NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017 and 2016
NOTE 1:
SUMMARY OF HISTORY AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company was incorporated in the State of Colorado on May 9, 1996. The Company originally intended to engage in the business of marine transportation. These plans did not materialize, and the Company is currently considering alternative business opportunities.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as set forth in ASC Topic 740,
Accounting for Income Taxes.
Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Revenue Recognition
The Company plans to recognize revenue when the following four conditions are present: (1) persuasive evidence of an agreement exists, (2) the price is fixed or determinable, (3) delivery has occurred or services are rendered, and (4) collection is reasonably assured.
Income (Loss) Per Common Share
Income (Loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the periods presented. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss 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 stock equivalents had been issued and if the additional common shares were dilutive. The Company has no potentially dilutive securities, such as convertible preferred stock, options, or warrants, outstanding during the periods presented. Accordingly, basic and dilutive loss per common share are the same.
Recently Issued Accounting Pronouncements
The Company has reviewed recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
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GULF & ORIENT STEAMSHIP COMPANY, LTD.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017 and 2016
Fair Value of Financial Instruments
It is not practicable to estimate the fair value of related party loans because there is no established market for these loans and it is inappropriate to estimate future cash flows, which are largely dependent on the Company establishing or acquiring operations at some future point. No financial instruments are held for trading purposes.
NOTE 2:
INCOME TAXES
At June 30, 2017, the Company had a net operating loss carryover of approximately $320,000 which expires from 2018 to 2036.
However, due to the fact that the Company has had a change in control, the loss will most likely never be utilized.
At June 30, 2017, the Company had a deferred tax asset in the amount of $158,364. The amount has been reserved 100% due to the Companys history of losses.
The increase in the valuation allowance was $10,364 and $8,399 for the periods ended June 30, 2017 and 2016, respectively.
Components of income tax are as follows:
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|
|
| |
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
Current
|
|
|
|
|
Federal
|
$
|
-
|
$
|
-
|
State
|
|
-
|
|
-
|
|
|
-
|
|
-
|
Deferred
|
|
-
|
|
-
|
|
$
|
-
|
$
|
-
|
A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax to income before provision for income taxes is as follows:
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|
|
| |
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
Income tax computed at
|
|
|
|
|
Federal statutory tax rate of 34%
|
$
|
(5,113)
|
$
|
(3,974)
|
Accrued related party interest
|
|
(3,922)
|
|
(3,348)
|
Deferred federal taxes and other
|
|
9,035
|
|
7,322
|
State taxes (net of federal benefit)
|
|
(752)
|
|
(585)
|
Accrued related party interest
|
|
(577)
|
|
(492)
|
Deferred state taxes and other
|
|
1,329
|
|
1,077
|
|
$
|
-
|
$
|
-
|
The Company complies with the provisions of uncertain tax positions as addressed in ASC 740-10-65-1. As a result of the implementation of ASC 740-10-65-1, the Company recognized approximately no increase in the liability for unrecognized tax benefits. The Company has no tax position at June 30, 2017 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at June 30, 2017. The Companys utilization of any net operating loss carry forward may be unlikely as a result of its limited activities. Tax years 2014 through 2016 are open to examination by the tax authorities.
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GULF & ORIENT STEAMSHIP COMPANY, LTD.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017 and 2016
NOTE 3: COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS
Management of the Company has conducted a diligent search and concluded that there were no commitments, contingencies, or legal matters pending at the balance sheet dates that have not been disclosed.
NOTE 4: NOTES PAYABLE - RELATED PARTIES
At June 30, 2017, the Company owed $272,570 to related parties for money advanced to the Company or expenses paid on behalf of the Company; $2,500 is non-interest bearing, $2,600 bears annual interest at 24%, $9,286 bears interest at 6%, $3,500 bears annual interest at 7%, $153,121 bears annual interest at 9%, $2,800 bears annual interest at 10%, and $1,000 bears annual interest at 18%. The Company received proceeds from these related parties of $10,240 and $6,400 during the six month periods ended June 30, 2017 and 2016, respectively, and did not make any repayments during those periods. The Company accrued $5,922 and $5,030 in interest expense during the three month periods ended June 30, 2017 and 2016, respectively. The Company accrued $11,535 and $9,848 during the six month periods ended June 30, 2017 and 2016, respectively. The notes are all due on demand. Total principal and accrued interest at June 30, 2017, was $174,807 and $97,763, respectively, resulting in the total payable balance of $272,570. During 2014, the Company and the President agreed to accrue $3,000 of interest on previous non-interest bearing obligations of about $29,235 and began charging 9% interest on such obligations, effective January 1, 2015.
During the year ended December 31, 2007, the Company converted two notes into its common stock. One note for $5,000 was due on October 13, 2005 and accrued a total interest of $2,500 on that date. This note was converted to common stock at $.07 per share for 71,429 shares. The $2,500 interest on the note is still outstanding and is included in the note payable balance at June 30, 2017.
A second note for $2,500 was converted to common stock during the year ended December 31, 2007 at $.07 per share for 35,714 shares. Accrued interest on the note was not converted and is included in the note payable balance at June 30, 2017.
NOTE 5: GOING CONCERN
The Companys financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2017, the Company had a retained deficit of $422,221 and a working capital deficit of $410,440
, which raises substantial doubt about the Company's ability to continue as a going concern.
The Companys continued existence is dependent on its ability to generate sufficient cash flow to cover operating expenses and to invest in future operations. Management is actively pursuing possible business opportunities. The Company will look to related parties to fund continuing operations until a suitable business opportunity is identified.
NOTE 6: SUBSEQUENT EVENTS
The Company has evaluated events from June 30, 2017, through the date whereupon the financial statements were issued and has determined that there are no additional items to disclose.
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Item 2.
Managements Discussions and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words may, would, could, should, expects, projects, anticipates, believes, estimates, plans, intends, targets or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Plan of Operation
Our plan of operation for the next 12 months is to: (i) consider guidelines of industries in which we may have an interest; (ii) adopt a business plan regarding engaging in the business of any selected industry; and (iii) to commence such operations through funding and/or the acquisition of a going concern engaged in any industry selected.
During the next 12 months, our only foreseeable cash requirements will relate to maintaining our good standing; the payment of our Securities and Exchange Commission and Exchange Act reporting filing expenses, including associated legal and accounting fees; costs incident to reviewing or investigating any potential business venture; and maintaining our good standing as a corporation in our state of organization. We anticipate that these funds will be provided to us in the form of loans from Michael Vardakis, our current President. There are no written agreements requiring Mr. Vardakis to provide these cash resources; and to the extent funds are provided, such funds will bear interest and will be due on demand. As of the date of this Quarterly Report, we have not actively begun to seek any business or acquisition candidate.
Results of Operations
We have generated no revenues since inception. We had net losses of ($17,261) and ($14,323) for the three months ended June 30, 2017, and 2016, respectively. We had net losses of ($26,575) and ($21,537) for the six months ended June 30, 2017, and 2016, respectively. Primarily all of these losses are the result of legal and accounting expenses.
Liquidity
We had $86 cash as of June 30, 2017.
During the next 12 months, our only foreseeable cash requirements will relate to the payment of our Securities and Exchange Commission and Exchange Act reporting filing expenses, including associated legal and accounting fees; costs incident to reviewing or investigating any potential business venture; and maintaining our good standing as a corporation in our state of organization. We do not have any cash reserves to pay for our administrative expenses for the next 12 months. In the event that additional funding is required in order to keep us in good standing, we may attempt to raise such funding through loans or through additional sales of our common stock.
13