ITEM 1 FINANCIAL STATEMENTS
JUDO CAPITAL CORP.
(FORMERLY CLASIC RULES JUDO CHAMPIONSHIPS,
INC.)
UNAUDITED FINANCIAL STATEMENTS
June 30, 2017
CONTENTS
Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016
(unaudited)
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Page 5
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Consolidated Statements of Operations for the three and six months ended June 30, 2017and 2016(unaudited)
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6
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Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016(unaudited)
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7
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Notes to Consolidated Financial Statements (unaudited)
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8
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4
Judo Capital Corp.
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Consolidated Balance Sheets
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(Unaudited)
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June 30, 2017
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December 31, 2016
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ASSETS
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Current assets
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Cash
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$
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882
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$
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4,787
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Prepaid expenses
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2,500
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5,250
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Total current assets
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3,382
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10,037
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Total assets
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$
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3,382
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$
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10,037
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current liabilities
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Accounts payable and accrued liabilities
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$
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16,765
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$
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9,805
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Interest payable, related party
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707
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—
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Loan payable, related party
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20,000
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—
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Total current liabilities
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37,472
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9,805
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Stockholders' equity (deficit)
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Preferred stock; $0.001 par value; 50,000,000 shares authorized; none issued or outstanding
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—
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—
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Common stock, $0.001 par value; 100,000,000 shares authorized; 69,322,426 shares issued and outstanding
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69,322
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69,322
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Additional paid-in capital
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278,825
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278,825
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Accumulated deficit
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(382,237
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)
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(347,915
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)
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Total stockholders' equity (deficit)
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(34,090
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)
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232
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Total liabilities and stockholders' equity (deficit)
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$
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3,382
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$
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10,037
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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5
Judo Capital Corp.
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Consolidated Statements of Operations
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(Unaudited)
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Three months ended June 30,
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Six months ended June 30,
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2017
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2016
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2017
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2016
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Operating expenses
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General and administrative
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$
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7,917
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$
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450
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$
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33,615
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$
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8,335
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Total operating expenses
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7,917
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450
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33,615
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8,335
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Loss from operations
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(7,917
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)
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(450
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)
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(33,615
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)
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(8,335
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Other expense
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Interest expense
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(499
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)
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—
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(707
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—
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Total other expense
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(499
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—
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(707
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—
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Net loss
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$
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(8,416
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$
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(450
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$
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(34,322
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$
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(8,335
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Basic and diluted net loss per common share
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$
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(0.00
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$
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(0.00
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$
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(0.00
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)
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$
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(0.00
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Weighted average common shares outstanding - basic and diluted
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69,322,426
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69,322,426
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69,322,426
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69,322,426
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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6
Judo Capital Corp.
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Statements of Cash Flows
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(Unaudited)
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Six months ended June 30,
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2017
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2016
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Cash flows from operating activities
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Net loss
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$
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(34,322
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$
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(8,335
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Changes in operating liabilities:
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Prepaid expenses
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2,750
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—
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Accounts payable and accrued liabilities
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6,960
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6,005
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Interest payable, related party
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707
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—
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Net cash used in operating activities
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(23,905
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(2,330
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Cash flows from financing activities
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Proceeds from loan payable related party
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20,000
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—
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Net cash provided by financing activities
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20,000
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—
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Net change in cash
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(3,905
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(2,330
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Cash at beginning of period
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4,787
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9,044
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Cash at end of period
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$
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882
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$
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6,714
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Supplemental cash flow information
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Cash paid for interest
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$
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—
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$
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—
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Cash paid for income taxes
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$
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—
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$
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—
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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7
Judo Capital Corp.
Notes to Consolidated Financial Statements
June 30, 2017
(Unaudited)
NOTE A – ORGANIZATION AND NATURE
OF BUSINESS
Judo Capital Corp. was incorporated
in the State of Delaware on November 16, 2005 under the name Blue Ribbon Pyrocool, Inc. (“Blue Ribbon”). Blue Ribbon
changed its name to Classic Rules Judo Championships, Inc. ("Classic Rules") on July 15, 2008 then to Judo Capital Corp
on February 15, 2017. Classic Rules formed a subsidiary in the State of Connecticut on August 13, 2008 named Classic Rules World
Judo Championships, Inc. to develop an annual judo championship tournament. Collectively the entities are referred to as “the
Company”. On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments. The Company
plans to operate in real estate investment activities focused in the New York City metropolitan area.
Unaudited Interim Financial Statements
The accompanying unaudited interim consolidated
financial statements as of June 30, 2017, and for the three and six months ended June 30, 2017 and 2016 have been prepared in accordance
with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions
to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s
annual report on Form 10-K for the year ended December 31, 2016. In the opinion of management, the financial statements contain
all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30,
2017 and the results of operations for the three and six months ended June 30, 2017 and 2016 and cash flows for the six months
ended June 30, 2017 and 2016. The results of operations for the threeand six months ended June 30, 2017 are not necessarily indicative
of the results to be expected for the full year.
Principles of Consolidation
The consolidated financial statements
include the accounts of Judo Capital Corp. and its wholly owned subsidiary Classic Rules World Judo Championships, Inc. All intercompany
balances and transactions have been eliminated in consolidation.
NOTE B – GOING CONCERN
The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. As of June 30, 2017, the Company had a working capital deficit
and accumulated deficit. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company needs to raise additional
capital in order to fully develop its business plan. Failure to raise adequate capital and generate adequate revenues could result
in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support
its operating expenses and generate adequate revenues, there can be no assurance that the revenue will be sufficient to enable
it to develop business to a level where it will generate profits and adequate cash flows from operations.
8
Judo Capital Corp.
Notes to Consolidated Financial Statements
June 30, 2017
(Unaudited)
NOTE C – STOCKHOLDERS’
DEFICIT
Preferred Stock
The Company is authorized to issue 50,000,000
shares of preferred stock with a par value of $0.001 per share. There were no shares of preferred stock issued or outstanding at
June 20, 2017 or December 31, 2016.
Common Stock
The Company is authorized to issue 100,000,000
shares of common stock with a par value of $0.001 per share. There were 69,322,426 shares issued and outstanding at June 30, 2017
and December 31, 2016.
NOTE D – RELATED PARTY TRANSACTIONS AND NOTE PAYABLE
During the six months ended June 30, 2017, the Company terminated
its credit line facility with its Chief Executive Officer, Lorenzo DeLuca that was entered into in October 2015. The Company had
not drawn on the credit facility and there was no principal or accrued interest due at the time of termination.
During the six months ended June 30,
2017, the Company entered into a $20,000 note payable with its Chief Executive Officer, Lorenzo DeLuca. The note accrues interest
at a rate of 10% per annum and is due within ten days of demand. There was $20,000 of principal and accrued interest total $707
due as of June 30, 2017.
The Company currently operates out of
an office of a related party free of rent.
NOTE E – COMMITMENTS AND CONTINGENCIES
On February 2, 2017, the Company entered
into three separate non-exclusive agreements whereby it engaged agents to assist in the purchase of distressed real estate properties
on behalf of the Company. The Company has agreed to compensate each party a minimum of 1% of the aggregate purchase price of the
property.
NOTE F – SUBSEQUENT EVENTS
On July 21, 2017, the Company entered
into a note payable with is Chief Executive Officer, Lorenzo DeLuca, to borrow $10,000. The note accrues interest at a rate of
10% per annum and is due within ten days of demand.
9
Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Information
This Form 10-Q quarterly report includes
“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements
of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will
or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations,
plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue," or the negative of such terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses
made by us in light of our experience and our perception of historical trends, current conditions and expected future developments
as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments
will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which
are beyond our control.
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. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements.
We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to
actual results.
Results of Operations
Comparison of the three months
ended June 30, 2017 and 2016
Revenues
.
The Company
had no revenue during the three months ended June 30, 2017 or 2016.
Cost of Revenues
. The
Company had no cost of revenue for the three months ended June 30, 2017or 2016.
General and Administrative expenses
.
The Company incurred $7,917 of general and administrative expenses during the three months ended June 30, 2017 compared to $450
during the same period in 2016. The increase in general and administrative expenses is the result of the Company incurring costs
during the current period to maintain its filings with the SEC which it was not performing during 2016.
Loss From Operations
.
The Company incurred an operating loss of $7,917 during the three months ended June 30, 2017 compared to $450 during the same period
in 2016. The increase in net loss is a result of decreased general and administrative expenses as discussed previously.
Other Income (Expense)
.
The Company incurred interest expense with related parties of $499 during the three months ended June 30, 2017 compared to $0 during
the three months ended June 30, 2016. The increase in interest expense is due to the outstanding balance under the Company’s
credit facility that was present during the three months ended June 30, 2017 but not 2016.
NetLoss
. The Company incurred
a net loss of $8,416 during the three months ended June 30, 2017 compared to $450during the same period in 2016. The increase in
net loss is a result of decreased general and administrative and other expenses as discussed previously.
Comparison of the six months ended
June 30, 2017 and 2016
Revenues
.
The Company
had no revenue during the six months ended June 30, 2017 or 2016.
Cost of Revenues
. The
Company had no cost of revenue for the six months ended June 30, 2017 or 2016.
General and Administrative expenses
.
The Company incurred $33,615 of general and administrative expenses during the six months ended June 30, 2017 compared to $8,335
during the same period in 2016. The increase in general and administrative expenses is the result of the Company incurring costs
during the current period to catch up and maintain its filings with the SEC which it was not performing during 2016.
10
Loss From Operations
.
The Company incurred an operating loss of $33,615 during the six months ended June 30, 2017 compared to $8,335 during the same
period in 2016. The increase in net loss is a result of decreased general and administrative expenses as discussed previously.
Other Income (Expense)
.
The Company incurred interest expense with related parties of $707 during the six months ended June 30, 2017 compared to $0 during
the six months ended June 30, 2016. The increase in interest expense is due to the outstanding balance under the Company’s
credit facility that was present during the six months ended June 30, 2017 but not 2016.
NetLoss
. The Company incurred
a net loss of $34,322 during the six months ended June 30, 2017 compared to $8,335 during the same period in 2016. The increase
in net loss is a result of decreased general and administrative and other expenses as discussed previously.
Liquidity and Capital Resources
At June 30, 2017, the Company had current
assets of $3,382 and currently liabilities totaling $37,472 creating a working capital deficit of $34,090. Current assets consisted
of $882 in cash and $2,500 of prepaid expenses. Current liabilities consisted of accounts payable and accrued liabilities totaling
$16,765, interest payable to related parties of $707 and a related party payable of $20,000.
Cash Flows
Net cash used in operating activities
was $23,905 and $2,330during the six months ended June 30, 2017 and 2016, respectively. Net cash used in operating activities during
the six months ended June 30, 2017 consisted of a net loss of $34,322 offset by changes in working capital of $10,417. Net cash
used in operating activities during the six months ended June 30, 2016 consisted of a net loss of $8,335 which was offset by a
positive change in working capital of $6,005.
Net cash provided by financing activities
were $20,000 and $0 during the six months ended June 30, 2017 and 2016, respectively. Net cash provided by financing activities
during the six months ended June 30, 2017 consisted of $20,000 of proceeds from related party loans.
As of June 30, 2017, the Company was
primarily relying on itscorporate officers, directors, and outside investors for the funding needed for the implementation of its
business plan. The Company’s management is currently looking for the capital needed to complete its corporate objectives.
The Company cannot predict the extent to which its liquidity and capital resources will be available prior to executing its business
plan or whether it will have sufficient capital to fund typical operating expenses.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 4. Controls
and Procedures
Evaluation of Disclosure Controls
and Procedures.
The Securities and Exchange Commission
defines the term "disclosure controls and procedures" to mean a company's controls and other procedures of an issuer
that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange
Act of 1934 is accumulated and communicated to the issuer's management, including its chief executive and chief financial officers,
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains
such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports
it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified
under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to its chief executive
and chief financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered
by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and
our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based
on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls
and procedures were not effective as of such date.
Management's Assessment of Internal
Control over Financial Reporting
The management of the Company is responsible
for the preparation of the financial statements and related financial information appearing in this Quarterly Report on Form 10-Q.
The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United
States of America ("GAAP"). The management of the Company is also responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company's internal
control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those policies and procedures that:
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Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;
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Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
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Management, including the Chief Executive
Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and internal controls will prevent
all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide
only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements.
Further, over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies
or procedures may deteriorate.
With the participation of the Chief
Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the Company's internal control over
financial reporting as of June 30, 2017, based upon the framework in Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as
of June 30, 2017, the Company had material weaknesses in its internal control over financial reporting. Specifically, management
identified the following material weaknesses at June 30, 2017:
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12
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As of June 30, 2017, there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles (“GAAP”) in the US and the financial reporting requirements of the Securities and Exchange Commission.
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As of June 30, 2017, there were insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to current requirements of GAAP and SEC disclosure requirements.
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As of June 30, 2017, there was a lack of segregation of duties, in that we had only one person performing all accounting-related duties.
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As of June 30, 2017, there were no independent directors and no independent audit committee.
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As a result of the material weaknesses
described above, management has concluded that, as of June 30, 2017, the Company’s internal control over financial reporting
involving the preparation and reporting of our financial statements presented in conformity with GAAP, were not effective.
We understand that remediation of material
weaknesses and deficiencies in internal controls is a continuing work in progress due to the issuance of new standards and promulgations.
However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress
and sufficiency of our ongoing initiatives and make adjustments as and when practical and necessary.
This quarterly report does not include
an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's
report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us
to provide only management's report in this quarterly report.
Changes in Internal Control over
Financial Reporting
There were no changes in our internal
control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.