Special Note Regarding Forward-Looking Statements
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR
PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN
THIS QUARTERLY REPORT.
This quarterly report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
other Federal securities laws and is subject to the safe-harbor created by such
Act and laws. Forward-looking statements may include statements regarding our
goals, beliefs, strategies, objectives, plans, including product and technology
developments, future financial conditions, results or projections or current
expectations. These forward-looking statements involve known or unknown risks,
uncertainties and other factors that may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as “may,” “should,” “potential,” “continue,” “expects,”
“anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar
expressions. These statements are based on our current beliefs, expectations,
and assumptions and are subject to a number of risks and uncertainties. Although
we believe that the expectations reflected-in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Our actual results may differ materially from those anticipated
in these forward-looking statements. These forward-looking statements are made
as of the date of this report, and we assume no obligation to update these
forward-looking statements whether as a result of new information, future
events, or otherwise, other than as required by law. In light of these
assumptions, risks, and uncertainties, the forward-looking events discussed in
this report might not occur and actual results and events may vary significantly
from those discussed in the forward-looking statements.
Implications of Being an
We are an
Securities Act of 1933, as amended, or the Securities Act. We will continue to
be an emerging growth company until: (i) the last day of our fiscal year during
which we had total annual gross revenues of at least
last day of our fiscal year following the fifth anniversary of the date of the
first sale of our common stock pursuant to an effective registration statement
under the Securities Act; (iii) the date on which we have, during the previous
3-year period, issued more than
the date on which we are deemed to be a large accelerated filer, as defined in
Section 12b-2 of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, which means the market value of our common stock that is held by
As an emerging growth company, we are exempt from:
• Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation. • The requirement to provide, in any registration statement, periodic report or other reports to be filed with the
Securities and Exchange Commission, or the "Commission" or "SEC", certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement. • Compliance with new or revised accounting standards until those standards are applicable to private companies; • The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, to provide auditor attestation of our internal controls and procedures; and • Any Public Company Accounting Oversight Board, or "PCAOB", rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public. 19
We have elected to use the extended transition period for complying with new or
revised accounting standards under Section 102(b)(1) of the Jumpstart Our
Business Startups Act.
We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange
Act. As a smaller reporting company, we are not required to provide selected
financial data pursuant to Item 301 of Regulation S-K, nor are we required to
comply with the auditor attestation requirements of Section 404(b) of the
Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified
executive compensation disclosure under Item 402 of Regulation S-K.
Renewable Energy Corp.
company as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS
Act”). We were established to build upon community assets through real estate,
financial services and technology. Our experienced team has dedicated their
careers to constructing high-quality mixed-use, multifamily residential, and
commercial properties in top metropolitan regions as well as have deep roots in
technology and finance industries. Our vision is to integrate our real estate
development proprietary business model across multiple verticals in finance,
technology, and real estate. This will provide long-term value to investors
while staying true to our mission of enhancing communities.
Our focus is to invest primarily in real estate, technology and finance
have oversight and policy-making authority over us, including responsibility for
governance, financial controls, compliance and disclosure.
Capital Advisors, LLC
membership interests in six commercial, retail, multifamily and mixed-use
properties, in revitalized areas in the
properties are both partially occupied and under continued development. As of
the year ending
Registration offering of up to
partnerships between the public and private sector to generate both business
interest and business activity in low-income neighborhoods that have gone
unnoticed by the development community at large while repairing and mending
relationships in these underserved communities. Our Company intends to work with
other real estate developers, as well as local and state government agencies to
implement the community’s vision for our projects. We are confident in our
ability to deliver community-centric projects because we have built a team that
understands the challenges facing underserved communities from living and
working in them. Our diverse team is our strength. Towards this goal, on
Capital Advisors, LLC
membership interests in six commercial, retail, multifamily and mixed-use
properties, in revitalized areas in the
properties are both partially occupied and under continued development.
Hills Capital Advisors LLC
Director and Board Member as disclosed in our 8-K of
Our Company is graciously endowed with an expert management team that has
extensive experience in acquiring, developing, constructing, and managing
high-quality multifamily, and retail properties in attractive markets throughout
the Mid-Atlantic and
aspects of the real estate development cycle including land development,
design-build, property operations, and site redevelopment. In addition to the
ownership of our operating property portfolio,
develop and build desirable properties for its own account and through ventures
with affiliated and unaffiliated partners.
suburban markets and our mission is to integrate our proprietary business model
by providing sustainable, long-term value to investors as we strive to provide
opportunities to improve neighborhoods with residential, commercial, and
industrial development projects while designing architecturally pleasing, clean,
energy-efficient communities and commercial structures.
Properties Acquired by the
estate. The Consideration for this transaction on the part of the Company was
the issuance of 17,750,000 common shares and 1,000,000 Preferred shares with 1:1
conversion, and 30:1 voting ratio. The stock value of the investment is
Ownership The Company's Investment Venture Interest March 31, 2022
Red Hills Capital Advisors: Fort Washington Livingston Pace, LLC (1) 24.50% $ 5,066,359 Suitland Holdings Pace A and Pace B, LLC 24.50% 2,236,430 Velocity Ventures, LLC 49.00% 302,482 Marlow Heights Branch Pace, LLC 24.50% 671,576 Capheights Hill Pace, LLC 24.50% 134,750 Capheights Central Dev, LLC (2) 24.50% 5,320,331 Capheights Velocity Services, LLC 24.50% 465,872 COZ Manager,LLC (2) 12.25% 4,273,439 Total $ 18,471,239
and mixed-use development projects. Our acquisition strategy is based on
acquiring quality, well-positioned real estate in markets with robust growth and
demographics, anchored by strong tenants. The
remains strong as a result of increased government spending. These properties
are located in a market that is thriving and generating robust job growth with
significant demand for housing.
We anticipate acquiring several properties and expanding into other markets.
the Mid Atlantic, Southeast, and
well-positioned real estate in markets with robust growth and demographics,
anchored by strong tenants. Our aim is to approach acquisition and development
thoughtfully by developing and constructing high-quality, well-located projects
at cost, for its stabilized portfolio or to sell with full market value-added
for a profit. The Company also plans to partner with other developers to build
or acquire fractional or membership interests in economically viable projects.
marketplace while providing long-term value. Our ability to acquire and develop
single and multi-family rental properties that can either be held by us or sold
to regional and national companies, further strengthens our market standing. We
believe our strategy of working with federal, state, and local governments, as
well as community leaders and other developers in our principal geographic areas
and our targeted areas for expansion, will provide us with a diverse product
portfolio and an opportunity to increase our overall market share and value
offering potential investors an opportunity to participate in the process of
investing in real estate projects that could improve the quality of life for
residents of low-income neighborhoods, via a publicly traded company. The
Company intends to work with other real estate developers, as well as local and
state government agencies to complete its projects in these communities.
redeveloper targeting economic growth and opportunity zones in secondary and
tertiary value-added markets. The Company is primarily focused on opportunity
zones in an effort to bring commerce and affordable housing to underserved
improve low-income neighborhoods for residential, commercial, and industrial
opportunities through government incentives, long-term partnerships, and
agreements. Our mission is to rebuild depressed, underserved communities,
improve the quality of life in those markets, and provide our investors with an
opportunity to profit. We intend to accomplish this by focusing on partnerships
between the public and private sector to generate both business interest and
business activity in low-income neighborhoods that have gone unnoticed by the
development community at large while repairing and mending relationships in
these underserved communities.
The Company is not a “shell company,” since its filing of its Form 10 with the
it has formal operations, emplaced Board, an Audit Committee and actively
pursuing several current projects, despite having no significant cash on hand
since the change in control of
requirements of the Exchange Act for so long as it is subject to those
The Company’s current management believes the advantages of being a publicly
held corporation will enable it to project further and faster growth during this
market downturn. The Company’s principal business objective for the next 12
months and beyond such time will be to achieve long-term growth potential
through community-private partnerships within different US jurisdictions.
During the remainder of the fiscal year and beyond such time, we anticipate
incurring costs related to the filing of Exchange Act reports, and
investigating, analyzing, and consummating further local partnerships. We
believe we will be able to meet these costs through the use of funds to be
loaned by or invested in us by our stockholders, management or other investors.
Our management and stockholders have indicated their intent to advance funds on
behalf of the Company as needed in order to accomplish its business plan and
comply with its Exchange Act reporting requirements; however, there are no
agreements in effect between the Company and our management and stockholders
specifically requiring that they provide any funds to the Company. As a result,
there are no assurances that such funds will be advanced or that the Company
will be able to secure any additional funding as needed.
While the Company has limited assets and no revenues to date, the Company has an
exceptionally experienced management in finance, politics, and business and has
unrestricted flexibility in seeking, analyzing and participating in potential
urban renewal opportunities in the area of community redevelopment. In its
efforts to analyze potential ventures, the Company will consider the following
kinds of factors:
(a) potential for growth, indicated by local need and assigned local, state or
federal funding and incentives towards urban renewal in that given locale.
(b) competitive position as compared to other firms of similar size and
experience within the industry segment as well as within the industry as a
(c) strength and diversity of current management.
(d) capital requirements and anticipated availability of required funds, to be
provided by the Company or from operations, through ventures or similar
arrangements, sales of securities, or from other sources.
(e) the extent to which the business opportunity can be advanced; and
In applying the foregoing criteria, not one of which will be definitive,
management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available urban renewal opportunities may occur in many different
locales, and at various stages of development, all of which will make the task
of comparative investigation and analysis of such urban renewal opportunities
extremely difficult and complex. Due to the Registrant’s limited capital
available for investigation, the Registrant may not discover or adequately
evaluate adverse facts about the opportunity to be engaged. In addition, we will
be competing against other entities that possess greater financial, technical,
and managerial capabilities for identifying and completing new projects.
In evaluating a prospective new project, we will conduct as extensive a due
diligence review of potential targets as possible given our dependence upon the
ever-changing city, state, and federal funding initiatives for urban
redevelopment and our limited financial resources. We expect that our due
diligence will encompass, among other things, meetings with the local government
officials and inspection of its neighborhoods and infrastructure, as necessary,
as well as a review of financial, government statistical data and other
information which is made available to us. This due diligence review will be
conducted primarily by our management or by unaffiliated third parties we may
engage, including but not limited to attorneys, accountants, consultants or
other such professionals. The costs associated with hiring third parties as
required to complete a new project may be significant and are difficult to
determine as such costs may vary depending on a variety of factors, including
the locale, amount of time it takes to complete a new project, the location of
the project, and the size and complexity of the business of the project. As of
the date of this filing, the Company has identified several potential business
opportunities. The Company is currently in discussions with several but not
limited to developers, real estate owners, property management companies in
acquire, design, and or redevelop properties.
Our limited funds will likely make it difficult to conduct a complete and
exhaustive investigation and analysis of a target project at this early stage
without bringing on strategic local partners, which is part of our business
plan, see infra. As a general rule, it normally requires approximately 3-6
months to carry out due diligence and meeting with local and state officials,
and approximately 9-12 months to follow through to completion. The estimated
costs for this period and need are anywhere from approximately
The time and costs required to select and evaluate a target project and to
structure and complete a new project cannot presently be ascertained with any
degree of certainty. The amount of time it takes to complete a new project, the
location of the project, the size and complexity of the project neighborhood,
the scope of city, state, and federal regulations, and whether funds may be
raised contemporaneously with the transaction are all factors that determine the
costs associated with completing a new project transaction. The time and costs
required to complete a new project can be estimated once a new project target
has been identified. Any costs incurred with respect to the evaluation of a
prospective new project that is not ultimately completed will result in a loss
Through information obtained from industry professionals including attorneys,
architects, developers, appraisers, accountants, commercial and residential real
estate brokers, builders, engineers as well as other consultants with experience
in the urban redevelopment sphere, there are literally thousands of new
potential projects, and the aim of the management is to filter through these for
the most reasonably achievable urban renewal projects.
We are and will continue for the foreseeable future to be, an insignificant
participant on the national level of public-private urban renewal.
Nearly all similar companies have significantly greater financial resources;
consequently, we will be at a competitive disadvantage in identifying possible
urban renewal opportunities and successfully completing a new project. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful new project.
Some of our officers are engaged in outside business activities, and as such
will be dividing their time amongst these entities and anticipate that they will
devote less than full time to our business until the successful project has been
identified. The specific amount of time that management will devote to the
Company may vary from week to week or even day to day, and therefore the
specific amount of time that management will devote to the Company on a weekly
basis cannot be ascertained with any level of certainty. In all cases,
management intends to spend as much time as is necessary to exercise their
fiduciary duties as an officer and/or director of the Company and believes that
they will be able to devote the time required to consummate a new project
transaction as necessary. We expect no significant changes in the number of our
employees other than such changes, if any, incident to a new project. We are,
however, strengthening our corporate structure, and on
and to the Audit Committee, On
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in
for quarterly financial statement presentation and in accordance with Form 10-Q.
Accordingly, they include all of the information and footnotes required in
quarterly financial statements. In the opinion of management, the unaudited
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position and
results of operations and cash flows. The results of operations presented are
not necessarily indicative of the results to be expected for any other interim
period or for the entire year.
These unaudited financial statements should be read in conjunction with our
10-K, filed with the
23 Going Concern
Due to the uncertainty of our ability to meet our current operating and capital
expenses, our independent auditors included an explanatory paragraph in their
report on the audited financial statements for the year ended
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.
Our unaudited condensed financial statements have been prepared on a going
concern basis, which assumes the realization of assets and settlement of
liabilities in the normal course of business. Our ability to continue as a going
concern is dependent upon our ability to generate profitable operations in the
future and/or to obtain the necessary financing to meet our obligations and
repay our liabilities arising from normal business operations when they become
due. The outcome of these matters cannot be predicted with any certainty at this
time and raise substantial doubt that we will be able to continue as a going
concern. Our unaudited financial statements do not include any adjustments to
the amount and classification of assets and liabilities that may be necessary
should we be unable to continue as a going concern. There is no assurance that
our operations will be profitable. Our continued existence and plans for future
growth depend on our ability to obtain the additional capital necessary to
operate either through the generation of revenue or the issuance of additional
debt or equity. Our future growth is dependent upon achieving further
development projects and execution of development projects, engaging other
company related opportunities, management of operating expenses, and the ability
of the Company to obtain the necessary financing to fund future obligations, and
upon profitable operations.
Since its inception on
The aggregated loss is related to the capital invested in advances real estate
membership interest, which has future positive cash flow after completion and
stabilization. See note 5.
Authorized Shares Common Stock
The Company is authorized to issue up to 500,000,000 shares of common stock, par
holder to one vote per share on all matters submitted to a stockholder vote. All
shares of common stock are non-assessable and non-cumulative, with no
pre-emptive rights. As of
issued and outstanding.
The Company Authorizes and hereby creates 5,000,000 (Five Million) shares of
preferred stock, with conversion rights of 1:1 (one to one), but with 30:1
voting rights. As of
issued and outstanding.
Commitments and Contingencies
Note, Securities Purchase Agreement, and ancillary agreements (collectively, the
“Agreements”) with Leonite Capital, LLC Per the terms of the Agreements with
was tendered, which is open with right of redemption for one year. Prior to the
maturity date of the Note, the Company at its option, has the right to redeem in
cash in part or in whole, the amounts outstanding. Should the Fund wish to
convert this debt into equity, the conversion price shall be sixty-five percent
of the lowest Intraday price during the previous 21 days. Pursuant to the
Agreements, the Company has earmarked the net proceeds for an immediate cash
infusion for normative working capital purposes and capital expenditures.
engage in any short-selling or hedging of our Common Stock during any time. The
foregoing is a summary description of certain terms of the Agreements. For a
full description of all terms, please refer to the original Agreements which are
Exhibits to this filing.
Secured Note, by 1,500,000 million shares of CRDV stock (reserved in bank’s
name, subject to loan and stock pledge agreement with
the terms of the Agreements with
borrow up to
against the collateral of 1,500,000 shares of CRDV stock and the President of
the company Mr.
The Private Note has a 7.5% fixed rate that matures on
the loan fees. For a full description of all terms, please refer to the original
Agreements which are Exhibits to this filing.
We will require additional financing to implement our business plan, which may
include joint venture projects and debt or equity financings. The nature of this
enterprise and constraint of positive cash flow places debt financing beyond the
creditworthiness required by most banks or typical investors of corporate debt
until such time as economically viable profits and losses can be demonstrated.
Therefore, any debt financing of our activities may be costly and result in
substantial dilution to our stockholders.
Future financing through equity investments is likely to be dilutive to existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, and the issuance of
warrants or other derivative securities, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital and
financing, including investment banking fees, legal fees, accounting fees, and
other costs. We may also be required to recognize non-cash expenses in
connection with certain securities we may issue, such as convertible notes and
warrants, which will adversely impact our financial condition.
Our ability to obtain needed financing may be impaired by such factors as the
capital markets, which could impact the availability or cost of future
financings. If the amount of capital we are able to raise from financing
activities, together with our revenue from operations, is not sufficient to
satisfy our capital needs, even to the extent that we reduce our operations
accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms
satisfactory to us, or at all. We do not have any arrangements in place for any
future financing. If we are unable to secure additional funding, we may cease or
suspend operations. We have no plans, arrangements, or contingencies in place in
the event that we cease operations.
Results of Operations
For the Three Months Ended
The Company has not brought in revenues to date.
For the three months ended
resulting in a decrease of
Net Operating loss
Net Operating loss was
the three months ended
25 Net loss
Net loss was
total decrease of
Other Income/(Expense) increased to
related to the swings in derivative fair values from
by an increase in interest expense of
Liquidity and Capital Resources
The Company’s cash and cash equivalents balance were
Net cash used in the Company’s operating activities during the three months
change was primarily due to decrease in net loss, general administration
expenses and increased prepaid expenses of
decrease in accounts payable of
interest payable between the two periods.
Net cash used in investing activities for the quarter ended
Net cash used in financing activities for the quarter ended
Since its inception on
execution, management of operating expenses and the ability of the Company to
obtain the necessary financing to fund future obligations, and upon profitable
Historically, we have financed our cash flow and operations from contributions
of our majority shareholder and by raising equity and convertible loans.
company as currently planned, covering our operating costs and maintaining our
regulatory reporting and filings. Should our revenues not materialize as
expected, or if our costs and expenses prove to be greater than we currently
anticipate, or should we change our current business plan in a manner that will
increase or accelerate our anticipated costs and expenses; we may need funds in
excess of that currently planned.
It is our current policy that all transactions between the Company and our
officers, directors and their affiliates will be entered into only if such
transactions are approved by a majority of the existing directors, are approved
by vote of the stockholders, or are fair to us as a corporation as approved or
ratified by our Board of Directors or authorized officer. We will conduct an
appropriate review of all related party transactions on an ongoing basis, and,
where appropriate, we review the potential of conflicts of interest.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Estimates
Use of Estimates
In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the dates
of the consolidated financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Significant estimates and
assumptions made by management include, but are not limited to, revenue
recognition, the allowance for bad debt, useful life of fixed assets, income
taxes and unrecognized tax benefits, valuation allowance for deferred tax
assets, and assumptions used in assessing impairment of long-lived assets.
Actual results could differ from those estimates.
using the modified retrospective transition method with a cumulative effect
adjustment to accumulated deficit as of
modified its policy on accounting for leases as stated below. As described under
“Recently Adopted Accounting Pronouncements,” below, the primary impact of
adopting ASC 842 for the Company was the recognition in the consolidated balance
sheet of certain lease-related assets and liabilities for operating leases with
terms longer than 12 months. The Company elected to use the short-term exception
and does not records assets/liabilities for short term leases as of
Revenue from Contracts with Customers (Topic 606), which supersedes all existing
revenue recognition requirements, including most industry-specific guidance.
This new standard requires a company to recognize revenues when it transfers
goods or services to customers in an amount that reflects the consideration that
the company expects to receive for those goods or services. The FASB
subsequently issued the following amvendments to ASU No. 2014-09 that have the
same effective date and transition date: ASU No. 2016-08, Revenue from Contracts
with Customers (Topic 606): Principal versus Agent Considerations; ASU No.
2016-10, Revenue from Contracts with Customers (Topic 606): Identifying
Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts
with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients;
and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606,
Revenue from Contracts with Customers. The Company adopted these amendments with
ASU 2014-09 (collectively, the new revenue standards).
Under the new revenue standards, the Company recognizes revenues when its
customer obtains control of promised goods or services, in an amount that
reflects the consideration which it expects to receive in exchange for those
goods. The Company recognizes revenues following the five-step model prescribed
under ASU No. 2014-09: (i) identify the contract(s) with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenues when (or as) we satisfy
the performance obligation. The Company recognized revenue from providing
temporary and permanent staffing solutions and the sale of consumer products.
Service revenues are recognized as the services are performed in proportion to
the transfer of control to the customer and real estate revenues are recognized
at the time of sale when consideration has been exchanged and title has been
conveyed to the buyer. At this time, we have not identified specific planned
revenue streams. During the period from
The Company accounts for income taxes using the asset and liability approach
that requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
Company’s financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than enactments of changes in the tax law. For deferred tax assets, management
evaluates the probability of realizing the future benefits of such assets. The
Company establishes valuation allowances for its deferred tax assets when
evidence suggests it is unlikely that the assets will be fully realized.
The Company recognizes the tax effects of an uncertain tax position only if it
is more likely than not to be sustained based solely on its technical merits as
of the reporting date and then only in an amount more likely than not to be
sustained upon review by the tax authorities. Income tax positions that
previously failed to meet the more likely than not threshold is recognized in
the first subsequent financial reporting period in which that threshold is met.
Previously recognized tax positions that no longer meet the more likely than not
threshold is derecognized in the first subsequent financial reporting period in
which that threshold is no longer met. The Company classifies potential accrued
interest and penalties related to unrecognized tax benefits within the
accompanying consolidated statements of operations and comprehensive income
(loss) as the income tax expense.
Stock-based compensation cost to employees is measured at the date of grant,
based on the calculated fair value of the stock-based award, and will be
recognized as expense over the employee’s requisite service period (generally
the vesting period of the award). Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever is
more readily determinable. The company has no stock-based compensation plan
established as of
The fair value of derivative instruments is recorded and shown separately under
liabilities. Changes in the fair value of derivatives liability are recorded in
the consolidated statement of operations under other (income) expenses.
Our Company evaluates all of its 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, the Company uses the binomial 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 or
not net-cash settlement of the derivative instrument could be required within 12
months of the balance sheet date.
The Company follows subtopic 850-10 of the FASB ASC for the identification of
related parties and disclosure of related party transactions. Pursuant to
Section 850-10-20 related parties include:
a. affiliates of the Company;
b. entities for which investments in their equity securities would be required,
absent the election of the FV option under the FV Option Subsection of Section
825-10-15, to be accounted for by the equity method by the investing entity;
c. trusts for the benefit of employees, such as pension and profit-sharing
trusts that are managed by or under the trusteeship of management;
d. principal owners of the Company;
e. management of the Company; 28
f. other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and
g. other parties that can significantly influence the management or operating
policies of the transacting parties or that have an ownership interest in one of
the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of financial statements is
not required in those statements.
The disclosures shall include: a. the nature of the relationship(s) involved; b.
a description of the transactions, including transactions to which no amounts or
nominal amounts were ascribed, for each of the periods for which income
statements are presented, and such other information deemed necessary to an
understanding of the effects of the transactions on the financial statements; c.
the dollar amounts of transactions for each of the periods for which income
statements are presented and the effects of any change in the method of
establishing the terms from that used in the preceding period; and d. amounts
due from or to related parties as of the date of each balance sheet presented
and, if not otherwise apparent, the terms and manner of settlement.
New Accounting Pronouncements
Financial Instruments (Topic 326): Measurement of Credit Losses on Financial
Instruments (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit
losses utilizing a methodology that reflects expected credit losses and requires
a consideration of a broader range of reasonable and supportable information to
inform credit loss estimates. ASU 2016-13 is effective for fiscal years
fiscal years. We did not expect the adoption of this guidance have a material
impact on its consolidated financial statements.
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