Item 1. Financial Statements
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Gryphon Resources , Inc.
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BALANCE SHEETS
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(Unaudited)
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June 30,
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September 30,
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2020
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2019
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ASSETS
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Current Assets:
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Cash
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$ -
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$ -
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Total Current Assets
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-
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-
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TOTAL ASSETS
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$ -
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$ -
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LIABILITIES & STOCKHOLDER'S DEFICIT
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Current Liabilities:
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Accounts Payable
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$ 1,159
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$ 5,250
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Accounts Payable - Related Party
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53,115
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1,500
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Interest Payable - Related Party
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-
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549
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Notes Payable - Related Party
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-
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17,798
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Total Current Liabilities
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54,274
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25,097
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Total Liabilities
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54,274
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25,097
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Stockholder's Deficit
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Common Stock, par value $0.001,
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400,000,000 shares Authorized, 267,675,000 shares Issued and
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Outstanding at June 30, 2020 and at September 30, 2019
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267,675
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267,675
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Additional Paid-In Capital
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459,270
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459,270
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Accumulated Deficit
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(781,219)
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(752,042)
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Total Stockholder's Deficit
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(54,274)
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(25,097)
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TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT
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$ -
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$ -
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The accompanying notes are an integral part of these unaudited financial statements
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-2-
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Gryphon Resources, Inc.
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STATEMENTS OF OPERATIONS
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(Unaudited)
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June 30,
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June 30,
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2020
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2019
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2020
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2019
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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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Expenses:
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Professional fees
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53,015
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1,362
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56,887
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13,369
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General and administrative expense
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1,828
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415
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3,380
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1,499
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Total Operating Expenses
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54,843
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1,777
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60,267
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14,868
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Operating Loss
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(54,843)
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(1,777)
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(60,267)
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(14,868)
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Other Income (Expense)
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Gain on Debt Forgiveness
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31,988
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-
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31,988
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-
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Interest Expense
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-
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(202)
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(898)
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(15,408)
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Total Other Income (Expense)
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31,988
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(202)
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31,090
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(15,408)
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Net Loss
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$ (22,855)
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$ (1,979)
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$ (29,177)
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$ (30,276)
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Basic & Diluted Loss per Common Share
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$ (0.00)
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$ (0.00)
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$ (0.00)
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$ (0.00)
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Weighted Average Common Shares
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Outstanding
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276,675,000
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276,675,000
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276,675,000
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208,334,341
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The accompanying notes are an integral part of these unaudited financial statements
-3-
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Gryphon Resources, Inc.
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STATEMENTS OF CASH FLOWS
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(Unaudited)
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For the Nine Months Ended
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June 30,
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2020
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2019
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CASH FLOWS FROM OPERATING
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ACTIVITIES:
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Net Loss
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$ (29,177)
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$ (30,276)
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Adjustments to reconcile net loss to net cash
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used in operating activities:
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Benefical Conversion Feature
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-
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15,000
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Gain on Debt Forgiveness
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(31,988)
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-
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Changes In:
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Accounts Payable
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(4,091)
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(9,780)
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Accounts Payable - Related Party
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51,615
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(2,500)
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Interest Payable - Related Party
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549
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408
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Net Cash Used in Operating Activities
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(13,092)
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(27,148)
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CASH FLOWS FROM FINANCING
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Proceeds from Note Payable - Related Party
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13,092
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27,148
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Net Cash Provided by Financing Activities
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13,092
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27,148
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Net (Decrease) Increase in Cash
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Cash at Beginning of Period
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-
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-
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Cash at End of Period
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$ -
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$ -
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
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Cash paid during the year for:
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Interest
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$ -
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$ -
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Franchise Taxes
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$ -
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$ -
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
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150,000,000 shares of common stock were issued in exchange for a debt conversion of $21,161 due to a Related Party
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Gain on Debt Forgiveness of $31,988 due to a Related Party
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The accompanying notes are an integral part of these unaudited financial statements
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-4-
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Gryphon Resources, Inc.
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STATEMENT OF STOCKHOLDERS' DEFICIT
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(Unaudited)
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Common Stock
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Shares
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Par Value
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Additional Paid-In Capital
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Accumulated Deficit
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Total Stockholders' Deficiency
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Balance as of September 30, 2019
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267,675,000
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$ 267,675
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$ 459,270
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$ (752,042)
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$ (25,097)
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Net Loss for the Three Months Ended December 31, 2019
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-
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-
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-
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(3,858)
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(3,858)
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Balance as of December 31, 2019
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267,675,000
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$ 267,675
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$ 459,270
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$ (755,900)
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$ (28,955)
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Net Loss for the Three Months Ended March 31, 2020
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-
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-
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-
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(2,464)
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(2,464)
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Balance as of March 31, 2020
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459,270
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(758,364)
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(31,419)
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Net Loss for the Three Months Ended June 30, 2020
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-
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-
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-
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(22,855)
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(22,855)
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Balance as of June 30, 2020
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267,675,000
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$ 267,675
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$ 459,270
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$ (781,219)
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$ (54,274)
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Balance as of September 30, 2018
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117,675,000
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$ 117,675
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$ 573,109
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$ (715,878)
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$ (25,094)
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Beneficial Conversion Feature
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-
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-
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5,000
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-
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5,000
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Net Loss for the Three Months Ended December 31, 2018
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-
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-
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-
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(6,089)
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(6,089)
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Balance as of December 31, 2018
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117,675,000
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117,675
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578,109
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(721,967)
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(26,183)
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Beneficial Conversion Feature
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-
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-
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10,000
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-
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10,000
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Stock Issuance for the Cancellation of Debt
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150,000,000
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150,000
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(128,839)
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21,161
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Net Loss for the Three Months Ended March 31, 2019
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-
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-
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-
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(22,208)
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(22,208)
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Balance as of March 31, 2019
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459,270
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(744,175)
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(17,230)
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Net Loss for the Three Months Ended June 30, 2019
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-
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-
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-
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(1,979)
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(1,979)
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Balance as of June 30, 2019
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267,675,000
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$ 267,675
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$ 459,270
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$ (746,154)
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$ (19,209)
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The accompanying notes are an integral part of these unaudited financial statements
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-5-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 1. Organization and Description of Business
The Company is engaged in business in the real estate.
Note 2. Going Concern Uncertainties
The Company has not generated any revenues, has an accumulated deficit of $781,219 as of June 30, 2020, and does not have positive cash flows from operating activities. The Company expects to incur additional losses as it continues to identify and develop new commercial opportunities. The Company will be subject to the risks, uncertainties, and difficulties frequently encountered by early-stage companies. The Company may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause the Company’s business, results of operations, and financial condition to suffer. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance date of these financial statements.
The Company’s ability to continue as a going concern is an issue due to its net losses and negative cash flows from operations, and its need for additional financing to fund future operations. Management plans to identify commercial opportunities and to obtain necessary funding from outside sources. There can be no assurance that such funds, if available, can be obtained on terms reasonable to the Company. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. Based on the Company’s current level of expenditures, management believes that cash on hand is adequate to fund operations for at least the next twelve months.
-6-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim financial statements as of June 30, 2020, and for the nine months ended June 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s annual report on Form 10-K for the year ended September 30, 2019. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30, 2020 and the results of operations for the nine months ended June 30, 2020 and 2019 and cash flows for the nine months ended June 30, 2020 and 2019. The results of operations for the nine months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year.
Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original maturities of nine months or less. On occasion, the Company has amounts deposited with financial institutions in excess of federally insured limits.
Fair Value of Financial Instruments
The Company measures certain financial assets and liabilities at fair value based on 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. The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
-7-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 3. Summary of Significant Accounting Policies (continued)
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of June 30, 2020, and 2019, the Company has not recorded any unrecognized tax benefits. See Note 6. Income Taxes.
Segment Reporting
The Company’s business currently operates in one segment.
Net Loss per Share
The computation of basic net loss per common share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net loss per common share is based on the weighted average number of shares used in the basic net loss per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. See Note 4. Net Loss Per Share.
Recently Issued Accounting Pronouncements
The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.
Note 4. Net Loss Per Share
During the nine months ended June 30, 2020 and June 30, 2019, the Company recorded a net loss. The Company does not have any potentially dilutive securities outstanding. Therefore, basic and diluted net loss per share is the same for those periods.
-8-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 5. Related Party
From September 2018 – June 2020, the Company incurred a related party payable in the amount of $7,000 to an entity related to the legal custodian of the Company for professional fees. On March 31, 2019, $4,000 of this balance was converted into a promissory note payable, bearing interest at an annual rate of 10% and On June 12, 2020, $3,000 was converted into a promissory note payable, non-interest bearing. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal and interest.
On September 30, 2018 the Company issued $5,955 in convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,955, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2018. As of September 30, 2019, this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.
In December 2018, the Company issued $5,000 in convertible notes payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019, this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.
In January 2019, 150,000,000 million shares were issued in exchange for the cancellations of debt, $21,161 in convertible notes payable and accrued interest to an entity related to the legal custodian of the Company.
In March 2019, the Company issued a $4,000 promissory note payable and a $2,794 promissory note payable to entities related to the legal custodian of the Company, at an annual rate of 10% and were payable on demand. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal and interest due.
In January 2019, the Company issued a $10,000 in a convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $10,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019, this note has been converted and $0 is outstanding in principal and accrued interest.
-9-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 5. Related Party (continued)
In June 2019, the Company issued a $5,000 promissory note payable and a $354 promissory note payable to entities related to the legal custodian of the Company, at an annual rate of 10% and were payable on demand. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal or interest due.
In July 2019, the Company issued a $2,150 promissory note payable related to the legal custodian of the Company, at an annual rate of 10% and was payable on demand. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding, in principal and interest due.
In September 2019, the Company issued a $3,500 promissory note payable related to the legal custodian of the Company that was non- interest bearing and payable on demand. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal or interest due.
In December 2019, the Company issued a $7,247 promissory note payable related to the legal custodian of the Company, at an annual rate of 10% and was payable on demand. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal or interest due.
On March 25, 2020, as a result of a private transaction, the control block of voting stock of Gryphon Resources, Inc. (the “Company”) represented by 142,500,000 shares of common stock [“Shares”] which is an ownership interest of approximately 53% has been transferred from Tourmeline Ventures, LLC [“Seller”] to Mr. Seong Y. Lee [“The Purchaser”]. The consideration for the shares was $0.0028 per share. The source of cash consideration for the shares was personal funds of the Purchaser.
As of the nine months ended June 30, 2020, the Company had Forgiveness of Debt in the amount of $31,988 during the Change of Control, the debt due to the Legal Custodian of the Company was forgiven in a signed agreement.
As of June 30, 2020, the Company has $0 in promissory notes payable and $0 in intrest payable to a legal custodian of the company.
In April - June 2020, an Officer and Related Party, paid the Company’s Legal fees and fees to the Stock Transfer Agent in the amount of $53,115. This amount is due to Related Party as of June 30, 2020. It is non-interest bearing.
-10-
GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 6. Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets on June 30, 2020 and September 30, 2019 are as follows:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
September 30, 2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
164,056
|
|
|
$
|
157,667
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
164,056
|
|
|
|
157,667
|
|
|
|
|
|
|
|
|
|
|
Less: valuation allowance
|
|
|
(164,056)
|
|
|
|
(157,667)
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
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The net increase in the valuation allowance for deferred tax assets was $231 for the nine months ended June 30, 2020. The Company evaluates its valuation allowance on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.
For federal income tax purposes, the Company has net U.S. operating loss carry forwards on June 30, 2020 available to offset future federal taxable income, if any, of $781,219. Accordingly, there is no current tax expense for the nine months ended June 30, 2020 and 2019.
The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.
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GRYPHON RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
(Unaudited)
Note 6. Income Taxes (continued)
The effects of state income taxes were insignificant for the nine months ended June 30, 2020 and 2019.
The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 21% for the nine months ended June 30, 2020 and 2019, respectively:
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Nine months Ended
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June 30,
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2020
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2019
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Income tax benefit at statutory rate
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$
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6,127
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$
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6,358
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Change in valuation allowance
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(6,127)
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(6,358)
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$
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-
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$
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The fiscal years 2012 through 2019 remain open to examination by federal authorities and other jurisdictions in which the Company operates.
On December 22, 2017, the Tax Cuts and Jobs Act was enacted. This law substantially amended the Internal Revenue Code, including reducing the U.S. corporate tax rates. Upon enactment, the Company’s deferred tax asset and related valuation allowance decreased by $110,223 to $150,334. As the deferred tax asset is fully allowed for, this change in rates had no impact on the Company’s financial position or results of operations.
Note 7. Subsequent Events
On July 15, 2020 the Articles of Incorporation of the Company were amended in the State of Nevada to authorize
410,000,000 shares of capital stock,of which 400,000,000 shares were designated as "Common Stock" with a par value of $0.01 per share, and 10,000,000 shares were designated as "Preferred Stock" with a par value of $0.01 per share.”
The shareholders also approved a 10-1 reverse stock split and recapitalization and they approved a change of domicile for the Corporation from Nevada to Wyoming. As a result of the change in domicile the Company changed its name to Ameritrust Corporation.
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ITEM 2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain information included herein contains forward-looking statements that involve risks and uncertainties within the meaning of Sections 27A of the Securities Act, as amended; Section 21E of the Securities Exchange Act of 1934. These sections provide that the safe harbor for forward looking statements does not apply to statements made in initial public offerings. The words, such as "may," "would," "could," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this Form 10 - Q and include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, our directors or our officers, with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans; (iii) continued development of business opportunities; (iv) market and other trends affecting our future financial condition; (v) our growth and operating strategy. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) we have incurred significant losses since our inception; (ii) any material inability to successfully develop our business plans; (iii) any adverse effect or limitations caused by government regulations; (iv) any adverse effect on our ability to obtain acceptable financing; (v) competitive factors; and (vi) other risks including those identified in our other filings with the Securities and Exchange Commission.
Overview
Organizational History.
Gryphon Resources, Inc. (“Gryphon”, “We”, or the “Company”) was incorporated in the State of Nevada on January 16, 2006 under the name Gryphon Oil & Gas, Inc. On March 22, 2007, our name was changed to Gryphon Resources, Inc. to more accurately reflect the nature of our operations. At the time of the filing of our initial registration statement on Form SB-2 with the Securities & Exchange Commission (the “SEC” or “Commission”) on or about April 25, 2007 our primary business focus was acquiring and exploring properties for the existence of commercially viable deposits of gold in Canada. On April 28, 2008 we incorporated a Turkish company named APM Madencilik Sanayi Ve Ticaret Limited Sirketi. (“APM”) as a 99% owned subsidiary. Thereafter, In July 2010, we re-focused our operations and began mineral exploration in Arizona, USA and on September 27, 2010, sold our entire shareholdings in APM to an unrelated third party and ceased all operations in Turkey. Thereafter focused on mineral exploration and continued exploring for gold, silver and copper-porphyry; and lithium on two different properties in the State of Arizona, USA. Following the filing of our Information Statement on May 15, 2009 with the Commission on DEF Schedule 14C, on May 26, 2009 we amended or Articles of Incorporation to increase our common stock from 100 million shares to 400 million shares, $0.001 par value, authorized for issuance. On May 3, 2012 prior management filed a termination of our registration statement on Form 15-12G pursuant to Rule 12g-4(a)1 and our termination went effective 90 days later on August 1, 2012 then on May 4, 2012 the Company was dissolved at the Nevada Secretary of State’s office and on August 28, 2018, its corporate charter was reinstated.
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On February 21, 2018, one of the Company’s shareholders made a motion and application to be appointed as custodian of the Company based on prior management abandoning its responsibilities to continue making filings at the Nevada Secretary of State’s office and for failing to hold a shareholders’ meeting in over 6 years otherwise keep current in its obligations to the Company. Upon motion and application to the District Court, Clark County Nevada, the Court granted the shareholder’s request and the shareholder was appointed as custodian for the Company (“Custodian”). As Custodian of the Company, the shareholder was ordered to file an amendment to the Company’s articles of incorporation which was filed in conformity with N.R.S. 78.347(4) and the shareholder was ordered to have the Company’s charter reinstated in Nevada, to notice and hold a shareholder meeting; to provide a report to the Court of the actions taken at the shareholder meeting; to identify and name a new registered agent in the State of Nevada; to reinstate the Company in the State of Nevada and the Custodian is complying with the Court Order and will be filing a motion for termination of the Custodian which will be followed by an Order from the Court terminating the Custodian and acknowledging that the Custodian has complied with all of the requirements listed by the Court in its Order for Appointment. The Custodian was given the power and authority to take any action it deemed reasonable and for the benefit of the Company and its shareholders. A Copy of the Order Appointing the Custodian was furnished with the Registration Statement as Exhibit 99.1 filed on July 5, 2019. The Company has since been seeking a merger target and has been evaluating various opportunities.
On March 25, 2020, as a result of a private transaction, the control block of voting stock of Gryphon Resources, Inc. (the “Company”) represented by 142,500,000 shares of common stock [“Shares”] which is an ownership interest of approximately 53% has been transferred from Tourmeline Ventures, LLC [“Seller”] to Mr. Seong Y. Lee [“The Purchaser”]. The consideration for the shares was $0.0028 per share. The source of cash consideration for the shares was personal funds of the Purchaser. The officers and directors of the Company did not change.
On April 15, 2020 the Board of Directors of Gryphon Resources, Inc. in accordance with the terms of that certain stock purchase agreement dated March 6, 2020 elected to increase the number of directors on its Board from one (1) to two (2). In addition, the Board voted to elect Mr. Seong Yeol Lee, the current majority owner of the Company’s outstanding shares of common stock, director and Chief Executive Officer to fill the created position.
The Company’s year-end is September 30.
Our Business
The Company is being reorganized to operate in the real estate industry.
Employees
As of the date of this Form 10Q, June 30, 2020, we have no employees.
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RESULTS OF OPERATIONS
Three months Ended June 30, 2020 and June 30, 2019
The professional fees were $53,015 and $1,362, in the three months ended June 30, 2020 and June 30, 2019, respectively. This was due to an increase in legal fees from business operations in 2020. General & Administrative expenses were $1,828 and $415 for the three months ended June 30, 2020 and June 30, 2019, respectively.
The interest expense was $0 and $202, in the three months ended June 30, 2020 and June 30, 2019, respectively.
There was no interest expense for three months ended June 30, 2020. In previous periods, we received funding from a legal custodian of the company. The notes had an annual interest rate of 10% and were payable upon demand. During the quarter ended June 30, 2020, this debt was forgiven during the Change of Control in a signed agreement. As of June 30, 2020 there is $0 in principal and $0 in accrued interest in promissory notes.
The interest expense for three months ended June 30, 2019 was related to accrued interest on promissory notes. In the three months ended June 30, 2019, we received funding from a legal custodian of the company. The notes had an annual rate of 10% and were payable upon demand.As of the current date, these notes have been forgiven.
Nine months Ended June 30, 2020 and June 30, 2019
The professional fees were $56,887 and $13,369, in the nine months ended June 30, 2020 and June 30, 2019, respectively. This was due to anincrease in legal fees from business operations in 2020. General & Administrative expenses were $3,380 and $1,499 for the nine months ended June 30, 2020 and June 30, 2019, respectively.
The interest expense was $898 and $15,408, in the nine months ended June 30, 2020 and June 30, 2019, respectively.
The interest expense for nine months ended June 30, 2020of $898 was related to accrued interest on promissory notes. In the nine months ended June 30, 2020 we received funding from a legal custodian of the company. The notes had an annual rate of 10% and were payable upon demand. During the quarter ended June 30, 2020, this debt was forgiven during the Change of Control in a signed agreement. As of June 30, 2020 there is $0 in principal and $0 in accrued interest in promissory notes.
The interest expense of $15,408 for the nine months ended June 30, 2019, was primarily related to a $15,000 beneficial conversion feature for convertible notes payable that the Company issued and accrued interest on the notes. The remaining amount of $408 was accrued interest on promissory notes to a legal custodian of the company. In the nine months ended June 30, 2019 we received funding from issuing $15,000, in convertible notes payable to a legal custodian of the company. The notes had an annual rate of 10% and were convertible to common shares of the Company at $0.0001 per share. For the year ended September 30, 2019 in connection with the above notes, the Company recognized a beneficial conversion feature of $15,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of the current date, these notes have been converted.
Net cash used in operating activities was $13,902 for the nine months ended June 30, 2020, compared to net cash used in operating activities of $27,148 for the previous nine months ended June 30, 2019. Based on our current level of expenditures, additional funding is required to cover our operations for at least the next twelve months.
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Liquidity and Capital Resources
As of the nine months ended June 30, 2020, we had an accumulated deficit of $781,219 and cash and cash equivalents of $0.
As of the previous year ended September 30, 2019, we had an accumulated deficit of $752,042 and cash and cash equivalents of $0.
From September 2018 – June 2020, the Company incurred a related party payable in the amount of $7,000 to an entity related to the legal custodian of the Company for professional fees. On March 31, 2019, $4,000 of this balance was converted into a promissory note payable, bearing interest at an annual rate of 10% and On June 12, 2020, $3,000 was converted into a promissory note payable, non-interest bearing. As of June 30, 2020, this debt was forgiven during the Change of Control and $0 remains outstanding in principal and interest.
On September 30, 2018 the Company issued $5,955 in convertible note payable to an entity related to the legal custodian of the Company. This note bears interest at an annual rate of 10% and is convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,955, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2018. As of September 30, 2019, this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable.
In December 2018, the Company issued $5,000 in convertible notes payable to an entity related to the legal custodian of the Company. This note bore interest at an annual rate of 10% and was convertible to common shares of the Company at $0.0001 per share. In connection with the above note, the Company recognized a beneficial conversion feature of $5,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 of the principal balance and $0 accrued interest is outstanding on the note payable
In January 2019, the Company issued a $10,000 convertible note payable to an entity related to the legal custodian of the Company. This note bore interest at an annual rate of 10% and was convertible to common shares of the Company at $0.0001 per share. In connection with the above note, t he Company recognized a beneficial conversion feature of $10,000, representing the maximum amount of the intrinsic value of the conversion feature at the time of issuance. This beneficial conversion feature was accreted to interest expense during the year ended September 30, 2019. As of September 30, 2019 this note has been converted and $0 is outstanding in principal and accrued interest.
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In January 2019, 150,000,000 million shares were issued in exchange for the cancellation of debt, $21,161 in convertible notes payable and accrued interest to an entity related to the legal custodian of the Company.
In March 2019, the Company issued a $4,000 promissory note payable and a $2,794 promissory note payable to entities related to the legal custodian of the Company, at an annual rate of 10% and were payable on demand. As of June 30, 2020, this debt was forgiven during the change of control and $0 remains outstanding in principal and interest.
In June 2019, the Company issued a $5,000 promissory note payable and a $354 promissory note payable to entities related to the legal custodian of the Company, at an annual rate of 10% and were payable on demand. As of June 30, 2020, this debt was forgiven during the change of control and $0 remains outstanding in principal or interest.
In July 2019, the Company issued a $2,150 promissory note payable to entities related to the legal custodian of the Company. This note bore interest at an annual rate of 10% and was payable on demand. As of June 30, 2020, this debt was forgiven during the change of control and $0 remains outstanding, in principal and interest.
In September 2019, the Company issued a $3,500 promissory note payable to entities related to the legal custodian of the Company. This note was non- interest bearing and was payable on demand. As of June 30, 2020, this debt was forgiven during the change of control and $0 remains outstanding in principal or interest.
In December 2019, the Company issued a $7,247 promissory note payable to entities related to the legal custodian of the Company. This note bore interest at an annual rate of 10% and it was payable on demand. As of June 30, 2020, this debt was forgiven during the change of controland $0 remains outstanding in principal or interest.
As of the nine months ended June 30, 2020, the Company had Forgiveness of Debt in the amount of $31,988 during the Change of Control The debt was owed due to the legal custodian of the Company and was forgiven in a signed agreement. As of June 30, 2020, the Company has $0 in promissory notes payable and $0 in interest payable to a legal custodian of the company.
In April - June 2020, an officer and related party, paid the Company’s Legal fees and fees to the Stock Transfer Agent in the amount of $53,115. This amount is due to the related party as of June 30, 2020. This debt is non-interest bearing.
Other Contractual Obligations
As of the nine months ended June 30, 2020, we do not have any contractual obligations other than the $53,115 payable to an officer and related party of the company. This debt is non-interest bearing.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Recently Issued Accounting Pronouncements
We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to the Company, we have not identified any standards that we believe merit further discussion. We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our financial position, results of operations, or cash flows.
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Going Concern
We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern.
Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.
The Company, as of the date of this filing had zero in cash and has not earned any revenues from operations to date. In the previous two fiscal years ended September 30, 2019 and September 30, 2018 our expenses were $20,409 and $25,094 respectively, consisting primarily of professional fees, administrative expenses and filing fees. In the nine months ended June 30, 2020, our expenses were $29,177 consisting primarily of professional fees,administrative expenses and filing fees. The ongoing expenses of the Company will be related to our reorganization as well as mandatory filing requirements, including our reporting requirements under the Securities Exchange Act of 1934.
The Company continues to rely on borrowings and financings either arranged by the Company’s President or through entities controlled by the President. In the next 12 months we expect to incur expenses equal to approximately $20,000 related to legal, accounting, audit, and other professional service fees.
The effects of Covid -19 could impact our ability to operate under the going concern and maintain sufficient liquidity to continue operations. The impact of COVID-19 on companies is evolving rapidly and its future effects are uncertain. There are material uncertainties from Covid-19 that cast significant doubt on the company’s ability to operate as a going concern. It is highly likely that our company will have issues relating to the current situation that need to be considered by management. There will be a wide range of factors to take into account, including travel bans, restrictions on activity, government assistance and potential sources of replacement financing, financial health of suppliers and customers and their effect on expected profitability and other key financial performance ratios including information that shows whether there will be sufficient liquidity to continue to meet obligations when they come due.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020.
Our management, with the participation of our principal executive officer, and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer, and principal financial officer has concluded that, as of the end of such period, our disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our president (our principal executive officer and our principal accounting officer and principal financial officer), as appropriate, to allow timely decisions regarding required disclosure due to the following reasons:
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1)
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We have an inadequate number of administrative personnel.
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2)
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We do not have sufficient segregation of duties within our accounting functions.
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3)
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We have insufficient written policies and procedures over our disclosures.
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4)
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Our management is relying on external consultants for purposes of preparing our financial reports.
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Evaluation of Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our Management has conducted, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2020 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of June 30, 2020 and the date of this filing, our Company’s internal control over financial reporting was not effective based on present Company activity. Our Company is in the process of adopting specific internal control mechanisms. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over Company activities as well as more stringent accounting policies to track and update our financial reporting.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of our last fiscal quarter as covered by this report on June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error or all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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