ZEV VENTURES INC.
UNAUDITED CONDENSED BALANCE SHEETS
|
|
June 30,
|
|
|
|
|
|
|
2018
|
|
|
December 31,
|
|
|
|
(unaudited)
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,460
|
|
|
$
|
3,410
|
|
Accounts receivable
|
|
|
—
|
|
|
$
|
649
|
|
Inventory
|
|
|
739
|
|
|
|
4,068
|
|
Total current assets
|
|
|
3,199
|
|
|
|
8,127
|
|
Total assets
|
|
$
|
3,199
|
|
|
$
|
8,127
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ deficit
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
20,355
|
|
|
$
|
2,500
|
|
Accrued expenses
|
|
|
680
|
|
|
|
6,000
|
|
Loans from related party
|
|
|
—
|
|
|
|
77,133
|
|
Total current liabilities
|
|
|
21,035
|
|
|
|
85,633
|
|
Total liabilities
|
|
|
21,035
|
|
|
|
85,633
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 75,000,000 shares authorized; 5,760,000 shares issued and outstanding at June 30, 2018 and December 31, 2017
|
|
|
576
|
|
|
|
576
|
|
Additional paid-in capital
|
|
|
111,357
|
|
|
|
21,724
|
|
Accumulated deficit
|
|
|
(129,769
|
)
|
|
|
(99,806
|
)
|
Total stockholders’ deficit
|
|
|
(17,836
|
)
|
|
|
(77,506
|
)
|
Total
liabilities and stockholders’ deficit
|
|
$
|
3,199
|
|
|
$
|
8,127
|
|
The accompanying notes are an integral part of the condensed
financial statements.
ZEV VENTURES INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Revenue
|
|
$
|
1,928
|
|
|
$
|
1,355
|
|
|
$
|
2,178
|
|
|
$
|
1,656
|
|
Cost of revenue
|
|
|
3,546
|
|
|
|
3,301
|
|
|
|
3,719
|
|
|
|
4,490
|
|
Gross loss
|
|
|
(1,618
|
)
|
|
|
(1,946
|
)
|
|
|
(1,541
|
)
|
|
|
(2,834
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
8,680
|
|
|
|
2,000
|
|
|
|
12,553
|
|
|
|
7,500
|
|
Filing fees
|
|
|
13,218
|
|
|
|
892
|
|
|
|
14,805
|
|
|
|
1,767
|
|
Other
|
|
|
410
|
|
|
|
—
|
|
|
|
1,064
|
|
|
|
141
|
|
Total operating expense
|
|
|
22,308
|
|
|
|
2,892
|
|
|
|
28,422
|
|
|
|
9,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(23,926
|
)
|
|
|
(4,838
|
)
|
|
|
(29,963
|
)
|
|
|
(12,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(23,926
|
)
|
|
|
(4,838
|
)
|
|
|
(29,963
|
)
|
|
|
(12,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and diluted
|
|
($
|
0.00
|
)
|
|
($
|
0.00
|
)
|
|
($
|
0.01
|
)
|
|
($
|
0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted
|
|
|
5,760,000
|
|
|
|
3,038,461
|
|
|
|
5,760,000
|
|
|
|
3,019,337
|
|
The accompanying notes are an integral part of the condensed
financial statements.
ZEV VENTURES INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(29,963
|
)
|
|
$
|
(12,242
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
649
|
|
|
|
1,818
|
|
Inventory
|
|
|
3,329
|
|
|
|
(1,849
|
)
|
Accounts payable
|
|
|
17,855
|
|
|
|
3,000
|
|
Accrued expenses
|
|
|
(5,320
|
)
|
|
|
—
|
|
Net cash used in operating activities
|
|
|
(13,450
|
)
|
|
|
(9,273
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Net cash from investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
—
|
|
|
|
21,000
|
|
Loan from related party
|
|
|
12,500
|
|
|
|
7,550
|
|
Net cash provided by financing activities
|
|
|
12,500
|
|
|
|
28,550
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(950
|
)
|
|
|
19,277
|
|
Cash and cash equivalents at beginning of period
|
|
|
3,410
|
|
|
|
2,382
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,460
|
|
|
$
|
21,659
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-cash Inventory and Financing Activities:
|
|
|
|
|
|
|
|
|
Forgiveness of loans from related party
|
|
$
|
89,633
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of the condensed
financial statements.
ZEV VENTURES INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 – BASIS
OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Interim Financial Statements
The Company’s
unaudited interim financial statements included herein have been prepared in accordance with Article 8 of Regulation S-X and the
rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed balance sheet at December 31,
2017 was derived from audited financial statements but certain information and footnote disclosures normally included in financial
statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. In management’s opinion, the accompanying statements reflect adjustments necessary to present
fairly the financial position, results of operations, and cash flows for the periods indicated, and contain adequate disclosure
to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise
disclosed in the footnotes. The interim financial statements and notes thereto should be read in conjunction with the Company’s
audited financial statements and notes thereto for the year ended December 31, 2017. Results of operations for interim periods
are not necessarily indicative of the results of operations for a full year.
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America 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 affect the reported amounts of revenues and expenses during the reporting
period. Actual results could materially differ from those estimates.
Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the liquidation of liabilities in the normal course of business, As of June 30,
2018 the Company had an accumulated deficit of $129,769 and has not earned sufficient revenues to cover operating costs and
has a working capital deficit of $17,836. The Company intends to fund operations through equity financing arrangements, which
may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending
December 31, 2018.
The ability of the
Company to continue as a going concern is dependent upon, among other things, obtaining additional financing to continue
operations and development of its business plan. In response to these problems, management intends to raise additional funds through
public or private placement offerings. These factors, among others, raise substantial doubt about the Company’s ability to
continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Revenue Recognition
On January 1, 2018, we adopted Topic
606, using the modified retrospective transition method. Results for reporting periods beginning after January 1, 2018 are presented
under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic
accounting under Topic 605. The impact of adopting the new revenue standard was not material to our condensed financial statements
and there was no adjustment to beginning retained earnings on January 1, 2018.
ASC 606 requires us to apply the
following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue
when, or as, we satisfy the performance obligation.
ZEV VENTURES INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Earnings Per Share
We calculate earnings
per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and
diluted. Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted
EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common
shares outstanding for the effects of all potential dilutive common shares, which is comprised of options granted, warrants, issued
and convertible debt. As of June 30, 2018, the Company had no potentially dilutive shares.
Recently Issued and Newly Adopted Accounting Pronouncements
In August 2016,
the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016-15,
Statement
of Cash Flows (Topic 230)
(“ASU 2016-15”). ASU 2016-15 is intended to reduce the diversity in practice regarding
how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities
for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. We adopted this update
on January 1, 2018 and the adoption had no impact to our financial statements.
In February 2016, the
FASB issued ASU 2016-02,
Leases (Topic 842)
, which requires lessees to recognize right-of-use assets and corresponding liabilities
for all leases with an initial term in excess of 12 months. This ASU is to be adopted using a modified retrospective approach,
including a number of practical expedients, that requires leases to be measured and recognized under the new guidance at the beginning
of the earliest period presented. This ASU is effective for the Company as of January 1, 2019. Early adoption is permitted.
The Company is currently evaluating the effect this ASU will have on its financial statements and related disclosures.
In July 2017, the FASB
issued ASU 2017-11
, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging
(Topic 815).
The amendments in Part I of this ASU change the classification analysis of certain equity-linked financial instruments
(or embedded features) with down round features. When determining whether certain financial instruments should be classified as
liabilities or equity instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes
equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify
existing disclosure requirements for equity-classified instruments. The amendments in Part I of this ASU are effective for the
Company as of January 1, 2019. The amendments in Part II of this ASU replace the indefinite deferral of certain guidance in Topic
480 with a scope exception. The amendments in Part II of this ASU do not require any transition guidance. The Company does not
expect adoption of this ASU to have any impact on its financial statements.
ZEV VENTURES INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Although there are
several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of these accounting
pronouncements has had or will have a material impact on its financial position or operating results.
Aside from the change
noted in
Revenue Recognition
above, there have been no material changes to our significant accounting policies as summarized
in
NOTE 2
of our Annual Report on Form 10-K for the year ended December 31, 2017. We do not expect that the adoption of
any recent accounting pronouncements will have a material impact on our accompanying condensed financial statements.
Reclassification
Certain 2017
amounts have been reclassified to conform to current year presentation.
NOTE 2 – INVENTORY
Inventory consists
of sporting event tickets. Inventories are presented at the lower of cost or net realizable value and are expensed through cost
of sales when sold.
NOTE 3 – LOAN FROM RELATED PARTY
On June 27, 2018, Zev
Turetsky, our former sole officer and director, forgave loans made to the Company in 2017 and during the six months ended June
30, 2018 in the amount of $89,633. The amount forgiven was recorded as additional paid in capital on the accompanying condensed
financial statements.
NOTE 4 – STOCKHOLDERS’ EQUITY
We have 75,000,000
shares of common stock, with a $0.0001 par value, authorized, of which 5,760,000 shares of common stock were issued and outstanding
at June 30, 2018 and December 31, 2017.
NOTE 5 – INCOME TAXES
Deferred income tax
assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We do
not expect to pay any significant federal or state income tax for 2018 as a result of the losses recorded during the six months
ended June 30, 2018 and the additional losses expected for the remainder of 2018 and net operating loss carry forwards from prior
years. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely
than not” that some component or all of the benefits of deferred tax assets will not be realized. As of June 30, 2018, we
maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income
taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period.
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. Net operating losses generated from January 1, 2018
are limited to offset 80% of current income, with the remainder of the net operating loss continuing to carry forward indefinitely.
Net operating losses incurred before January 1, 2018 are not subject to the 80% limitations and will begin to expire in 2029.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
General
The following discussion
and analysis provides information which our management believes to be relevant to an assessment and understanding of our results
of operations and financial condition. This discussion should be read together with our financial statements and the notes to the
financial statements, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should
also be read in conjunction with the information contained in our Form 10-K filed with the Securities and Exchange Commission (the
“SEC”) on March 28, 2018 and Form 10-K/A filed with the SEC on May 3, 2018, including the audited financial
statements and notes included therein as of and for the year ended December 31, 2017. The reported results will not necessarily
reflect future results of operations or financial condition.
Throughout this Report,
the terms “we,” “our,” or the “Company(’s)” refers to Zev Ventures, Inc., a Nevada corporation.
Our common stock is
listed on the OTCPink under the trading symbol “ZVVT.” To date, there is no established public trading market for our
common stock which has traded on a limited basis.
Company Overview
We purchase sporting
events and concert tickets in bulk directly from ticket vendors such as Ticketmaster and directly from the sports franchises and
sports associations. We intend to focus on tickets offered by the following sports leagues: Major League Baseball (“MLB”),
the National Basketball Association (“NBA”), the National Hockey League (“NHL”), and the National Football
League (“NFL”). Teams in these leagues sell their tickets for below market price in order to insure games are sold
out and to maintain customer loyalty. We intend to capitalize on this market inefficiency by reselling tickets purchased from primary
vendors at the price actually commanded by the market on StubHub, a ticket resale marketplace. Buying tickets on the primary market
in bulk and months in advance of a given sporting event will permit us to resell those tickets on the secondary market at a 5-20%
markup. For tickets to events in unusually high demand, such as playoff games or late-season games with potential playoff implications,
the markup can be as high as 30-100%. Our ability to profit on the resale of tickets depends highly on an event’s ability
to sell out. Sold out events eliminate primary market vendors from our competition and decrease the supply of tickets, thus increasing
our profits. Our ability to see real growth requires additional funding to ensure we have the ability to buy as many tickets as
possible. If we focus on simply one team, we will not be able to ensure at least some playoff tickets.
Events Occurring During Second Quarter
2018
Change of Control
On May 22,
2018, Zev Turetsky, our sole officer and director and majority shareholder at the time, sold 3,500,000 common shares of the
Company to Energy Capital, LLC (“Energy Capital”), a non-affiliate, resulting in a change of control. Energy
Capital paid $0.124 per share for an aggregate purchase price of $434,000. In addition, Energy Capital purchased 865,150
non-legended common shares of the Company from various non-affiliated shareholders for $0.016482 per share, or an aggregate
purchase price of $14,259.
Forgiveness of Debt and General Release
On June 27, 2018, Zev
Turetsky, the sole officer and director of the Company at the time, executed a Forgiveness of Debt and General Release wherein
Mr. Turetsky, for and in consideration of the sum of $10.00, released and forever discharged the Company from the repayment of
the related party loan to Mr. Turetsky in the outstanding amount of approximately $90,000.
Change of Independent Registered
Public Accounting Firm
On June 28, 2018, the
Company dismissed Weinstein & Co. C.P.A. (Isr) (“Weinstein & Co.”) as the Company’s independent registered
public accounting firm and engaged Rosenberg Rich Baker Berman, P.A. (“RRBB”) as the Company’s independent
registered public accounting firm for the year ending December 31, 2018.
Change of sole Officer and Director
On June 28, 2018, Zev
Turetsky, the Company’s sole director at the time, appointed Eric Brock, as a director of the Company. Mr. Turetsky then
resigned as the Company’s sole officer and Mr. Brock was appointed as the Company’s President, Chief Executive Officer,
Chief Financial Officer, Secretary and Treasurer. Immediately thereafter, Mr. Turetsky resigned from his position as director.
Results of Operations
Three months ended June 30, 2018 compared to three months
ended June 30, 2017
|
|
Three months ended
June 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Revenue
|
|
$
|
1,928
|
|
|
$
|
1,355
|
|
|
$
|
573
|
|
Cost of sales
|
|
|
3,546
|
|
|
|
3,301
|
|
|
|
245
|
|
Gross loss
|
|
|
(1,618
|
)
|
|
|
(1,946
|
)
|
|
|
328
|
|
Operating expenses
|
|
|
22,308
|
|
|
|
2,892
|
|
|
|
19,416
|
|
Operating loss
|
|
|
(23,926
|
)
|
|
|
(4,838
|
)
|
|
|
(19,088
|
)
|
Net loss
|
|
$
|
(23,926
|
)
|
|
$
|
(4,838
|
)
|
|
$
|
19,088
|
)
|
Operating Expenses
Operating expenses
increased by approximately $19,000, primarily due to payment of Depository Trust Company (“DTC”) eligibility fees
($12,000) and an increase in professional fees ($6,680).
Six months ended June 30, 2018 compared to six months ended
June 30, 2017
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Revenue
|
|
$
|
2,178
|
|
|
$
|
1,656
|
|
|
$
|
522
|
|
Cost of sales
|
|
|
3,719
|
|
|
|
4,490
|
|
|
|
(771
|
)
|
Gross loss
|
|
|
(1,541
|
)
|
|
|
(2,834
|
)
|
|
|
1,293
|
|
Operating expenses
|
|
|
28,422
|
|
|
|
9,408
|
|
|
|
19,014
|
|
Operating loss
|
|
|
(29,963
|
)
|
|
|
(12,242
|
)
|
|
|
(17,721
|
)
|
Net loss
|
|
$
|
(29,963
|
)
|
|
$
|
(12,242
|
)
|
|
$
|
(17,721
|
)
|
Operating Expenses
Operating expenses
increased by approximately $21,000 as a result of DTC eligibility fees ($12,000), an increase in professional fees ($5,053), and
other filing fees ($1,038).
Liquidity and Capital Resources
As of June 30, 2018,
cash on hand was $2,460. As of June 30, 2018, we had $3,199 in total assets and $21,035 in total liabilities compared to $8,127
and $85,633, respectively, at December 31, 2017. In June 2018, our former sole officer/director forgave a loan he made to the Company
totaling $89,633.
Accounting standards
require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the
filing of this Form 10-Q (“evaluation period”). As such, we have evaluated if cash on hand and cash generated through
operating activities would be sufficient to sustain projected operating activities through August
10,
2019. We anticipate that our current resources, along with cash generated from operations, will not be sufficient to meet our cash
requirements throughout the evaluation period. If we do not generate sufficient cash flows from operations and obtain sufficient
funds when needed, we expect that we would scale back our operating plan by deferring or limiting some, or all, of our capital
spending, as well as other cost reductions to be determined. Because such contingency plans have not been finalized (the specifics
would depend on the situation at the time), such actions also are not considered probable for purposes of current accounting standards.
Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency
plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt
is deemed to exist about the Company’s ability to continue as a going concern. As we continue to incur losses, our transition
to profitability is dependent upon achieving a level of revenues adequate to support our cost structure. We may never achieve profitability,
and unless and until doing so, we intend to fund future operations through additional dilutive or non-dilutive financings. There
can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all.
Off-Balance Sheet Arrangements
As of June 30, 2018,
we had no off-balance sheet arrangements.
Critical Accounting Estimates
Please refer to our
Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 28, 2018 and Form 10-K/A filed with
the SEC on May 3, 2018, incorporated herein by reference, for detailed explanations of our critical accounting estimates, which
have not changed significantly during the six months ended June 30, 2018.
New Accounting Pronouncements
In August 2016,
the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016-15,
Statement
of Cash Flows (Topic 230)
(“ASU 2016-15”). ASU 2016-15 is intended to reduce the diversity in practice regarding
how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities
for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. We adopted this update
on January 1, 2018 and the adoption had no impact to our financial statements.
In February 2016, the
FASB issued ASU 2016-02,
Leases (Topic 842)
, which requires lessees to recognize right-of-use assets and corresponding liabilities
for all leases with an initial term in excess of 12 months. This ASU is to be adopted using a modified retrospective approach,
including a number of practical expedients, that requires leases to be measured and recognized under the new guidance at the beginning
of the earliest period presented. This ASU is effective for the Company as of January 1, 2019. Early adoption is permitted.
The Company is currently evaluating the effect this ASU will have on its financial statements and related disclosures.
In July 2017, the FASB
issued ASU 2017-11
, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging
(Topic 815).
The amendments in Part I of this ASU change the classification analysis of certain equity-linked financial instruments
(or embedded features) with down round features. When determining whether certain financial instruments should be classified as
liabilities or equity instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes
equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify
existing disclosure requirements for equity-classified instruments. The amendments in Part I of this ASU are effective for the
Company as of January 1, 2019. The amendments in Part II of this ASU replace the indefinite deferral of certain guidance in Topic
480 with a scope exception. The amendments in Part II of this ASU do not require any transition guidance. The Company does not
expect adoption of this ASU to have any impact on its financial statements.
Aside from the change
noted in
Revenue Recognition
as summarized in
NOTE 1
of the accompanying financial statements, there have been no
material changes to our significant accounting policies as summarized in
NOTE 2
of our Annual Report on Form 10-K for the
year ended December 31, 2017. We do not expect that the adoption of any recent accounting pronouncements will have a material impact
on our accompanying condensed financial statements.
Recent Events
None
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls
and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time period specified
in the SEC’s rules and forms and is accumulated and communicated to our management, as appropriate, in order to allow timely decisions
in connection with required disclosure.
Our management, with
the participation of Eric Brock, our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q.
Based on such evaluation,
Mr. Brock, our CEO and CFO, has concluded that as of June 30, 2018, our disclosure controls and procedures were not effective to
provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities
and Exchange Commission (SEC), and that such information is accumulated and communicated to our management, including our CEO and
CFO, as appropriate, to allow timely decisions regarding required disclosure. Known material weaknesses in our internal control
over financial reporting are summarized in the following paragraph.
As of June 30, 2018,
we had limited employees and our CEO and CFO was responsible for initiating transactions, had custody of assets, recorded and reconciled
transactions and prepared our quarterly financial reports without the sufficient segregation of conflicting duties normally required
for effective internal control. We believe that the lack of segregation of duties is a material weakness in our internal controls
at June 30, 2018 affecting management’s ability to conclude that our disclosure controls and procedures were effective at
the reasonable assurance level.
While we plan to attempt to remediate the
above noted material weakness in the future, there is no assurance that we can remediate any control deficiencies in a timely manner.
Changes in Internal Control
There were no changes
in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d)
of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating
the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact
that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls
and procedures relative to their costs.