ITEM 1.
FINANCIAL STATEMENTS.
MOREGAIN PICTURES, INC.
CONDENSED BALANCE SHEETS
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September 30,
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June 30,
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2018
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2018
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(Unaudited)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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9,236
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$
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18,593
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Prepaid expenses
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—
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1,842
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Total Current Assets
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9,236
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20,435
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Fixed Assets:
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Furniture and Equipment, net of accumulated depreciation of $1,453 at September 30, 2018 and $1,314 at June 30, 2018
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806
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945
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Total Fixed Assets
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806
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945
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TOTAL ASSETS
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$
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10,042
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$
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21,380
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current Liabilities:
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Accounts payable
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$
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35,894
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$
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35,894
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Accrued expense
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20,719
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—
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Notes payable
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70,000
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70,000
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Related party notes payable
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31,886
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—
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Total Current Liabilities
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158,499
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105,894
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TOTAL LIABILITIES
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158,499
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105,894
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Stockholders' Deficit
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Preferred stock, $.001 par value 20,000,000 shares authorized, none issued and outstanding at September 30, 2018 and June 30, 2018
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—
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—
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Common stock, $.001 par value 780,000,000 shares authorized, 7,180,199 issued and outstanding at September 30, 2018 and June 30, 2018
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7,180
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7,180
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Additional paid-in capital
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1,173,574
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1,028,907
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Accumulated deficit
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(1,329,211
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)
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(1,120,601
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)
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TOTAL STOCKHOLDERS' DEFICIT
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(148,457
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)
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(84,514
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)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$
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10,042
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$
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21,380
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The accompanying notes are an integral part of the financial statements.
1
MOREGAIN PICTURES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended
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September 30,
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2018
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2017
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Revenues
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$
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—
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$
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—
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Operating Expenses:
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General and Administrative Expense
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208,610
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9,422
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Total Operating Expenses
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208,610
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9,422
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Net Operating Loss
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(208,610
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)
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(9,422
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)
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Other Expenses:
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Interest expense (income)
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—
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(2
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)
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Total Other Expenses
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—
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(2
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)
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Net Loss
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$
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(208,610
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)
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$
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(9,420
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)
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Net Loss Per Share
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$
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(0.03
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)
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$
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(0.00
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)
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Weighted Average Shares Outstanding
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7,180,199
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7,180,199
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The accompanying notes are an integral part of the financial statements.
2
MOREGAIN PICTURES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Three Months Ended
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September 30,
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2018
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2017
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Cash Flows from Operating Activities:
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Net loss
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$
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(208,610
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)
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$
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(9,420
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)
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Adjustment to reconcile net cash used in operating activities
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Amortization of warrant expense
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144,667
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—
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Depreciation
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139
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138
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Changes in assets and liabilities
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Accounts payable & accrued expenses
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20,719
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(26,878
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)
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Prepaid expenses
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1,842
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(7,483
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)
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Net Cash Used in Operating Activities
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(41,243
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)
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(43,643
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)
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Cash Flows from Financing Activities:
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Proceed from related party loan
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31,886
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—
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Net Cash Provided by Financing Activities
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31,886
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—
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Net decrease in Cash and Cash Equivalents
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(9,357
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)
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(43,643
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)
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Cash and Cash Equivalents, Beginning of Period
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18,593
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59,529
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Cash and Cash Equivalents, End of Period
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$
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9,236
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$
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15,886
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Supplemental Disclosure of Non-Cash Transactions:
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Interest paid
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$
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—
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$
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—
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The accompanying notes are an integral part of the financial statements.
3
MOREGAIN PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
Note 1. Summary of Accounting Policies, and Description of Business
The accompanying unaudited interim condensed financial statements of Moregain Pictures, Inc. (the “Company” or “Moregain”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2018 and September 30, 2017 and for the periods then ended have been made. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018 filed with the SEC on October 16, 2018. The results of operations for these interim periods are not necessarily indicative of the results for the entire year.
Going forward, the Company intends to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for our shareholders. The Company’s objectives discussed below are extremely general and are not intended to restrict discretion of the Company’s Board of Directors to search for and enter into potential business opportunities or to reject any such opportunities.
Related Party Debt – Non-Convertible Note
The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.
Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At September 30, 2018 and June 30, 2018, the Company had no cash or cash equivalents in financial institutions in excess of amounts insured by agencies of the U.S. Government.
Reclassifications
Certain amounts previously reported have been reclassified to conform to current presentation.
Going concern
The Company has no business operations and has recurring losses, which raise substantial doubt about its ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company has financed its operations primarily through the sale of stock and advances from related parties. There is no assurance that these advances will continue in the future, that we will be able to execute our business plan to identify and engage in a business combination or to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available or will be available on terms acceptable to our company.
Cash and Cash Equivalents
The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less.
4
MOREGAIN PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
Fair Value Measurements
Accounting Standards Codification (“ASC”) 820,
Fair Value Measurements and Disclosures,
defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value according to ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
·
Level 1 - Quoted prices in active markets for identical assets or liabilities.
·
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
·
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Income Taxes
The Company records deferred taxes in accordance with Statement of Financial Accounting Standards (SFAS) ASC 740, "Accounting for Income Taxes." The statement requires recognition of deferred tax assets and liabilities for temporary differences between the tax bases of assets and liabilities and the amounts at which they are carried in the financial statements, the effect of net operating losses, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.
Warrants
Since the Warrants described below are fully vested upon issuance, such Warrants are classified as equity. The fair value of the warrants was recorded as additional-paid-in-capital, and no further adjustments are made.
For stock warrants paid in consideration of services rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of FASB ASC 505-50,
Equity-Based Payments to Non-Employees
.
On March 20, 2018, the Company entered into a one-year consulting agreement (the “Shilong Consulting Agreement”) with Shilong Film Investment, Inc. for business development and marketing services. In consideration for the services, the Company issued warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, exercisable for five years from the date of issuance, at an exercise price of $0.15 per share (the “Warrants”). Using the Black-Scholes-Merton pricing model, the Company determined the aggregate value of the Warrants to be approximately $600,000. This amount will be recognized over the one-year term of the consulting agreement. The Warrants have a cashless exercise feature. For the quarter ended September 30, 2018, the Company recognized approximately $145,000 in marketing expenses as a result of the Shilong Consulting Agreement.
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2018
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Risk-Free Interest Rate
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2.69
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%
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Expected Life (years)
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5
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Expected Volatility
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467
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%
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Expected Dividend Yield
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0
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%
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5
MOREGAIN PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2018
A summary of the Company’s warrant activity and related information for the three months ended September 30, 2018 is shown below:
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Warrants
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Weighted
Average
Exercise Price
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Outstanding, July 1, 2017
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—
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$
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—
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Issued
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3,000,000
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0.15
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Expired
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—
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—
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Outstanding, September 30, 2018
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3,000,000
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0.15
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Exercisable, September 30, 2018
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3,000,000
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|
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$
|
0.15
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|
Recent Accounting Pronouncements
There were various accounting standards and interpretations issued during 2018 and 2017, none of which are expected to a have a material impact on the Company’s consolidated financial position, operations or cash flows.
Note 2. Notes Payable
On January 10, 2018, the Company entered into a loan agreement with Michael Wu, an unaffiliated third party, whereby Michael Wu agreed to provide a non-interest bearing unsecured loan in the amount of $70,000 to the Company with a maturity date of June 30, 2018. On June 30, 2018, the loan was extended to December 31, 2018. On November 7, 2018, the Company repaid such $70,000 loan.
Note 3.
Related Party Transactions
Currently, the Company uses the offices of Moregain Capital Group, Inc. its majority shareholder for its minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial.
On August 27, 2018 the Company and Moregain Capital Group, Inc., the Company’s majority shareholder, entered into a loan agreement, whereby Moregain Capital Group, Inc. agreed to provide a loan to the Company in the principal amount of $31,886 with 2.5% interest rate per annum and a maturity date of August 27, 2021.
On March 20, 2018, the Company entered into the Shilong Consulting Agreement. The Company’s former General Counsel and current CEO. is married to the President of Shilong Film Investment, Inc. In consideration for the consulting services, the Company issued Warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, exercisable for five years from the date of issuance at an exercise price of $0.15 per share. Using the Black-Scholes-Merton pricing model, the Company determined the aggregate value of the Warrants to be approximately $600,000. This amount will be recognized over the one-year term of the consulting agreement. The warrants have a cashless exercise feature. For the quarter ended September 30, 2018, the Company recognized approximately $145,000 in marketing expenses as a result of the consulting agreement.
Note 4. Subsequent events
As of October 18, 2018, our trading symbol on the OTC Markets changed from “ALAD” to “MGPC.”
6
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed financial statements and the notes to those financial statements appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
As used in this Report, the "Company", "we," "us," and "our," refer to
Aladdin International, Inc., as our company was formerly known as until September 18, 2018 and Moregain Pictures, Inc. after such date.
Overview
The Company was incorporated under the laws of the state of Minnesota on May 3, 1972 under the name Aladdin International, Inc. Since 2010, the Company was a franchisee of fast food restaurants in Milwaukee, Wisconsin until the franchised restaurants were sold in October 1998. Since June 2010, the Company has had insignificant operations and assets consisting solely of cash. As such, the Company is presently defined as a "shell" company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).
On February 14, 2008, the Company entered into a Stock Purchase Agreement with Michael Friess and Sanford Schwartz, both of whom have been successful in completing merger transactions between public blank-check companies they controlled with private operating companies. The Stock Purchase Agreement provided that some time following the sale of the Company’s real estate and the distribution of the sale proceeds to the Company’s shareholders, each of Mr. Friess and Mr. Schwartz would purchase 1,819,374 shares of the Company’s common stock (representing 40% of the then-to-be outstanding shares of the Company’s common stock) for $10,000. On June 24, 2010, the Company sold the real estate. The Board of Directors declared a dividend of $0.148 per share paid on May 6, 2011, to its shareholders of record on March 31, 2011. On July 16, 2014, in connection with the sale of the shares to Mr. Friess and Mr. Schwartz, Mr. Friess and Mr. Schwartz were appointed to the Company’s Board of Directors, the then current Directors resigned from the Board, Mr. Friess was appointed CEO of the Company, and Mr. Schwartz was appointed CFO and Secretary.
On November 25, 2014, the Company held a shareholder meeting to reincorporate the Company in the State of Nevada and amend the Articles of Incorporation to increase the authorized common stock of the Company to seven hundred eighty million (780,000,000) shares of common stock and to authorize the creation of 20,000,000 shares of preferred stock.
On March 21, 2015, Billion Rewards Development Limited, a British Virgin Islands corporation (the “Sellers”), the majority shareholder of the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Moregain Capital Group LLC, a Nevada Limited Liability Company (the “Purchaser”), pursuant to which the Seller sold to the Purchaser, and the Purchaser purchased from the Seller, an aggregate of 6,270,512 shares of Common Stock of the Company (the “Shares”), which represent 87.33% of the issued and outstanding shares of Common Stock, par value $.001 per share for the purchase price of $180,000.
On July 20, 2015, Mr. Michael Friess and Mr. Sanford Schwartz (each, a “Seller,” together, the “Sellers”) and Billion Rewards Development Limited, a British Virgin Islands corporation (the “Purchaser”), entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Sellers sold to the Purchaser, and the Purchaser purchased from the Sellers, an aggregate of 3,638,748 shares of Common Stock of the Company (the “Shares”), which represent 80% of the issued and outstanding shares of Common Stock for the purchase price of $300,000.
7
The closing of the transaction occurred on July 20, 2015 (the “Closing”). In connection with the Purchase Agreements, Mr. Sanford Schwartz resigned as the CFO and director of the Company, and Mr. Michael Friess resigned as a CEO and president of the Company. Mr. Ningdi Chen was appointed as the Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, and director of the Company as of July 20, 2015. As a result of the transactions, control of the Company passed to the Purchaser (the “Change of Control Transaction”). Post-Closing, Michael Friess resigned as a director effective on the tenth day following the Company’s mailing of this Information Statement on Schedule 14f-1 to its shareholders (the “Effective Date”), which occurred on July 23, 2015. Immediately after the Closing, the Shares acquired by the Purchaser comprised 80% of the issued and outstanding Common Stock of the Company.
On June 3, 2017, a total of $343,840 of the third-party loans
was converted to a total of 2,631,764 shares of Common Stock of the Company (Form 8-K, the “Debt Conversion Agreement”), As a result, Billion Rewards Development Limited held an aggregate of 6,270,512 shares of Common Stock of the Company
,
which represents 87.33% of the issued and outstanding shares of Common Stock as of June 30, 2017.
On March 20, 2018, the Company entered into certain consulting agreement (“the Agreement”) with Shilong Film Investment Inc., (“Shiling”), a California corporation that engages in film production investment in Hollywood, Hong Kong, ND China. Pursuant to the Agreement, Shilong agreed to provide the Company with strategy to promote growth, advisory service with respect to business development, marketing efforts to increase awareness for the Company’s corporate image. In considering for the services, the Company agreed to issue Shilong warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, exercisable for five (5) years from the date of issuance at an exercise price of $0.15 per share.
On March 23, 2018, Board of Directors of the Registrant approved “2018 Performance Boost Stock Option Plan” in order to retain and recruit certain selected employees, consultants, and directors. In the same day, stock options to purchase a total of 2,000,000 shares of common stock were granted to certain employees, consultants, and directors exercisable at $0.15 per share, the closing price on March 22, 2018, following a 5-year vesting schedule starting 12-months from the commencement date of March 23, 2018.
PLAN OF OPERATIONS
The Company intends to specialize in investing in Hollywood movies with a focus on films with an extraordinary cast and crew, exciting storylines, and high production quality. It prefers films that target global audiences and have a global distribution network.
The Company plans to focus on developing innovative concepts with a fresh approach, covers award-winning feature films, short films, live events, and new media content. It is committed to building an inclusive pipeline and telling the diverse stories in its industry to advance the art and business of China and America's creative economy. The Company embraces new advances in technology. Innovations in filmmaking transport audiences to new worlds and deliver content where, when, and on any device, they want.
The Company is majority owned by, Moregain Capital Group, Inc, a private equity investment and management company specializing in financing the healthcare, gambling and entertainment industries.
Our goal is to become a professional and comprehensive film company specializing in the investment, development, and distribution of blockbuster movies in Hollywood.
The Company hopes to cooperate with six major US production companies, focusing on the exchange of resources, complementing each other’s strengths, and building strong, supportive alliances. Headquartered in Los Angeles with immediate access to Hollywood, the Company will use creativity and innovation to maximize its advantages in order to support the success of investments and films. This includes exploring opportunities to acquire and hold film and television companies in Hollywood, China, Hong Kong, and other regions, while implementing in-depth reorganization to lead to a more globally successful industry.
8
RESULTS OF OPERATIONS
The following table provides selected interim condensed financial data about our company for the periods ended September 30, 2018 and the year ended June 30, 2018. For detailed financial information, see the interim condensed financial statements included elsewhere herein.
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September 30,
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June 30,
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Balance Sheet Data
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2018
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2018
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Cash
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$
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9,236
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$
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18,593
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Total assets
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10,042
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21,380
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Total liabilities
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158,499
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105,894
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Shareholders' deficit
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(148,457
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)
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(84,514
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)
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Results of Operations
The following summary of our results of operations should be read in conjunction with our unaudited interim condensed financial statements included herein. Our unaudited operating results for the periods ended September 30, 2018 and 2017 are summarized as follows:
For the three months ended September 30, 2018 compared to the three months ended September 30, 2017.
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Periods Ended
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September 30,
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2018
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2017
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Revenue
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$
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—
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$
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—
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Operating Expenses
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208,610
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9,422
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Net Loss
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$
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(208,610
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)
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$
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(9,422
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Revenues
We did not earn any revenues for the three months periods ended September 30, 2018. We are presently in the development stage of our business and we can provide no assurance that we will begin earning revenues.
Net Loss
Our net loss for the three months ended September 30, 2018 was $208,610 compared to the net loss of $9,420 for the three months ended September 30, 2017.
Expenses
Our operating expenses for the three month periods ended September 30, 2018 and 2017 (unaudited) are outlined in the table below:
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Periods Ended
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September 30,
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2018
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2017
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General and Administrative Expenses
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$
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208,610
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$
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9,422
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Total Operating Expenses
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$
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(208,610
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)
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$
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(9,422
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)
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Total operating expenses were comprised of general and administrative expenses which includes primarily amortization of the Warrants and
legal, accounting and other professional services
. General and administrative expenses for the three months ended September 30, 2018 and September 30, 2017 were $208,610, and $9,422, which were comprised of $59,234 and $4,025, respectively, of accounting expenses incurred in connection with the preparation of our financial statements, legal and other professional fees. The increase in our accounting and professional fees is associated with the increase in our business activities.
On March 20, 2018, the Company entered into a one-year consulting agreement with Shilong Film Investment, Inc. (“Shilong”) pursuant to which Shilong provides business development and marketing services to the Company. In consideration for such services, the Company issued five-year warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, at an exercise price of $0.15 per share. For the quarter ended September 30, 2018, the Company recognized approximately $145,000 in marketing expenses as a result of the consulting agreement.
9
Liquidity and Capital Resources
As of September 30, 2018, the Company had cash on hand of $9,236. As of September 30, 2018, our accumulated deficit was $1,329,211. Our net loss for the three months ended September 30, 2018 was $208,610 compared to the net loss of $9,422 for the three months ended September 30, 2017. Our losses have principally been attributable to a lack of revenues while incurring operating expenses.
It is currently anticipated that the Company will require approximately $300,000 of working capital during the next 12 months to implement its business plan.
Net Cash used in Operating Activities
Net cash used in operating activities was $41,243 for the three months ended September 30, 2018 and resulted primarily from a net loss for the period of $208,610 adjusted for non-cash items totaling $144,806 and net changes in operating assets and liabilities of $22,561. Adjustments for non-cash items primarily consisted of amortization of warrant expense of $144,667 and depreciation of $139. The changes in operating assets and liabilities primarily consisted of increase in accounts payable and accrued expenses and decrease in prepaid expenses.
Net cash used in operating activities was $43,643 for the three months ended September 30, 2017 and resulted primarily from a net loss for the period of $9,420 adjusted for non-cash items totaling $138 and net changes in operating assets and liabilities of $34,361. Adjustments for non-cash items primarily consisted of depreciation of $138. The changes in operating assets and liabilities primarily consisted of decrease in accounts payable and accrued expenses and decrease in prepaid expenses.
Net Cash provided by Financing Activities
Net cash provided by financing activities was $31,886 and zero for the three months ended September 30, 2018 and September 30, 2017, respectively. Net cash provided by financing activities for the three months ended September 30, 2018 was primarily the $31,886 proceeds from the loan from Moregain Capital Group, Inc.
Net Cash provided by Investment Activities
There was no cash provided by investment activities for the three months ended September 30, 2018 or September 30, 2017.
Going Concern
The Company has no business operations and has recurring losses, which raise substantial doubt about its ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company has financed its operations primarily through the sale of stock and advances from Moregain Capital Group, Inc. There is no assurance that these advances will continue in the future, that we will be able to execute our business plan to identify and engage in a business combination or to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available or will be available on terms acceptable.
As of September 30, 2018, there is substantial doubt about the Company's ability to continue as a going concern.
Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with the U.S. GAAP, on the basis that the Company will continue as a going concern.
Due to the uncertainty of the Company’s ability to meet its current operating and capital expenses, there is substantial doubt about the Company’s ability to continue as a going concern, as the continuation and expanse ion of our business is dependent upon obtaining further financing. Our interim condensed financial statements do not include any adjustments that might result from the outcome of these uncertainties.
The preparation of these interim condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.
10
While our significant accounting policies are more fully described in Note 1 to our financial statements included in our Annual Report on Form 10-K
for the year ended June 30, 2018, filed on October 16, 2018 (“Annual Report”)
, we believe that the following accounting policies are the most critical to assist you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.
Related Party Debt
Non-convertible Notes
The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 3.