership of the company pursuant to Internal Revenue Code Section 382. The Company has no uncertain tax positions as of December 31, 2016.
Tax returns for the years ended April 30, 2011 through April 30, 2016 and eight month transition period ended December 31, 2016 remain open to examination.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Litigation
The Company is not presently involved in any litigation.
Lease Obligations
At December 31, 2016, the Company does not have any capital leases.
On January 3, 2016, the Company leased office space at $199 per month with no specified term. The lease is cancelable at any time by either party with 30 days notice.
NOTE 10 - RELATED PARTY TRANSACTIONS
As of December 31 and April 30, 2016, the Company accrued salaries to officers and directors of $111,814 and $125,814, respectively.
NOTE 11 - SUBSEQUENT EVENTS
On December 30, 2016, the Company entered into a Definitive Share Exchange Agreement (the Agreement) with James M. Nixon (Nixon) and Nixon Restaurant Group, Inc., a Florida corporation (NRG) pursuant to which our company will exchange 12,100,000 shares of our common stock for 60,500,000 shares of NRG Common Stock, $0.0001 par value per share, which represents all of the issued and outstanding capital stock of NRG. In addition, our company will issue 500,000 shares of our preferred stock to Nixon as compensation for completing the transaction. This preferred stock which shall be designated as Series A Preferred Stock shall have no dividend, liquidation, or conversion rights, but will have voting rights of 100,000 votes per share of Series A Preferred Stock, an aggregate equal to 50,000,000,000 shares of our companys common stock. The closing of transaction described in the Agreement is subject to several conditions precedent as follows: Our company must, among other actions, (i) file our delinquent filings with the Securities and Exchange Commission (the SEC) including the Form 10-K Annual Report for the year ended April 30, 2016 and the Form 10-Q Annual Reports for the periods ended July 31, 2016 and October 31, 2016; (ii) effectuate the cancelation of 60,000 shares of our common stock owned by Mayya Khalay; (iii) file a Certificate of Designation of the Series A Preferred Stock with the Nevada Secretary of State; and (iv) effectuate a change of our fiscal year to December 31. NRG must, among other actions, (v) Deliver to our company audited consolidated financial statements for the two year periods ended December 31, 2015 and 2014 as well as reviewed consolidated financial statements for the nine month periods ended September 30, 2016 and 2015, each in format and content as required under the Rules of the SEC. Following closing of the transaction NRG will operate as wholly owned subsidiary of our company.
26