UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

 

☐     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 333-208350

 

CARNEGIE DEVELOPMENT, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

76-0513297

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

3495 Lakeside Drive, #1087, Reno, NV, 89509.

(Address of principal executive offices) (Zip Code)

 

(800) 345-8561

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes     ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes     ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging Growth Company

 

If an Emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes     ☒ No

 

As of August 14, 2020, there were 46,203,716 shares of common stock issued and outstanding.

 

 

 

 

TABLE OF CONTENTS

 

PART 1.

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

Item 2.

Management’s Discussions and Analysis of Financial Condition and Results of Operations

 13

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 14

Item 4.

Controls and Procedures

 15

 

PART 2.

OTHER INFORMATION

 16

 

Item 1.

Legal Proceedings

 16

Item 1A.

Risk Factors.

 16

Item 2.

Unregistered Sales of Securities and Use of Proceeds

 16

Item 3.

Defaults Upon Senior Securities

 16

Item 4.

Mine Safety Disclosures

 16

Item 5.

Other Information

 16

Item 6.

Exhibits

 17

 

SIGNATURES

 18

 

 
2

Table of Contents

 

Carnegie Development, INC

Balance Sheet

 

 

 

6 months

 

 

12 months

 

 

 

ended

 

 

ended

 

 

 

06/30/20

 

 

12/31/19

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Bank Account

 

$ 84

 

 

$ 84

 

Total current assets

 

$ 84

 

 

$ 84

 

Total assets

 

$ 84

 

 

$ 84

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable - Related Party

 

 

87,103

 

 

 

79,442

 

Accounts payable - Others

 

 

220,122

 

 

 

220,122

 

Accrued expenses

 

 

-

 

 

 

-

 

Total Current Liabilities

 

 

307,225

 

 

 

299,564

 

Total liabilities

 

 

307,225

 

 

 

299,564

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Series A preferred stock: 1,000 shares authorized, par value $0.001 per share; 1,000 shares issued and outstanding on June 30, 2020 and 1,000 shares issued and outstanding on December 31, 2019

 

 

4,000

 

 

 

4,000

 

Common stock: 250,000,000 shares authorized, par value $0.0001 per share, 46,203,716 shares issued and outstanding on June 30, 2020 and 46,203,716 shares issued and outstanding on December 31, 2019

 

 

3,532,757

 

 

 

3,532,757

 

Additional Paid-in Capital

 

 

0

 

 

 

0

 

Retained Earnings

 

 

-3,843,898

 

 

 

-3,836,237

 

Total Stockholders' Equity

 

 

-307,141

 

 

 

-299,480

 

Total Liabilities & Equity

 

$ 84

 

 

$ 84

 

 

 
3

Table of Contents

 

Carnegie Development, INC

Income Statement

 

 

 

3 months ended

 

 

6 months ended

 

 

 

30-Jun-20

 

 

30-Jun-19

 

 

30-Jun-20

 

 

30-Jun-19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,064

 

 

 

4,699

 

 

 

7,661

 

 

 

4,865

 

Total operating expenses

 

 

3,064

 

 

 

4,699

 

 

 

7,661

 

 

 

4,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(3,064 )

 

 

(4,699 )

 

 

(7,661 )

 

 

(4,865 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain (loss)

 

 

(3,064 )

 

 

(4,699 )

 

 

(7,661 )

 

 

(4,865 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) attributable to common stock

 

 

(3,064 )

 

 

(4,699 )

 

 

(7,661 )

 

 

(4,865 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

(0.00007 )

 

 

(0.00011 )

 

 

(0.00017 )

 

 

(0.00012 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

 

46,203,716

 

 

 

41,153,156

 

 

 

46,203,716

 

 

 

41,153,156

 

 

 
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Table of Contents

 

Carnegie Development, INC

Cash Flow Statement

 

 

 

3 months ended

 

 

6 months ended

 

 

 

30-Jun-20

 

 

30-Jun-19

 

 

30-Jun-20

 

 

30-Jun-19

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

Net Gain (loss)

 

 

(3,064 )

 

 

(4,699 )

 

 

(7,661 )

 

 

(4,865 )

Adjustments to reconcile Net Income to Net Cash provided by operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

 

 

3,064

 

 

 

4,699

 

 

 

7,661

 

 

 

4,949

 

Accrued Expenses

 

 

(0 )

 

 

(0 )

 

 

(0 )

 

 

(120,000 )

Total Adjustments to reconcile Net Income to Net Cash provided by operations

 

 

3,064

 

 

 

4,699

 

 

 

7,661

 

 

 

(115,051 )

Net cash provided by operating activities

 

 

(0 )

 

 

(0 )

 

 

(0 )

 

 

(119,916 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW from Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH used by Investing Activities

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Paid-in Capital

 

 

0

 

 

 

0

 

 

 

0

 

 

 

120,000

 

NET CASH used by Financing Activities

 

 

0

 

 

 

0

 

 

 

0

 

 

 

120,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH INCREASE (DECREASE) For PERIOD

 

 

(0 )

 

 

(0 )

 

 

(0 )

 

 

84

 

Cash, Beginning

 

 

84

 

 

 

84

 

 

 

84

 

 

 

0

 

Cash, Ending

 

 

84

 

 

 

84

 

 

 

84

 

 

 

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Income taxes

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 
5

Table of Contents

 

Carnegie Development, INC

Statement of shareholders' equity

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Surplus

 

 

 

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

(Deficit)

 

 

Networth

 

Balance, December 31, 2017

 

1000

 

 

$ 4,000

 

 

 

41,153,156

 

 

$ 2,270,117

 

 

$ (3,484,418 )

 

$ (1,210,301 )

Net Income (Loss)

 

 

0

 

 

$ 0

 

 

 

0

 

 

$ 0

 

 

$ (60,000 )

 

$ (60,000 )

Balance, December 31, 2018

 

 

1,000

 

 

$ 4,000

 

 

 

41,153,156

 

 

$ 2,270,117

 

 

$ (3,544,418 )

 

$ (1,270,301 )

Share Issuance

 

 

0

 

 

$ 0

 

 

 

5,050,560

 

 

$ 1,262,640

 

 

$ 0

 

 

$ 1,262,640

 

Net Income (Loss)

 

 

0

 

 

$ 0

 

 

 

0

 

 

$ 0

 

 

$ (291,819 )

 

$ (291,819 )

Balance, December 31, 2019

 

 

1,000

 

 

$ 4,000

 

 

 

46,203,716

 

 

$ 3,532,757

 

 

$ (3,836,237 )

 

$ (299,480 )

Net Income (Loss)

 

 

0

 

 

$ 0

 

 

 

0

 

 

$ 0

 

 

$ (7,661 )

 

$ (7,661 )

Balance, June 30, 2020

 

 

1,000

 

 

$ 4,000

 

 

 

46,203,716

 

 

$ 3,532,757

 

 

$ (3,843,898 )

 

$ (307,141 )

 

 
6

Table of Contents

 

Carnegie Development, Inc.

Notes to Financial Statements as of June 30, 2020

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Carnegie Development Inc., is a publicly trading company under the symbol, “CDJM”

 

The Company Website is www.carnegie-development.com

 

This Company was previously known as:

 

 

·

Escue Energy Inc until July 1, 2019

 

·

State of incorporation changed from Delaware to Nevada in 2015

 

·

eDoorways Corporation, Inc. until 2015

 

·

M Power Entertainment, Inc. until 2007

 

·

GK Intelligent Systems, Inc. until 2005

 

·

Technicraft Financial, Ltd. until 1994

 

·

Incorporated in Delaware in February 1988

 

NOTE 2 - GOING CONCERN

 

The Company has an accumulated deficit of $3,843,898 as on the reporting date and there was no revenue since inception.

 

The Company is currently in the process of acquiring various special purpose entities engaged in developing affordable homes in Texas and is also seeking debt or equity financing to fund its development plan although no financing arrangements are currently in place and the Company can provide no assurance that financing will be available on acceptable terms. However, the management believes that the actions for (a) obtaining the additional funds and (b) implementing its strategic plans, provide the opportunity for the Company to continue as a going concern.

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant account policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and the notes are the representation of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles (“US GAAP”) and have been consistently applied in the preparation of the financial statements.

 

Basis of Presentation

 

This Company uses the enterprise reporting under the provisions of Statement of Financial Accounting Standards (“SFAS”) no. 7. The accompanying financial statements are prepared in accordance with Generally accepted accounting principles (“US GAAP”) in the United States of America.

 

Use of Estimates

 

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses for the reported period. Actual results will differ from those estimates. Included in these estimates are legal risks and exposures, valuation of stock-based compensation, the potential outcome of future tax consequences of events that have been recognized in the financial statement or tax returns.

 

Reclassification

 

Certain amounts in the financial statements of the prior year have been reclassified to conform to the presentation of the current year for comparative purposes.

 

 
7

Table of Contents

 

Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less, when purchased, to be cash equivalents.

 

Concentration of Credit Risks

 

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents.

 

The Company’s cash and cash equivalents accounts are held at financial institutions and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. As on the reporting date, there were no cash balances in excess of federally insured limits.

 

Product Concentration

 

The Company is focusing on developing affordable homes in Texas

 

Fair Value of Financial Instruments

 

The Company accounts, for the assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

 

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

 

 

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data.

 

 

 

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entities own assumptions.

 

The Company did not have any Level 2 or Level 3 assets or liabilities on the reporting date.

 

Additional Disclosures Regarding Fair Value Measurements

 

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, interest payable, advances payable, and notes and convertible promissory notes payable approximate their fair value due to the short maturity of these items.

 

Revenue Recognition

 

The Company recognizes revenue on arrangements in accordance with ASC 606 — Revenue from Contracts with Customers. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured. Since inception and until now, this company has not earned any revenue.

 

Advertising

 

The Company expenses advertising costs as incurred. The Company did not spend any money for the advertising, during the reporting period.

 

 
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Table of Contents

 

Share-Based Payment

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

 

Basic and Diluted Earnings per Share

 

Basic earnings per share are calculated by dividing the income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). Earnings per share calculations are provided as part of the income statement.

 

Property and Equipment

 

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of three years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.

 

Depreciation expense is $0 for the reporting period.

 

Impairment of Long-Lived Assets and Amortizable Intangible Assets

 

The Company follows ASC 360-10, ”Property, Plant, and Equipment,” which established a ”primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Intangible Assets - Goodwill

 

The excess of the purchase price over net tangible and identifiable intangible assets of business acquired is carried as Goodwill on the balance sheet. Goodwill is not amortized, but instead is assessed for impairment at least annually and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Measurement of the impairment loss, if any, is based on the difference between the carrying value and fair value of reporting unit. The goodwill impairment test follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to that excess. There were no material impairments to the carrying value of long-lived assets and intangible assets subject to amortization during the reporting period.

 

Acquisitions

 

The Company recognizes the assets acquired, the liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year from the date of acquisition, the Company may update the value allocated to the assets acquired and liabilities assumed and the resulting goodwill balances as a result of information received regarding the valuation of such assets and liabilities that was not available at the time of purchase. Measuring assets and liabilities at fair value requires the Company to determine the price that would be paid by a third-party market participant based on the highest and best use of the assets or interests acquired. Acquisition costs are expensed as incurred.

 

 
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Table of Contents

 

Fair Value Measurements

 

For certain financial instruments, including accounts receivable, accounts payable, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.

 

The Company follows ASC 820-10, ”Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC 815.

 

ASC 825-10 ”Financial Instruments.” permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The Company chose not to elect the option to measure the fair value of eligible financial assets and liabilities.

 

Borrowings

 

Borrowings are recognized initially at cost, which is the fair value of the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective yield method; any difference between fair value of the proceeds (net of transaction costs) and the redemption amount is recognized as interest expense over the period of the borrowings.

 

Provisions

 

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

 

The Company recognizes the estimated liability to repair or replace products sold still under warranty at the balance sheet date. This provision is calculated based on past history of the level of repairs and replacements.

 

Legal Matters

 

In the ordinary course of our business, we may be subject to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. We are not aware of any material pending legal proceedings to which we are a party or of which any of our properties is the subject.

 

 
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Net Income per Share

 

The Company computes net income (loss) per share in accordance with ASC 260-10, ”Earnings per Share.” The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the ”as if converted” basis.

 

NOTE 4 - COMMON STOCK AND PREFERRED STOCK

 

Common Stock

 

There is currently only one class of common stock. Each share common stock is entitled to one vote.

 

The authorized number of shares of common stock of the Company on the reporting date was 250,000,000 shares with a par value per share of $0.00001. Authorized shares that have been issued and outstanding are 46,203,716 as on the reporting date.

 

Preferred Stock

 

Series A – [1] Designation: A series of preferred stock is hereby designated as Series A Preferred Stock. [2] Liquidation Preference: The holders of the Series A Preferred Stock has no liquidation preference. [3] Dividends: The holders of the Series A Preferred Stock shall not receive dividend. [4] Number: The number of shares is fixed at 1,000. As on the reporting date, 1,000 shares are authorized, issued and outstanding. [5] Conversion: The Series A Preferred Stock is not convertible into shares of common stock. [7] Voting Rights: The Series A Preferred Stock, collectively, are entitled to that number of votes which shall equal Seventy-five percent (75%) of all eligible votes. There is currently 1 shareholder of record of the company’s common stock. These shares are accounted at FMV so as to comply with FASB ASC Topic 718 column (e)

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

 

a)

Officer’s compensation is a related party transaction for the reporting period:

 

 

 

Q2 2020

 

 

Q1 2020

 

 

Q4 2019

 

 

Q3 2019

 

Compensation.

 

$ 0

 

 

$ 0

 

 

$ 0

 

 

$ 0

 

 

 

b)

In July 2019, the Company signed a contract with JMJ development Inc. for all the administrative support. The owner of JMJ Development Inc. is a major shareholder in the Company.

 

NOTE 6 - INCOME TAXES

 

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

 

 
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Table of Contents

 

Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.

 

A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:

 

The components of the deferred tax assets and liabilities are as follows:

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryovers

 

$ 3,843,898

 

 

$ 3,836,254

 

Stock-based compensation

 

 

-

 

 

 

-

 

Other temporary differences

 

 

-

 

 

 

-

 

Total deferred tax assets

 

$ 3,843,898

 

 

$ 3,836,254

 

Valuation allowance

 

$ (3,843,898 )

 

$ (3,836,254 )

Net deferred tax asset

 

$ -

 

 

$ -

 

 

As on the reporting date, the Company had net operating loss carryovers of approximately $3.8 million that may be applied against future taxable income and expires at various dates between 2027 and 2033, subject to certain limitations. The Company has a deferred tax asset arising substantially from the benefits of such net operating loss deduction and has recorded a valuation allowance for the full amount of this deferred tax asset since it is more likely than not that some or all of the deferred tax asset may not be realized.

 

NOTE 7 - RECLASSIFICATIONS

 

Prior year balances are reclassified to conform to the current year presentation.

 

NOTE 8 - CONTINGENCIES

 

The management reviewed with the legal team and concludes that there are no disputes remaining unresolved and hence there are no contingent liabilities as on the reporting date.

 

NOTE 9 - NOTES PAYABLE

 

No notes payable is outstanding as on the reporting date.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following Management’s Discussion and Analysis of Financial Condition and Plan of Operations (“MD&A”) is intended to help you understand our historical results of operations during the periods presented and our financial condition. This MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes to consolidated financial statements and contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

 

Forward-looking statements can be identified by the use of words such as “expects,” “anticipates,” “plans,” “will,” “should,” “could,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results and product and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed, and actual future results may vary materially.

 

Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

 

 

·

The uncertainty of profitability;

 

·

High volatility in the value attributable to our business model and assets;

 

·

Rapid change in the regulatory and legal environment in which we operate with many unknown future challenges to operating our business in a lawful manner or which will require our business or the businesses in which we invest to be subjected to added costs and/or uncertainty regarding the ability to operate;

 

·

Risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; and

 

·

Other risks and uncertainties related to our business plan and business strategy.

 

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully, and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made, and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as may be required under applicable law. We cannot guarantee future results, levels of activity, performance or achievements.

 

 
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Results of Operations during the 3 months ended 30th June 2020 are compared to the same period of 3 months in the previous year 2019

 

There was no revenue during this period

 

Expenses during the current quarter are $3,064, which is a considerable decrease from $4,699 as expenses of the same three months period in the previous year.

 

The net loss for the current quarter is $3,064, which is also a considerable increase from $4,699 as the net loss for the same three months period in the previous year.

 

Liquidity and Capital Resources

 

This company is negotiating the acquisition of quiet a few special purpose entities engaged in the development of affordable homes in Texas.  As part of the negotiations, the company is waiting for the audited financials of the special purpose entities

 

Cash Flow from Operating Activities

 

Net cash from operations for the current quarter is $0 which is the same as in the same period of three months in the previous year.

 

Cash Flow from Investing Activities

 

Net cash provided by investing activities for the current quarter is $0 which is the same as in the same period of three months in the previous year.

 

Cash Flow from Financing Activities

 

Net cash provided by financing activities for the current quarter is $0 which is the same as in the same period of three months in the previous year.

 

Off-balance sheet arrangements

 

The company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

 

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a small reporting company as defined by Rule 12b – 2 of the exchange act and are not required to provide information required under this item.

 

 
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ITEM 4 - CONTROLS AND PROCEDURES

 

With the change in the management, this Company is contracting to receive the administrative support and is planning to provide adequate controls and procedures in place in due course.

 

For the current quarter, the Company has few transactions. The book-keeping and the financial statement preparations were handled by qualified professionals and hence this management believes that there are adequate controls and procedures for the current period covered by this report which are effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 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, as appropriate to allow timely decisions regarding disclosure. It has been determined by our management that the Company has adequate segregation of duties consistent with control objectives and has also adapted various accounting policies in accounting and financial reporting with respect to the requirements and application of GAAP and SEC requirements. The Company has effective controls over the financial disclosure and reporting processes.

 

Management s Annual Report on Internal Control over Financial Reporting

 

The management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. The system of internal control over financial reporting prevent or detect misstatements. All projections such as evaluation of effectiveness to future periods, are provided by well experienced professionals, while the same can be subject to inherent risks such as changing conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

The management conducts quarterly evaluation of the effectiveness of internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework (2013). Based on its evaluation, the Company is constantly requiring the experts to improve the system so as to remove any material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company s annual or interim financial statements will not be prevented or detected on a timely basis.

 

The material weakness is eliminated by segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by experts with adequate oversight by a professional with accounting expertise.

 

In general, there have been no changes in our system of internal controls over financial reporting during the current period of reporting, while the management has been constantly reviewing and eliminating any area of material weakness. The management assertion is adequate internal control over financial reporting.

 

 
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PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Silverland Finance Ltd, Platinum Investment Corporation, Lin Zhou, Jin Wang, and Li Jun (collectively known as plaintiffs) have filed a law suit on (i) Wall007, LLC, (ii) Wall009, LLC, (iii) Timothy Barton, (iv) Sada Cumber, and (v) Carnegie Development, Inc. (collectively known as defendants) on November 15, 2019 in the 44th Judicial District of Texas in Dallas County, Texas, Case No DC-19-18361 and on 25th November, 2019, this company was served with the notice of the court case. On December 30, 2019 this company filed its (i) Plea in Abatement; (ii) Rule 91A Motion to Dismiss Plaintiff’s Original Petition (“Motion to Dismiss”); (iii) Special Exceptions and Original Answer denying the causes of action asserted against CDI, and (iv) Motion for Protective Order and Motion to Stay Discovery Pre-Trial Proceedings. Plaintiffs filed an Amended Petition on 31st January 2020.On 10th April 2020, plaintiffs filed a suggestion of bankruptcy [not for CDI]. No other material events occurred in this case as on 21st March 2020.

 

There are no other pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, or any owner of record or beneficially of more than 5% of any class of voting securities of the Company, is a party.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 2. Unregistered Sales of Securities and Use of Proceeds: None

 

Item 3. Defaults Upon Senior Securities: None

 

Item 4. Mine Safety Disclosures: None

 

Item 5. Other Information: None

 

 
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Item 6. Exhibits.

 

Exhibit No.

 

Description

31.1

Certification of Principal Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2

Certification of Principal Financial Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1

Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002*

32.2

Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.*

________

*Filed Herewith

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Carnegie Development, Inc.

 

Date: August 14, 2020

By:

/s/ Timothy Barton

 

Timothy Barton

Chief Executive Officer

 

 
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