NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – THE COMPANY HISTORY
AND NATURE OF THE BUSINESS
Nukkleus Inc.
(f/k/a Compliance & Risk Management Solutions Inc.) (“Nukkleus” or the “Company”) was formed on July
29, 2013 in the State of Delaware as a for-profit Company and established a fiscal year end of September 30.
The Company is
a financial technology company which is focused on providing software and technology solutions for the worldwide retail foreign
exchange (“FX”) trading industry. The Company primarily provides its software, technology, customer sales and marketing
and risk management technology hardware and software solutions package to FXDD Malta Limited (“FXDD Malta”). The FXDD
brand (e.g., see FXDD.com) is the brand utilized in the retail forex trading industry by FXDD Malta.
Nukkleus Limited,
a wholly-owned subsidiary of the Company, provides its software, technology, customer sales and marketing and risk management technology
hardware and software solutions package under a General Services Agreement ("GSA") to FXDD Malta Limited (“FXDD
Malta”). FXDD Malta is a private limited liability company formed under the laws of Malta. The GSA entered with FXDD Malta
provides that FXDD Malta will pay Nukkleus Limited at minimum $1,600,000 per month. Emil Assentato is also the majority member
of Max Q Investments LLC (“Max Q”), which is managed by Derivative Marketing Associates Inc. (“DMA”). Mr.
Assentato, who is our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and chairman, is
the sole owner and manager of DMA. Max Q owns 79% of Currency Mountain Malta LLC, which in turn is the sole shareholder of FXDD
Malta.
In addition, in
order to appropriately service FXDD Malta, Nukkleus Limited entered into a GSA with FXDirectDealer LLC (“FXDIRECT”),
which provides that Nukkleus Limited will pay FXDIRECT a minimum of $1,575,000 per month in consideration of providing personnel
engaged in operational and technical support, marketing, sales support, accounting, risk monitoring, documentation processing and
customer care and support. FXDIRECT may terminate this agreement upon providing 90 days’ written notice. Currency Mountain
Holdings LLC is the sole shareholder of FXDIRECT. Max Q is the majority shareholder of Currency Mountain Holdings LLC.
In July 2018,
the Company incorporated Nukkleus Malta Holding Ltd., which is a wholly-owned subsidiary. In July 2018, Nukkleus Malta Holding
Ltd. incorporated Nukkleus Exchange Malta Ltd. For Nukkleus Exchange Malta Ltd., the Company is currently exploring obtaining a
license to operate an electronic exchange whereby it facilitates the buying and selling of various digital assets as well as traditional
currency pairs used in FX Trading. The Company’s affiliates have created the electronic exchange that may be used by Nukkleus
Exchange Malta Ltd., however, as the Company does not believe obtaining a license to operate the exchange will be feasible, the
affiliates are searching for alternate uses for the exchange and as such have not sold or transferred the exchange to the Company.
On October 29, 2019, the Company entered
into a Non-Binding Letter of Intent (“LOI”) with XT Energy Group Inc. (OTCQB: XTEG) (“XT”) and Stanley
Hutton Rumbough. The purpose of the LOI was to outline a proposed transaction pursuant to which XT, among other items, would acquire
all intellectual properties of EF Hutton, including its trademark “EF Hutton,” held by Mr. Hutton Rumbough and acquire
all of the issued and outstanding shares of common stock of the Company in consideration of 11 million shares of XT. The purpose
of the transactions was to establish XT in two areas of activity of energy and energy related services and financial services and
financial technology. Following the closing of the transactions, the Company would become a wholly-owned subsidiary of XT, and
XT would change its name to “EF Hutton Group Inc.” The LOI expired in January 2020 and no agreement was reached.
The unaudited condensed financial statements
have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern,
which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. The
Company incurred a net loss for the three months ended December 31, 2019 of $45,301, and had an accumulated deficit and a working
capital deficit of $1,503,052 and $1,092,209, respectively, at December 31, 2019. The Company’s ability to continue
as a going concern is dependent upon the management of expenses and ability to obtain necessary financing to meet its obligations
and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – THE COMPANY HISTORY
AND NATURE OF THE BUSINESS (continued)
We cannot be certain
that such necessary capital through equity or debt financings will be available to us or whether such capital will be available
on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could
result in significant financial operating covenants that would negatively impact our business. In the event that there are any
unforeseen delays or obstacles in obtaining funds through the aforementioned sources, Currency
Mountain Holdings Bermuda, Limited (“CMH”), which is wholly-owned by an entity that is majority-owned by Mr.
Assentato, has committed to inject capital into the Company in order to maintain the ongoing operations of the business.
NOTE 2 – BASIS
OF PRESENTATION
These
interim condensed consolidated financial statements of the Company and its subsidiaries are unaudited. In the opinion of management,
all adjustments (consisting of normal recurring accruals) and disclosures necessary for a fair presentation of these interim condensed
consolidated financial statements have been included. The results reported in the unaudited condensed consolidated financial statements
for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying
unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements
in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).
The
Company’s unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated
subsidiaries. These accounts were prepared under the accrual basis of accounting. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Certain
information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with
U.S. GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction
with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended September 30, 2019 filed with the Securities and Exchange Commission on January 14, 2020. The consolidated
balance sheet as of September 30, 2019 contained herein has been derived from the audited consolidated financial statements as
of September 30, 2019, but does not include all disclosures required by U.S. GAAP.
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The
preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Significant estimates during the three months ended December 31, 2019 and 2018 include valuation
of deferred tax assets and the associated valuation allowances.
Fair value of financial instruments
and fair value measurements
The
Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the
inputs used in measuring fair value. Fair value is the price that would be received to sell an asset and paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques to maximize
the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities are recorded at fair value are
categorized based upon the level of judgment associated with the inputs used to measure their value. Inputs are broadly defined
as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are
as follows:
|
●
|
Level 1-Inputs are unadjusted quoted prices in active markets
for identical assets or liabilities available at the measurement date.
|
|
●
|
Level 2-Inputs are unadjusted quoted prices for similar assets
and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active,
inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
|
|
●
|
Level 3-Inputs are unobservable inputs which reflect the
reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability
based on the best available information.
|
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments
and fair value measurements (continued)
The Company holds investments in digital
currency, consisting of Bitcoins and Ethereum. The Company initially records its investments at cost, and then revalues such assets
at every reporting period and recognizes gain or loss as unrealized gain (loss) on digital currency that are attributable to the
change in the fair value of the digital currency. Unrealized gains and losses and realized gains and losses recognized upon the
sale or transfer of the investments in digital currency are netted and recognized within gain (loss) on digital currency on the
unaudited condensed consolidated statements of operations. The fair value of the investment in digital currency is determined using
the equivalency rate of the digital currency to USD and is included in current assets. The equivalency rates obtained represent
a generally well recognized quoted price in active markets for Bitcoin and Ethereum. The current guidance in U.S. GAAP does not
directly address the accounting for cryptocurrencies.
The following
tables provide the financial assets measured on a recurring basis and reported at fair value on the balance sheets as of December
31, 2019 and September 30, 2019:
|
|
Fair value measurement using
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total at
December 31,
2019
|
|
Investment - digital currency
|
|
$
|
479
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
479
|
|
|
|
Fair value measurement using
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total at
September 30,
2019
|
|
Investment - digital currency
|
|
$
|
168,943
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
168,943
|
|
The investment
in digital currency had a cost of $137,223 net of fees, and a fair value of $168,943 at September 30, 2019. The Company recognized
a gain of $17,888 and a loss of $37,403 for the three months ended December 31, 2019 and 2018, respectively. During the first quarter
of fiscal 2020, the Company transferred substantially all of its investment in digital currency to affiliates related through common
ownership.
The carrying values
of cash, prepaid expense, due from affiliate, due to affiliates, accrued liabilities and accrued liabilities – related party
in the Company’s condensed consolidated balance sheets approximated their fair values as of December 31, 2019 and September
30, 2019 due to their short-term nature.
Concentration
of credit risk
The Company maintains its cash in bank
and financial institution deposits that at times may exceed federally insured limits. At December 31, 2019 and September 30, 2019,
the Company’s cash balances accounts were not in excess of the federally-insured limits.
The following
table summarizes customer revenue concentrations:
|
|
Three Months Ended
December 31,
2019
|
|
|
Three Months Ended
December 31,
2018
|
|
FXDD Malta - related party
|
|
|
100
|
%
|
|
|
100
|
%
|
The
following table summarizes vendor expense concentrations:
|
|
Three Months Ended
December 31,
2019
|
|
|
Three Months Ended
December 31,
2018
|
|
FXDIRECT - related party
|
|
|
100
|
%
|
|
|
100
|
%
|
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
The Company accounts
for revenue under the provisions of ASC Topic 606. The nature of the Company’s contract with its customer relates to the
Company’s services performed for a related party under a GSA.
The transaction
price is determined in accordance with the terms of the GSA and payments are due on a monthly basis. There are multiple services
provided under the GSA and these performance obligations are combined into a single unit of accounting. Fees are recognized as
revenue over time as the services are rendered under the terms of the GSA.
Revenue is recorded
at gross as the Company is deemed to be a principal in the transactions.
Per share data
ASC Topic
260, Earnings per Share, requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the
earnings of the entity.
Basic net
earnings per share are computed by dividing net earnings available to common stockholders by the weighted average number of shares
of common stock outstanding during the period. Diluted net earnings per share is computed by dividing net earnings applicable to
common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur if securities
were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock
that would then share in the Company’s earnings subject to anti-dilution limitations. In a period in which the Company has
a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have
an anti-dilutive impact. For the three months ended December 31, 2019 and 2018, potentially dilutive common shares consist of common
stock issuable upon the conversion of Series A preferred stock (using the if-converted method).
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Per share data
(continued)
The following
is a reconciliation of the basic and diluted net loss per share computations for the three months ended December 31, 2019 and 2018:
|
|
Three Month Ended
December 31,
2019
|
|
|
Three Months Ended
December 31,
2018
|
|
Net loss available to common stockholders for basic and diluted net loss per share of common stock
|
|
$
|
(45,301
|
)
|
|
$
|
(119,902
|
)
|
Weighted average common stock outstanding - basic
|
|
|
230,485,100
|
|
|
|
230,485,100
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Series A preferred stock
|
|
|
-
|
|
|
|
-
|
|
Weighted average common stock outstanding - diluted
|
|
|
230,485,100
|
|
|
|
230,485,100
|
|
Net loss per common share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
For the three
months ended December 31, 2019 and 2018, a total of 1,250,000 shares of common stock from the assumed redemption of the Series
A convertible redeemable preferred stock at the contractual floor of $0.20 per share have been excluded from the computation of
diluted weighted average number of shares of common stock outstanding as they would have had an anti-dilutive impact.
Recently issued accounting pronouncements
Effective October
1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of Topic 718 to include share-based payment transactions for
acquiring goods and services from nonemployees. The guidance also specifies that Topic 718 applies to all share-based payment transactions
in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based
payment awards. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
Other accounting
standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a
material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that
are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash
flows or disclosures.
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4 – ACCRUED LIABILITIES
At December 31, 2019 and September 30, 2019, accrued liabilities
consisted of the following:
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
Professional fees
|
|
$
|
84,591
|
|
|
$
|
73,478
|
|
Directors’ compensation
|
|
|
100,537
|
|
|
|
90,537
|
|
Interest payable
|
|
|
32,416
|
|
|
|
31,479
|
|
Other
|
|
|
4,100
|
|
|
|
2,000
|
|
Total
|
|
$
|
221,644
|
|
|
$
|
197,494
|
|
NOTE 5 – SHARE CAPITAL
Preferred stock
The Company’s
Board of Directors is authorized to issue, at any time, without further stockholder approval, up to 15,000,000 shares of preferred
stock. The Board of Directors has the authority to fix and determine the voting rights, rights of redemption and other rights and
preferences of preferred stock.
Common stock and Series A preferred
stock sold for cash
On June 7, 2016,
the Company sold to CMH 15,450,000 shares of common stock and 100,000 shares of Series A preferred stock for $1,000,000. The common
stock was recorded as equity and the Series A preferred stock was recorded as a long-term liability.
The Series A preferred
stock has the following key terms:
|
1)
|
A stated value of $10 per share;
|
|
2)
|
The holder is entitled to receive cumulative dividends
at the annual rate of 1.5% of stated value payable semi-annually on June 30 and December 31;
|
|
3)
|
The preferred stock must be redeemed at the stated
value plus any unpaid dividends in 5 years.
|
|
4)
|
The Series A preferred stock is non-voting. However,
without the affirmative vote of the holders of the shares of the Series A preferred stock then outstanding, the Company may not
alter or change adversely the powers, preferences or rights given to the Series A preferred stock or alter or amend the Certificate
of Designation except to the extent that such vote relates to the amendment of the Certificate of Designation.
|
|
5)
|
The holders of the Series A preferred stock are not
entitled to receive any preference upon the liquidation, dissolution or winding up of the business of the Company. Each holder
of Series A preferred stock shall share ratably with the holders of the common stock of the Company.
|
The $1,000,000
of proceeds received was allocated to the common stock and Series A preferred stock according to their relative fair values determined
at the time of issuance, and as a result, the Company recorded a total discount of $45,793 on the Series A preferred stock, which
is being amortized to interest expense to the date of redemption. For both the three months ended December 31, 2019 and 2018, amortization
of debt discount amounted to $572.
The terms
of the Series A preferred stock issued represent mandatory redeemable shares, with a fixed redemption date (in 5 years) and the
Company has a choice of redeeming the instrument either in cash or a variable number of shares of common stock based on a formula
in the certificate of designation. The conversion price has a floor of $0.20 per share. As such, all dividends accrued and/or paid
and any accretions are classified as part of interest expense. For both the three months ended December 31, 2019 and 2018, dividends
on redeemable preferred stock amounted to $938.
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 5 – SHARE CAPITAL
(continued)
Common stock and Series A preferred
stock sold for cash (continued)
At December 31,
2019 and September 30, 2019, Series A redeemable preferred stock consisted of the following:
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
Redeemable preferred stock (stated value)
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Less: unamortized debt discount
|
|
|
(3,263
|
)
|
|
|
(3,835
|
)
|
Redeemable preferred stock, net
|
|
$
|
246,737
|
|
|
$
|
246,165
|
|
NOTE 6 – RELATED PARTY
TRANSACTIONS
Services provided
by related parties
From time
to time, Craig Marshak, a director of the Company, provides consulting services to the Company. Mr. Craig Marshak is a principal
of Triple Eight Markets, Inc. All professional services fee payable to Craig Marshak are paid to Triple Eight Markets, Inc. As
compensation for professional services provided, the Company recognized consulting expenses of $0 and $15,000 for the three
months ended December 31, 2019 and 2018, respectively, which have been included in general and administrative expense – related
party on the accompanying unaudited condensed consolidated statements of operations. As of December 31, 2019 and September 30,
2019, the accrued and unpaid services charge related to Craig Marshak amounted to $0 and $10,000, respectively, which have been
included in accrued liabilities – related party on the accompanying condensed consolidated balance sheets.
The Company uses
affiliate employees for various services such as the use of accountants to record the books and accounts of the Company at no charge
to those affiliates, which are considered immaterial.
Office space
from related parties
The Company
uses office space of affiliate companies, free of rent, which is considered immaterial.
Revenue from related party and cost
of revenue from related party
The Company operates
under a GSA with FXDD Malta providing personnel and technical support, marketing, accounting, risk monitoring, documentation processing
and customer care and support. The minimum monthly amount received is $1,600,000.
The Company operates
under a GSA with FXDIRECT receiving personnel and technical support, marketing, accounting, risk monitoring, documentation processing
and customer care and support. The minimum monthly amount payable is $1,575,000.
Both of the above
entities are affiliates through common ownership.
During the three
months ended December 31, 2019 and 2018, services provided to the related party, which was recorded as revenue - related party
on the accompanying unaudited condensed consolidated statements of operations were as follows:
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Service provided to:
|
|
|
|
|
|
|
|
|
FXDD Malta
|
|
$
|
4,800,000
|
|
|
$
|
4,800,000
|
|
|
|
$
|
4,800,000
|
|
|
$
|
4,800,000
|
|
NUKKLEUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 6 – RELATED PARTY
TRANSACTIONS (continued)
Revenue from related party and cost
of revenue from related party (continued)
During the
three months ended December 31, 2019 and 2018, services received from the related party, which was recorded as cost of revenue
- related party on the accompanying unaudited condensed consolidated statements of operations were as follows:
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Service received from:
|
|
|
|
|
|
|
FXDIRECT
|
|
$
|
4,725,000
|
|
|
$
|
4,725,000
|
|
|
|
$
|
4,725,000
|
|
|
$
|
4,725,000
|
|
Due from affiliate
At December 31,
2019 and September 30, 2019, due from related party consisted of the following:
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
NUKK Capital (*)
|
|
$
|
143,776
|
|
|
$
|
3,880
|
|
|
(*)
|
An entity controlled
by Emil Assentato, the Company’s chief executive officer, chief financial officer and chairman.
|
The balance of
due from related party represents investment – digital currency transferred to NUKK Capital.
Management
believes that the related party receivable is fully collectable. Therefore, no allowance for doubtful account is deemed to be
required on its due from related party at December 31, 2019 and September 30, 2019. The Company historically has not
experienced uncollectible receivable from the related party.
Due to affiliates
At December 31,
2019 and September 30, 2019, due to related parties consisted of the following:
|
|
December 31,
2019
|
|
|
September 30,
2019
|
|
Forexware LLC
|
|
$
|
570,271
|
|
|
$
|
570,271
|
|
FXDIRECT
|
|
|
130,323
|
|
|
|
67,056
|
|
CMH
|
|
|
42,000
|
|
|
|
42,000
|
|
FXDD Malta
|
|
|
321,784
|
|
|
|
320,129
|
|
FXDD Trading (*)
|
|
|
471
|
|
|
|
43,185
|
|
FXMarkets (*)
|
|
|
-
|
|
|
|
346
|
|
Total
|
|
$
|
1,064,849
|
|
|
$
|
1,042,987
|
|
|
(*)
|
FXDD Trading
and FXMarkets are both controlled by Emil Assentato, the Company’s chief executive officer, chief financial officer and
chairman.
|
The balances of
due to related parties represent expenses paid by Forexware LLC, FXDIRECT, FXDD Malta, FXDD Trading, and FXMarkets on behalf of
the Company and advances from CMH. The balances due to FXDIRECT and FXDD Malta may also include unsettled funds due related to
the General Service Agreement. The balances due to FXDD Malta and FXDD Trading also include the value of transferred digital assets.
The related parties’
payables are short-term in nature, non-interest bearing, unsecured and repayable on demand.
NOTE 7 – INCOME TAXES
The Company recorded
no income tax expense for the three months ended December 31, 2019 and 2018 because the estimated annual effective tax rate was
zero. As of December 31, 2019, the Company continues to provide a valuation allowance against its net deferred tax assets since
the Company believes it is more likely than not that its deferred tax assets will not be realized.
NOTE 8 – SUBSEQUENT
EVENTS
Management
has evaluated subsequent events through the date of the filing.