NOTES TO (UNAUDITED) CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
1. |
Organization History and Business |
Organization and Business
We were incorporated in the State
of Nevada on July 26, 2013 as a mineral exploration and production company. On May 10, 2021, we issued a press release stating our Company
was changing its market focus – “Management recognizes that our Company needs to move in a new direction and will pursue acquisition
opportunities that can benefit private companies through our Company’s public status. The benefit to our Company and its stockholders
will be built on acquisitions based on growth and revenue of targeted acquisitions.”
We have restructured our Company
as a holding company seeking transactions on a managed basis, acquiring controlling interest in acquisition targets as subsidiaries of
our Company. Using a holding company strategy, we will be able to mitigate risk while making multiple acquisitions. All targeted acquisitions
must be audited or auditable. We will make either majority or minority investments in companies that meet its investment criteria.
As a holding company, we will
not manufacture anything, sell any products or services, or conduct any other business operations. Our purpose is to hold the controlling
stock or membership interests in other companies.
Our Company is taking an agnostic
approach regarding industry, in almost every contemplated acquisition, we will retain the management team of the acquired company. The
subsidiary’s own management will run the day-to-day business, as this retention of management post transaction will maintain
operational continuity. Our Company’s management will be responsible for overseeing how the subsidiaries are run and assisting their
management as needed.
Our Company is seeking opportunities
in mature private companies that are in transition or growth mode.
We have begun sourcing opportunities
through several third-party organizations. Transactions will be subject to industry standard due-diligence requirements. Of course, no
two acquisitions are the same, so the due diligence process will vary from one situation to the next. In general, however, there are up
to five types of due diligence; (i) Business; (ii) Accounting; (iii) Legal; (iv) Valuation and (v) Environmental, that will need to be
completed as part of the process for any proposed transaction.
Using this new strategy, on December
9, 2021 we executed a Memorandum of Understanding (the “MOU”) with a Singapore based holding company whose subsidiaries are
engaged principally in foreign exchange remittance services. In conducting our due diligence, the acquisition target was unable to supply
the information we required and, as a result, the MOU expired August 31, 2022.
2. |
Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited interim
financial statements have been prepared by us pursuant to the rules and regulations of the United States Securities Exchange Commission
(“SEC”). Certain information and disclosures normally included in the annual financial statements prepared in accordance with
the accounting principles generally accepted in the Unites States have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been
included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with
our Company’s historical financial statements and related notes filed with the SEC including our Annual Report on Form 10-K for
the fiscal year ended March 31, 2022 filed on June 28, 2022. The results of operations for the six months ended September 30, 2022, are
not necessarily indicative of the results that may be expected for the full year.
Going Concern Considerations
The accompanying financial statements
have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of
our Company as a going concern. We currently have no revenues, have incurred net losses, and have an accumulated deficit of $1,193,294
as of September 30, 2022. Effective December 4, 2020, we entered into a Credit Line Agreement with Mambagone, S.A de C.V. (“Mambagone”)
which allowed for advances totaling $1,050,000. However, after advancing us $260,000 under the terms of the Credit Line Agreement, Mambagone
made no further advances. See Note 5 for further information. As such, there is uncertainty whether our capital needs over the next 12
months can be met and, as a result, there is reasonable doubt about our ability to continue as a going concern for one year from the date
of this report. If we are unable to obtain adequate capital to meet our working capital needs, we could be forced to cease operations.
The continuation of our Company
as a going concern is dependent upon continued financial support from our stockholders, the ability to raise equity or debt financing,
and the attainment of profitable operations from any future business we may acquire. There are no assurances that we will be successful
in obtaining sufficient capital to continue as a going concern.
The accompanying financial statements
do not include any adjustments that might be necessary if our Company is unable to continue as a going concern
Fair Value of Financial Instruments
Fair value is defined as the exchange
price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance
provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market
participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our
Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would
use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:
|
Level 1 |
- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|
Level 2 |
- Include other inputs that are directly or indirectly observable in the marketplace. |
|
Level 3 |
- Unobservable inputs which are supported by little or no market activity. |
The fair value hierarchy also
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Fair value estimates discussed
herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2022 and March
31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial
instruments include cash, prepaid expense, accounts payable, and accrued expenses. Fair values for these items were assumed to approximate
carrying values because they are short-term in nature or they are payable on demand. Fair values for derivative liabilities were determined
under level 2 since inputs used are either directly or indirectly observable in the marketplace.
Derivative Financial Instruments
– We account for convertible debt with conversion features representing embedded derivative liabilities in accordance with ASC 815,
Derivatives and Hedging. ASC 815-15-25-1 requires that embedded derivative instruments be bifurcated and assessed on their issuance date
and measured at their fair value for accounting purposes. In determining the appropriate fair value, we use the Black-Scholes option valuation
method, resulting in a reduction of the initial carrying amount of the notes as unamortized debt discount. The unamortized discount is
amortized over the term of each note using the effective interest method.
The fair value of derivative instruments
is recorded and shown separately under liabilities. Changes in the fair value of derivative liabilities are recorded in the consolidated
statement of operations under non-operating income (expense).
We evaluate each of our financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is
then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based
derivative financial instruments, we use a weighted average Black-Scholes-Merton option-pricing model to value the derivative instruments
at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within
twelve months of the balance sheet date.
Basic and Diluted Net Loss Per Share
We compute net income (loss) per
share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share
(“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders
(numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted
method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2022 and 2021, potentially
dilutive shares related to our convertible notes payable and Series A Preferred Stock have not been included in the diluted loss per share
computations as they would be antidilutive for the periods presented.
New Accounting Pronouncements
We have reviewed all recently
issued accounting pronouncements and determined that they were either disclosed in our most recently filed Form 10-K or, based on current
operations, are not believed to have a material impact on our financial statements.
As of September 30, 2022, equipment
consists of a laptop computer. Depreciation is being calculated on a straight-line basis over a three-year period and was $188 for both
six-month periods ended September 30, 2022 and 2021.
4. |
Related Party Transactions |
Payable to Stockholder
Due to related party of $167,469
as of September 30, 2022 consists of $160,719 in advances by C2C Business Strategies (“C2C”), a large stockholder, to cover
certain operating expenses and $6,750 owed to one of our outside Directors for Directors fees. As of March 31, 2022, the balance of $54,582
consists of $52,332 in advances from C2C and $2,250 owed to the outside Director. From time to time, we have received advances from certain
of our large stockholders, which we reported on our Balance Sheets under the caption Due to related parties. The advances bear no interest
and are repayable on demand.
Under an April 1, 2020 Executive
Employment Agreement, as amended, we retained the services of Mr. James Jenkins, our CEO and Director, by and through C2C. We expensed
$72,000 for Mr. Jenkins services during each of the six-month periods ended September 30, 2022 and 2021.
Notes payable consists of the following at September
30, 2022 and March 31, 2022:
Schedule of notes payable | |
| | |
| |
| |
September 30, 2022 | | |
March 31, 2022 | |
Non-Related Parties: | |
| | | |
| | |
Advances under unsecured credit line agreement | |
$ | 260,000 | | |
$ | 260,000 | |
Less debt discount on amounts borrowed | |
| – | | |
| (55,581 | ) |
Subtotal — non-related parties | |
| 260,000 | | |
| 204,419 | |
Less current portion | |
| (260,000 | ) | |
| (204,419 | ) |
Long-term portion | |
$ | – | | |
$ | – | |
| |
| | | |
| | |
Related Party: | |
| | | |
| | |
Unsecured promissory note | |
$ | 25,000 | | |
$ | 25,000 | |
Subtotal — related party | |
| 25,000 | | |
| 25,000 | |
Less current portion | |
| (25,000 | ) | |
| (25,000 | ) |
Long-term portion | |
$ | – | | |
$ | – | |
NON-RELATED PARTIES
Unsecured Credit Line Agreement
Effective December 4, 2020, we
entered into a Credit Line Agreement with Mambagone (“the LOC”) under which Mambagone agreed to advance our Company a total
of $1,050,000
on various dates specified in the LOC. Each advance under the LOC bears interest at 8%
per annum and matures, along with all accrued and unpaid interest, on July 31, 2022. To date, Mambagone has advanced us $260,000.
Despite repeated requests on our part for additional advances as required by the LOC, Mambagone made no further advances. Mambagone’s
lack of performance under the LOC created an event of default by the lender and we sent a letter to Mambagone, via Federal Express, dated
December 15, 2021 notifying them of such default and of our termination of the LOC which letter was received on December 31, 2021. According
to the terms of the LOC, a default by the lender results in a portion of the advances being considered to not be due and payable and
shall be considered as forgiven or fully discharged. Under the guidance of ASC 405-20-15-1, derecognition of a debt that has not been
paid can only occur if the debtor is legally released from the debt, either judicially or by the creditor. We have been unable to contact
Mambagone and, as such, have not yet met the criteria of the relevant guidance but are attempting to do so. Once met, we expect to extinguish
at minimum a portion of the debt. Until such time, our obligation to Mambagone is in default.
Mambagone
has the right, but not the obligation, at any time, to convert all or any portion of the outstanding principal amount and accrued interest
into fully paid and non-assessable shares of our common stock. The conversion price shall be equal to seventy-five percent (75%) of the
average of the closing price of our common stock during the ten (10) trading days immediately preceding the conversion date. We determined
that the conversion provisions of the Mambagone LOC contain an embedded derivative feature and we valued the derivative feature separately,
recording debt discount and derivative liabilities in accordance with the provisions of the advances. See Note 6. We are amortizing the
debt discount on a straight-line basis over the term of the advances. For the six months ended September 30, 2022 and 2021, we recorded
amortization of debt discount of $55,581 and $14,123, respectively. Interest expense in connection with this debt was $10,429 for both
of the six-month periods ended September 30, 2022 and 2021.
RELATED PARTY
Unsecured Promissory Note
On March 16, 2021, we issued an
unsecured promissory note to one of our large stockholders in the amount of $25,000. The note bears interest at 10% per annum and is payable
on demand. No demand has been made for payment against this note. Interest expense in connection with this note was $1,253 and $1,355
for the six months ended September 30, 2022 and 2021, respectively.
6. |
Derivative Liabilities |
As stated in Note 5, Notes Payable,
we determined that the advances under the unsecured credit line agreement each contained an embedded derivative feature in the form of
a conversion provision which was adjustable based on future prices of our common stock. In accordance with ASC 815-10-25, each derivative
feature was initially recorded at its fair value using the Black-Scholes option valuation method and then re-valued at each reporting
date, with changes in the fair value reported in the statements of operations. Derivative liabilities are classified in the balance sheet
as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the
balance sheet date.
The following table represents
our derivative liability activity for the six months ended September 30, 2022:
Schedule of derivative liability activity | |
| | |
Balance at March 31, 2022 | |
$ | 180,181 | |
Derivative income | |
| (11,956 | ) |
Balance at September 30, 2022 | |
$ | 168,225 | |
The fair value of the derivative
features of the convertible notes were calculated using the following assumptions:
Schedule of assumptions used to calculate derivative features of convertible notes |
|
|
|
|
|
Six Months Ended September 30, 2022 |
|
Expected term in years |
|
|
0.5 |
|
Risk-free interest rate |
|
|
3.95% |
|
Annual expected volatility |
|
|
150% |
|
Dividend yield |
|
|
0.00% |
|
Risk-free interest rate: We use the risk-free
interest rate of a U.S. Treasury Bill with a similar term on the date of the issuance.
Volatility: We estimate the expected volatility
of the stock price based on the corresponding volatility of our historical stock price for a period consistent with the convertible notes'
expected terms.
Dividend yield: We use a 0% expected dividend
yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.
Expected term: The remaining term is based
on the estimated remaining contractual term of the convertible notes.
Preferred Stock
We are authorized to issue 100,000,000
shares of our $0.001 par value preferred stock and have designated three (3) series of preferred stock whose rights are described below:
Series A Preferred Stock – we
have designated 5,000,000 Series A preferred shares. The Series A preferred ranking is senior to common shares, no dividends are payable,
and each share is convertible into common shares at a rate of 15 common shares for each Series A preferred share. Each Series A preferred
share is entitled to 20 votes on all matters subject to a vote of stockholders. There are 2,500,000 Series A preferred shares issued and
outstanding at both September 30, 2022 and March 31 2022.
Series B Preferred Stock – we
have designated 5,000,000 Series B preferred shares. The Series B preferred ranking is senior to common stock, no dividends are payable,
and each share is convertible into common shares at a rate of 10 common shares for each Series B preferred share. Each Series B preferred
share is entitled to 10 votes on all matters subject to a vote of stockholders. No Series B preferred shares are issued and outstanding
at either September 30, 2022 or March 31, 2022.
Series C Preferred
Stock – we have designated 5,000,000 Series C preferred shares. The Series C preferred ranking is senior to common stock,
no dividends are payable, and each share is convertible into common shares at a rate of 30 common shares for each Series C preferred share.
The Series C shares have no voting rights. No Series C preferred shares are issued and outstanding at either September 30, 2022 or March
31, 2022.
Common Stock
We are authorized to issue 500,000,000
shares of our $0.001 par value common stock and each holder is entitled to one (1) vote on all matters subject to a vote of stockholders.
There was no common stock activity
during the six months ended September 30, 2022. During the six months ended September 30, 2021, we issued 201,451 shares of our common
stock to a vendor for services. These shares had been recorded in “Common Stock to be Issued” at March 31, 2021. We also issued
1,395,348 shares to the same vendor under the terms of a Services Agreement dated April 16, 2021. See Note 8.
On April 16, 2021, we entered
into a Services Agreement with Cicero Transact Group, Inc. Under the Agreement, Cicero has agreed to rebuild our website and social media
sites and help identify and introduce potential acquisition targets to our Company. Once an acquisition is completed, Cicero has agreed
to provide, at their sole discretion, any number of post-acquisition services listed in the Agreement. As consideration for the services,
we issued Cicero 1,395,348 shares of our restricted common stock which were vested on the date of the Agreement. We valued the shares
at $5,581, based on a valuation of our Company done by an independent third-party, and recorded a general and administrative expense of
that amount during the three-month period ended June 30, 2021.