The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2017
Note 1 - Business
Buscar Company. (“Buscar”, “we”, “us”, “our”, the “Company”) was incorporated in Nevada as Cascade Springs Ltd. on January 19, 2010. In 2012, we amended our Articles of Incorporation to change our name to Colorado Gold Mines, Inc. On June 18, 2014, changed our name to Buscar Oil, Inc. On May 19, 2015, the Company changed its name to Buscar Company. Buscar is domiciled in the state of Colorado, and its corporate headquarter is located in Los Angeles, CA. The Company selected March 31 as its fiscal year end.
The Company’s business is the buying, selling and racing of thoroughbreds that can race in the allowance and stakes levels of thoroughbred racing; however, the Company will initially begin in the claiming level of thoroughbred racing. The Company intends to acquire in its claiming division before acquiring horses for its allowance/stakes division. These horses will provide the Company with revenue and a foundation to build out a stakes level stable. The Company’s main focus will be acquiring horses that will be capable of racing in stake races throughout the Country.
Note 2 - Going Concern
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these unaudited condensed consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At September 30, 2017, the Company had not yet achieved profitable operations, has accumulated losses of $18,967,460 since its inception and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on terms acceptable to the Company.
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation of Interim Financial Statements
The accompanying unaudited interim consolidated financial statements as of and for the six months ended September 30, 2017 have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the six ended September 30, 2017 are not necessarily indicative of the results that may be expected for any future periods or the year ending March 31, 2018. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on July 14, 2017.
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. It is reasonably possible that a change in the Company’s estimates will occur in the near term and such change could be material as information becomes available. The Company’s estimates include thoroughbreds reserve for potential impairment, and contingent liabilities.
Consolidation Policy
The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Buscar Stables, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Thoroughbreds
The Company depreciates thoroughbreds via straight-line depreciation over its useful life of 3 years.
The thoroughbreds are stated at the lower of cost or market value. The cost was deemed to be the best evidence of market value and the company’s thoroughbreds were therefore stated at cost. Costs of maintaining horses prior to maturity and entered into a race or disposition are capitalized as additional costs of the horse. When a horse is sold or otherwise disposed of, the cost and associated accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized in the statement of operations.
The company evaluates the recoverability of its Long-Term Assets in accordance with ASC topic 360, which requires recognition of impairments of long lived assets in the event an indication of impairment exists and the net book value of such assets exceeds the expected future value net cash flows attainable to such assets.
Cost of Development represent stud fee, boarding, training, blacksmith, veterinary and land use for the horses. These specific costs are capitalized until the horse reaches maturity.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Stock-Based Compensation
ASC 718,
“Compensation – Stock Compensation,”
prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50,
“Equity – Based Payments to Non-Employees.”
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense totaled $32,010 and $1,753,500 for the six months ended September 30, 2017 and 2016, respectively. Share-based expense totaled $32,010 and $1,228,500 for the three months ended September 30, 2017 and 2016, respectively.
Thoroughbred Revenue Recognition
The Company pursues opportunities to realize revenues from a principal activity: breeding the thoroughbreds. It is the Company’s policy that revenues and gains will be recognized in accordance with ASC Topic 605-10-25, “Revenue Recognition.” Under ASC Topic 605-10-25, revenue earning activities such as selling the horses and the Company has substantially accomplished all it must do to be entitled to the benefits represented by the revenue. Gains or losses from the sale of the horses are recognized when the horse is sold, and the cost and associated accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized in the statement of operations.
Recent Accounting Pronouncements
Revenue from Contracts with Customers
In September 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.
In May 2014, the FASB issued accounting standards updates which modifies the requirements for identifying, allocating, and recognizing revenue related to the achievement of performance conditions under contracts with customers. This update also requires additional disclosure related to the nature, amount, timing, and uncertainty of revenue that is recognized under contracts with customers. This guidance is effective for fiscal and interim periods beginning after December 15, 2017 and is required to be applied retrospectively to all revenue arrangements. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
Note 4 - Thoroughbreds
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September 30,
2017
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March 31,
2017
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Thoroughbreds
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$
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625,103
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$
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625,103
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|
Cost of development
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|
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77,529
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|
|
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410,529
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|
|
|
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702,632
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|
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1,035,632
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Accumulated depreciation
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(198,371
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)
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(94,189
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)
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Thoroughbreds, net
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$
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504,261
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$
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941,443
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Depreciation expense for six months ended September 30, 2017 and 2016 was $104,182 and $7,788, respectively. Depreciation expense for three months ended September 30, 2017 and 2016 was $52,092 and $6,038, respectively. At September 30, 2017 and March 31, 2017, thoroughbreds with a cost basis of $625,103 and accumulated depreciation of $198,371 and $94,189, respectively.
On December 14, 2016, the Company paid $333,000 for stud fee which is used to mate Milania, one of the Company’s thoroughbreds, with War Front, a highly breaded third-party horse. The amount was capitalized as thoroughbreds. On August 1, 2017, the Company notified its insurance company that the mating was not successful after four breeding sessions. The insurance company approved to cover the loss of $300,000. As a result, the Company recognized an impairment loss of $0 and $333,000 for the three and six months ended September 30, 2017, respectively, and reduced the cost of development asset of $333,000. On August 8, 2017, the Company received cash of $300,000 from the insurance company.
Note 5 - Long Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”), usually at the thoroughbred level. The carrying amount of an asset group is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. If the asset group is determined not to be recoverable, then an impairment charge will be recognized in the amount by which the carrying amount of the asset group exceeds its fair value, determined using discounted cash flow valuation techniques, as defined in ASC 360,
Property, Plant, and Equipment
.
On August 1, 2017, the company was notified that Milania was not pregnant with War Front after four breeding sessions. The Company recognized an impairment loss of $333,000, and reduced the cost of development asset of $333,000.
Note 6 - Note payable
As of September 30, 2017, and March 31, 2017, the Company recorded note payable of $5,871 and $5,871, respectively. The note bears no interest and is due upon demand.
Note 7 - Commitments and Contingencies
As of September 30, 2017, the Company had a total of $222,045 of outstanding liabilities. As of this date, the Company recognizes $177,270 of outstanding liabilities related to previous Company directors, Robert Sawatsky and Kelly Fielder. The Company’s legal counsel believes that the outstanding liabilities are expected to be paid back to the previous Company directors, Robert Sawatsky and Kelly Fielder, who had originally loaned money to the Company. However, there has been no resolution of this event.
Dividend policy
The Company intends to distribute at least 16% of our net purse winnings that our company's thoroughbreds generate. However, our ability to pay dividends is subject to limitations imposed by Nevada law. Pursuant to Nevada Revised Statute 78.288, dividends may be paid to the extent that a corporation's assets exceed it liabilities and it is able to pay its debts as they become due in the usual course of business.
Note 8 - Equity
Preferred Stock
The Company has authorized 50,000,000 preferred shares with a par value of $0.0001 per share. Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Series A Preferred Stock
The Company has designated 10,000,000 preferred shares of Series A Preferred Stock with a par value of $0.0001 per share.
As at September 30, 2017 and March 31, 2017, the Company had 8,000,000 shares of Series A Preferred Stock issued and outstanding.
Series B Preferred Stock
The Company has designated 10,000,000 preferred shares of Series B Preferred Stock with a par value of $0.0001 per share.
As at September 30, 2017 and March 31, 2017, the Company had 9,965,000 shares of Series B Preferred Stock issued and outstanding, respectively.
Common Stock
The Company has authorized 500,000,000 shares of common stock with a par value of $0.0001 per share.
During the six months ended September 30, 2017, the Company issued 100,000 shares of common stock for services, with a fair value of $32,010.
As of September 30, 2017, and March 31, 2017, the Company had 18,681,321 and 18,581,321 shares of common stock issued and outstanding, respectively.
Note 9 - Loss Per Common Share
Basic earnings per share (“EPS”) is computed by dividing earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the periods. Diluted EPS reflects the potential dilution of securities that could share in the earnings. As of September 30, 2017, and March 31, 2017 the Company did not have any dilutions.
Note 10 – Subsequent Events
The Company has analyzed its operations subsequent to September 30, 2017 to the date these financial statements were issued, and have the following events to disclose:
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·
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The Company acquired Lazy Susan at the 2017 Keenland Auction for $120,000.
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·
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The Company sold two foals at the 2017 Keeneland Auction for a total of $330,000. The Company expects to receive the funds within 45 days after the conclusion of the sale.
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·
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The Company's thoroughbred Mr. Ability was retired due to injury.
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