Item 1. Interim Financial Statements.
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Condensed Balance Sheets as of June 30, 2018 (Unaudited) and September 30, 2017
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F-1
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Condensed Statements of Operations for the three and nine months ended June 30, 2018 and 2017 (unaudited)
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F-2
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Condensed Statements of Cash Flow for the nine months ended June 30, 2018 and 2017 (Unaudited)
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F-3
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Notes to Unaudited Condensed Financial Statements
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F-4
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4
GRCR PARTNERS INC
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2018 (UNAUDITED) AND SEPTEMBER 30, 2017
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ASSETS
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6/30/18
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9/30/17
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CURRENT ASSETS:
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Cash or cash equivalents
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$
251
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$
2,611
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Accounts receivable, net
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5,000
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16,250
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TOTAL CURRENT ASSETS
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5,251
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18,861
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TOTAL ASSETS
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$
5,251
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$
18,861
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
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Accounts payable and accrued expenses
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$
24,801
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$
25,466
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Accrued taxes
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320
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320
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Accrued interest
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3,872
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1,627
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Note payable
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25,000
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25,000
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TOTAL CURRENT LIABILITIES
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53,993
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52,413
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TOTAL LIABILITIES
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53,993
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52,413
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Commitments and Contingencies
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STOCKHOLDERS' (DEFICIT):
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Preferred stock, $.0001 par value, 15,000,000 shares
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authorized, none issued and outstanding
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-
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-
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Common stock, $.0001 par value, 500,000,000 shares authorized, 2,926,500 issued and outstanding
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as of June 30, 2018 and September 30, 2017
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293
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293
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Additional paid-in capital
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55,083
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55,083
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Retained (deficit)
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(104,118)
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(88,928)
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TOTAL STOCKHOLDERS' (DEFICIT)
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(48,742)
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(33,552)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$
5,251
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$
18,861
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The accompanying notes to financial statements are
an integral part of these statements.
F-1
GRCR PARTNERS INC
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2018 AND 2017
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Three Months Ended June 30, 2018
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Three Months Ended June 30, 2017
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Nine Months Ended June 30, 2018
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Nine Months Ended June 30, 2017
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Revenues:
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Professional service revenues
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$
13,750
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$
16,000
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$
57,460
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$
25,000
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Expense reimbursement
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735
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-
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3,452
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-
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Total Revenues
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14,485
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16,000
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60,912
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25,000
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Cost of revenues
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7,000
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5,500
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28,550
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10,000
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Cost of revenues from a related party
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1,500
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2,000
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3,250
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2,000
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Gross Profit
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5,985
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8,500
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29,112
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13,000
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Operating expenses:
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Marketing and sales
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-
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2,141
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-
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Depreciation
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-
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-
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-
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838
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General and administrative
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13,157
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5,493
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39,067
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34,107
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General and administrative costs from a related party
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500
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1,000
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850
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1,000
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Total operating expenses
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13,657
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6,493
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42,058
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35,945
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Income (Loss) from operations
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(7,672)
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2,007
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(12,946)
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(22,945)
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Other Expenses
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Interest expense
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748
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748
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2,244
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871
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Total other expenses
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748
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748
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2,244
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871
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Income (Loss) before taxes
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(8,420)
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1,259
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(15,190)
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(23,816)
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Net Income (Loss) applicable to common shareholders
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$
(8,420)
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$
1,259
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(15,190)
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(23,816)
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Net income (loss) per share - basic and diluted
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($0.00)
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$
0.00
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($0.01)
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($0.01)
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Weighted number of shares outstanding -
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Basic and diluted
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2,926,500
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2,926,500
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2,926,500
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4,695,379
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The accompanying notes to financial statements are an integral part of these statements.
F-2
GRCR PARTNERS INC
CONDENSED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED JUNE 30, 2018 AND 2017
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For the nine months ended June 30, 2018
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For the nine months ended June 30, 2017
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net (loss)
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$
(15,190)
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$
(23,816)
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Adjustments to reconcile net (loss) to cash (used in) operating activities:
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Depreciation
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-
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838
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Change in operating assets and liabilities:
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Accounts receivable
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11,250
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(10,500)
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Accrued interest
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2,245
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871
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Accounts payable and accrued expenses
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(665)
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2,077
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Net cash (used in) operating activities
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(2,360)
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(30,530)
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CASH FLOW FROM FINANCING ACTIVITIES:
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Proceeds from issuance of common stock
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-
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500
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Proceeds from issuance of note
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-
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25,000
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Net cash provided by financing activities
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-
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25,500
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NET (DECREASE) IN CASH
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(2,360)
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(5,030)
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CASH AND CASH EQUIVALENTS at beginning of period
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2,611
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13,973
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CASH AND CASH EQUIVALENTS at end of period
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$
251
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$
8,943
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Supplemental disclosure of cash flow information
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Cash paid for:
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Interest
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-
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-
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Income Taxes
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-
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-
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The accompanying notes to financial statements are an integral part of these statements.
F-3
GRCR PARTNERS INC
NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
Note 1. The Company History and Nature of the Business
GRCR Partners Inc. (the “Company”, “Our” or “We”), formed on January 16, 2015 is a provider of risk management and asset protection (RAP) services for businesses, individuals and families. Prior to 2017, the Company provided its services primarily to businesses on a project-based fee arrangement. During 2017, the Company shifted its business model to more recurring fee based engagements and expanded target markets to included individuals and families. The Company delivers services following a proprietary progressive bSecure methodology. The Company believes that by combining expert consulting, proven processes and software, clients can cost effectively build and maintain RAP programs that reduce day-to-day and long-term risks in their work environment, personal and family lives.
The financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has a retained deficit of $104,118 and has a working capital deficit of $48,742 at June 30, 2018. Although we are generating revenue, our growth is dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations and pay liabilities arising from normal business operations when they come due, and upon profitable operations. The Company may also explore other grow opportunities, including, but not limited to, a merger or acquisitions.
Management has concluded that due to the conditions described above, there is substantial doubt about the entity’s ability to continue as a going concern through August 2019. We have evaluated the significance of these conditions in relation to our ability to meet our obligations and believe that we may need to either borrow funds from our majority shareholder or raise additional capital through equity or debt financings. We expect our current majority shareholder will be willing and able to provide such additional capital or sell ownership in the Company. However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Organization
The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting. The balance sheet at September 30, 2017 was derived from audited financial statements but does not include all disclosures required by accounting principals generally accepted in the United States of America. The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for the fair presentation of the results for the periods covered. These financial statements should be read in conjunction with the financial statements and additional information as contained in our Form 10K for the year ended September 30, 2017.
F-4
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. The Company’s cash and cash equivalents are located in a United States bank. The Company does not have any cash equivalents as of June 30, 2018 or September 30, 2017.
Accounts Receivable
The Company’s accounts receivables are derived from direct customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses as considered necessary. The Company performs ongoing reviews of all customers that have breached their payment terms or for whom information has become available indicating a risk of non-recoverability. The Company records an allowance for bad debts for specific customers identified as well as an allowance based on its historical collection experience. The Company’s evaluation of the allowance for potential credit losses requires the use of estimates and the actual results may differ from these estimates. At June 30, 2018 and September 30 2017, the allowance for potential credit losses was $0.
Fixed Assets
Office equipment is stated at cost and depreciated over three years using the straight-line method of accounting. For the three and nine months ended June 30, 2018, and 2017, the Company recorded depreciation expense of $0 and $0, and $0 and $838, respectively.
Revenue Recognition
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
Consulting Services
Because the Company provides its applications as services, it follows the provisions of Accounting Standards Codification No.605,
Revenue Recognition.
The Company recognizes revenue when all of the following conditions are met:
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•
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there is persuasive evidence of an arrangement;
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•
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the service has been provided to the customer;
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•
|
the collection of the fees is reasonably assured; and
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•
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the amount of fees to be paid by the customer is fixed or determinable.
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The Company recognizes revenue as services are performed or monthly based upon contract terms. Contracts may either be for a specific project, or, a monthly recurring fee.
Reimbursements
The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in its Statement of Operations.
F-5
Net Income (Loss) per Common Share
Basic income (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the periods ended June 30, 2018 or 2017.
Income Taxes
The Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates.
The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. corporate rates from 35% to 21%. Additionally, the Act limits the use of net operating loss carry backs, however any future net operating losses will instead be carried forward indefinitely. Only 80% of current income will be able to be offset with a net operating loss carryforward, with the remainder of the net operating loss continuing to carry forward. Based on an initial assessment of the Act, the Company believes that the most significant impact on the Company’s consolidated financial statements will be reduction of deferred tax assets related to net operating losses. Such reduction is expected to be largely offset by changes to the Company’s valuation allowance.
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of December 31, 2017 the carrying value of accounts receivable, accounts payable-trade and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.
Customer Concentration Disclosure.
For the three months ended June 30, 2018 and 2017, 1 and 3 customers made up 100% and 94% of our revenue, respectively. Those customers represented 100%, and 38%, 38%, 19%, respectively for three months ended March 31, 2018 and 2017.
For the nine months ended June 30, 2018 and 2017, 3 and 3 customers made up 81% and 96% of our revenue, respectively. Those customers represented 51%, 15%, 15% and 40%, 40% 16%, respectively for nine months ended June 30, 2018 and 2017.
F-6
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and expenses. Actual results could differ from those estimates made by management.
Recent accounting pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers which modifies how all entities recognize revenue and various other revenue accounting standards for specialized transactions and industries. This update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company has completed evaluation of the possible impact of ASU 2014-15 including the contract review and has no material impact on the Company's consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 3. Note Payable
On March 16, 2017, the Company executed a promissory note (the “Note”) with an unaffiliated lender in the amount of $25,000. The Note matures one year from issuance and has a 12% interest rate. Through a second addendum to the Note dated August 8, 2018, the Note’s due date was extended until December 31, 2018.
For the three and nine months ended June 30, 2018 and 2017, the Company recorded $748 and $748, and $2,244 and $871 in interest expense, respectively.
Note 4. Related Party Transactions
The Company has paid the majority shareholder, officer and director $2,000 and $3,000, and $4,100 and $3,000 for the three and nine month periods ended June 30, 2018 and 2017, respectively. Such amounts are presented in the statements of operations, in the general and administrative line as related party costs. The Company has no formal contract in place with its sole officer and director.
Note 5. Subsequent Events
On August 15, 2018, the Company executed a promissory note (the “Note2”) with an unaffiliated lender in the amount of $10,000. The Note2 matures one year from issuance and has a 6% interest rate. The Note 2 has no prepayment penalty and has a conversion clause that allows the noteholder to convert any principal and accrued interest into common stock of the company at $0.75 per share.
On August 20, 2018, the Company executed a promissory note (the “Note3”) with an unaffiliated lender in the amount of $10,000. The Note3 matures one year from issuance and has a 6% interest rate. The Note 2 has no prepayment penalty and has a conversion clause that allows the noteholder to convert any principal and accrued interest into common stock of the company at $0.75 per share.
F-7
Item 2. Management’s Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
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1.
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our future operating results;
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|
2.
|
|
our business prospects;
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3.
|
|
any contractual arrangements and relationships with third parties;
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4.
|
|
the dependence of our future success on the general economy;
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5.
|
|
any possible financings; and
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|
6.
|
|
the adequacy of our cash resources and working capital.
|
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
Summary of Business
GRCR Partners Inc. (the “Company”, “Our” or “We”) was formed on January 16, 2015 under the laws of the State of Delaware. We are a provider of risk management and asset protection services for businesses, individuals and families. Our offices are located at 1771 Post Rd East #178, Westport CT 06880. Our telephone number is 203-307-1179 and our website is
www.grcrpartners.com
Prior to 2017, the Company provided its services primarily to small businesses on a project-based fee arrangement. During 2017, the Company shifted its business model to more recurring fee based engagements and expanded target markets to included individuals and families. The Company delivers services following its progressive bSecure methodology. The Company believes that by combining expert consulting, proven processes and software, clients can cost effectively build and maintain RAP programs that reduce day-to-day and long-term risks in their work environment, personal and family lives.
Our Opportunity
Along with the lack of clearly identified corporate risk management roles, an overall complex approach to personal and family asset protection, we believe there is a need to bridge the communication gap between technology and risk as well as lack of appropriate metrics to define and track enterprise risks. Some may be scratching their heads and wondering why CROs are necessary. After all, isn’t risk already part of the domain responsibility of the chief executive officer (CEO), general counsel, chief security officer (CSO), chief information officer (CIO), chief information security officer (CISO) and chief operating officer (COO)? The answer is yes; every member of the C-suite is responsible for their domain and for ensuring the remainder of the enterprise or company benefits from their decisions and counsel for collective risk management.
5
Given the global nature of business today, it has become harder and harder to wrap your arms around risk management. How do you invest intelligently? How do we protect ourselves and our customers in the most effective way? Today’s risk management needs to go beyond just checking off boxes that are required by regulations. The only way you can truly protect the enterprise is by understanding the context and the landscape in which your business operates. If an organization can leverage that information and collect it and provide context, the organization will be more agile and adaptive as a result of that the risk level goes down.
Add to the challenge the Internet and the explosion in digital information, risk management and information security touches every aspect of business today.
Our Strategy and Plan of Operations
We plan to establish a broad customer base through traditional offline marketing as well as through social media which would include; email campaigns, building a Facebook presence and developing our own blog for subject matter experts in the legal, governance, compliance and reporting industry.
Over the next twelve months we plan to;
·
Build out awareness to our “bSecure” workshop series and procure additional corporate sponsors and educational partners Through the Free or Corporate/Community Sponsored workshops, attendees learn about risk management planning and can work through the development of their custom plan. In 2018 we delivered our first workshop. The workshops have been purposely built to be progressive and include;
o
Workshop 1 – Basics to business owner, individual and family risk management planning
o
Workshop 2 – Introduction to software tools and processes to build risk management plans
o
Workshop 3 – Interactive session that includes assistance with developing the plan (only open to attendees from workshops 1 and 2)
o
Workshop 4 – By invite only, interactive session where attendees complete their first draft of a risk management plan
·
Expand our socials media efforts, including, launching a Facebook for business page. We plan to do more internet marketing that might include, search engine marketing, blogging, organic and paid for search engine optimization. In 2018 we launched our new website. From the website, visitors may now download our CEO’s new white paper entitled “Defining Risk – Roles and Metrics.” A version is available for both business owners and individuals In 2018 we commenced testing of our industry targeting social media plans through the distribution of information to over 1500 broker dealers and registered investment advisors in the northeastern United States.
·
Further explore the use of “For-Cause Alliance Partnerships” whereby we partner up with non-profit educational-like mission based organizations to further both business plans and reputation with the local community.
·
Complete the development of our Risk Management Health Checkup to be used with 1 on 1 risk management planning session
·
Producing a survey related to risk management for both individuals and businesses which will be used to complete a report as a follow-up to our CEO’s whitepaper – Defining Risk: Roles and Metrics.
6
Results of Operations
Summary of Key Results
For the unaudited three months ending June 30, 2018 and 2017
Revenues and Cost of Revenues
Total revenue for the three months ended June 30, 2018 and 2017, was $14,485 versus $16,000, respectively. Revenues are from professional services.
Cost of revenue for the three months ended June 30, 2018 and 2017, was $8,500 versus $7,500, respectively. Cost of revenue included payments to third party independent contractors and $1,500, and $2,000 paid to a related party for the three months ended June 30, 2018 and 2017, respectively.
Operating Expenses
Total operating expenses for the three months ended June 30, 2018 and 2017, was $13,657 versus $6,493, respectively. The increase was primarily due to increased marketing professional service fees. Operating expenses included payments of $500 and $1,000 to a related party for the three months ended June 30, 2018 and 2017, respectively.
For the unaudited nine months ending June 30, 2018 and 2017
Revenues and Cost of Revenues
Total revenue for the nine months ended June 30, 2018 and 2017, was $60,912 versus $25,000, respectively. Revenues are from professional services and expense reimbursements. The increase in revenue was due to new clients during the 1
st
Quarter of 2018.
Cost of revenue for the nine months ended June 30, 2018 and 2017, was $31,800 versus $12,000, respectively. Cost of revenue included payments to third party independent contractors and $3,250, and $2,000 paid to a related party for the nine months ended June 30, 2018 and 2017, respectively.
Operating Expenses
Total operating expenses for the nine months ended June 30, 2018 and 2017, was $42,058 versus $35,945, respectively. This increase was primarily due to increased marketing and sales efforts and professional service fees. Operating expenses included payments of 850 and $1,000 to a related party for the nine months ended June 30, 2018 and 2017, respectively.
Liquidity and Capital Resources
As of June 30, 2018
Since inception (January 16, 2015) the Company had a cumulative net loss of $104,118 and we have a working capital deficit of $48,742 at June 30, 2018. Although we are generating recurring revenue, and had a profit for the most recent quarter end, our future growth in dependent upon achieving further sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations. The company may also explore other grow opportunities, including, but not limited to, a merger or acquisitions.
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Since our inception (January 16, 2015) through June 30, 2018, we have generated total revenues of $330,374. As of June 30, 2018, our cash balance was $251 and we had accounts receivable of $5,000. We believe we will require a minimum of $50,000 in additional cash over the next 12 months to pay for the remainder of our total offering costs, maintain our regulatory reporting and filings and cover our operations costs. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, our major shareholder, Sean Conrad, has indicated that he may be willing to provide funds required to maintain the reporting status in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company or sell ownership in the Company. However, there is no contract in place or written agreement securing this agreement. Management believes if the Company cannot maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
As a matter of practice, we don’t intend to hire our independent consultants. Consultants will be engaged as independent contractors and will be paid on either a fixed or hourly basis per engagement as clients are retained. We believe this approach will allow us to keep our fixed operating costs low.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the then existing directors, are approved by vote of the stockholders, or are fair to us as a corporation as approved or ratified by the board or authorized officer. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we review the potential of conflicts of interest.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Critical Accounting Policies
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.
Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Revenue Recognition
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
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Consulting Services
Because the Company provides its applications as services, it follows the provisions of Accounting Standards Codification No.605,
Revenue Recognition.
The Company recognizes revenue when all of the following conditions are met:
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there is persuasive evidence of an arrangement;
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the service has been provided to the customer;
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the collection of the fees is reasonably assured; and
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the amount of fees to be paid by the customer is fixed or determinable.
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The Company recognizes revenue as services are performed or monthly based upon contract terms. Contracts may either be for a specific project, or, a monthly recurring fee.
Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
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