The Company's unaudited interim financial statements are prepared using
accounting principles generally accepted in the United States of America
applicable to a going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The Company has an
accumulated deficit and no cash flows from operating activities at September 30,
2019. The Company has not yet established an ongoing source of revenue
sufficient to cover its operating costs and allow it to continue as a going
concern. The ability of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating losses until it
becomes profitable. If the Company is unable to obtain adequate capital, it
could be forced to cease operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plans focus is on a variety
of strategic acquisitions in service, agriculture and industrial companies to
compliment and grow Astika Holdings, Inc.'s business. The Company is positioning
to capture the next wave of growth companies from Asia. As the centerpieces for
Astika Holdings in Asia, the focus is on rapid economic growth and increased
foreign investment sector companies which management believes is poised for
accelerated economic growth with national modernization. Astika's planned focus
is also on adding value through successful project development, efficient
operations, and opportunistic acquisitions while maintaining a low risk profile
through project diversification, astute financial management and operating in
secure jurisdictions. Management's plan to obtain such resources for the Company
include (i) obtaining capital from management and significant stockholders
sufficient to meet its minimal operating expenses; (ii) obtaining funding from
outside sources through the sale of its debt and/or equity securities; and (iii)
completing a merger with or acquisition of an existing operating company.
However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission for the presentation of interim financial information, but do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. The accompanying
financial statements should be read in conjunction with the December 31, 2018
financial statements that were filed in our annual report on Form 10-K. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The operating
results for interim periods are not necessarily indicative of results that may
be expected for the year ended December 31, 2019.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Stock-Based Compensation
We recognize compensation cost for stock-based awards to employees in accordance
with ASC Topic 718, over the requisite service period for each separately
vesting tranche, as if multiple awards were granted. Compensation cost is based
on grant-date fair value using quoted market prices for our common stock. We
recognize compensation cost for stock-based awards to nonemployees in accordance
with ASC Topic 505.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260,
"Earnings Per Share" (ASC 260). Under the provisions of ASC 260, basic earnings
per share is computed by dividing the net income (loss) for the period by the
weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share is computed by dividing the net income (loss) for the
period by the weighted average number of common and potentially dilutive shares
of common stock outstanding during the period. The Company had net losses as of
September 30, 2019 and 2018, as such, the diluted loss per share excludes all
dilutive potential shares because their effect is anti-dilutive.
Fair Value of Financial Instruments
ASC 820, "Fair Value Measurements" (ASC 820) and ASC 825, "Financial
Instruments" (ASC 825), requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. It
establishes a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A financial
instrument's categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. It
prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted
prices in active markets for identical assets or liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs
other than quoted prices that are observable for the asset or liability such as
quoted prices for similar assets or liabilities in active markets; quoted prices
for identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.
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Level 3 - Level 3 applies to assets or liabilities for which there are
unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities.
The carrying values of cash, accounts payable, and accrued liabilities
approximate fair value. Pursuant to ASC 820 and 825, the fair value of cash is
determined based on "Level 1" inputs, which consist of quoted prices in active
markets for identical assets. The recorded values of all other financial
instruments approximate their current fair values because of their nature and
respective maturity dates or durations.
Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, "Compensation - Stock Compensation
(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU
2018-07 expands the scope of Topic 718 to include share-based payment
transactions for acquiring goods and services from nonemployees. ASU 2018-07
also clarifies that Topic 718 does not apply to share-based payments used to
effectively provide (1) financing to the issuer or (2) awards granted in
conjunction with selling goods or services to customers as part of a contract
accounted for under Revenue from Contracts with Customers (Topic 606). ASU
2018-07 is effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. Early adoption is
permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter
beginning January 1, 2019. The adoption of ASU 2018-07 does not have a material
impact on the Company's financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement ("Topic
820"): Disclosure Framework - Changes to the Disclosure Requirements for Fair
Value Measurement ("ASU 2018-13"). The ASU modifies the disclosure requirements
in Topic 820, Fair Value Measurement, by removing certain disclosure
requirements related to the fair value hierarchy, modifying existing disclosure
requirements related to measurement uncertainty and adding new disclosure
requirements, such as disclosing the changes in unrealized gains and losses for
the period included in other comprehensive income for recurring Level 3 fair
value measurements held at the end of the reporting period and disclosing the
range and weighted average of significant unobservable inputs used to develop
Level 3 fair value measurements. This ASU is effective for public companies for
annual reporting periods and interim periods within those annual periods
beginning after December 15, 2019. The Company does not expect the adoption of
ASU 2018-13 to have a material impact on its financial statements.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 4 - LOAN TRANSACTION
The Company purchased a recorded music compilation from EuGene Gant for a
purchase price of $5,000 pursuant to a Bill of Sale and Assignment dated June
15, 2012, an Exclusive Songwriter Agreement dated June 15, 2012, and a
Promissory Note that the Company concurrently executed and delivered to Mr. Gant
on the same date. The Company made a payment to Mr. Gant in the amount of
$1,000 on June 15, 2012 and $2,000 on October 1, 2012, and $1,000 on June 15,
2013, and the remaining $1,000 principal amount under Promissory Note bears
interest at five percent (5%) per annum, and there is one remaining principal
installment payment in the amount of $1,162 due. Accrued and unpaid interest on
the Promissory Note is also due in the amount of $57 for the nine-months ended
September 30, 2019, and $53 for the nine-months ended September 30, 2018. As of
September 30, 2019 and December 31, 2018, total outstanding short-term debt was
$1,546 and $1,490, respectively. The note matured on June 15, 2013 and the loan
is currently in default.
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On October 22, 2015, Artfield Investment paid $2,100 in expenses on behalf of
the Company. This loan is unsecured, due on demand, and carries no interest. As
of September 30, 2019 and December 31, 2018, the total amount owed was $2,100
and $2,100, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company has entered into transactions with the related party, IQ Acquisition
(NY), Ltd, owned by Mr. Richards, the CEO of the Company. IQ Acquisition (NY),
Ltd, the major shareholder of the Company, has paid expenses on behalf of the
Company in the amount of $84,557 and $10,408 during the nine months ended
September 30, 2019 and 2018, respectively. The Company reimbursed IQ
acquisition (NY) in the amount of $0 and $42,101 during the nine-months ended
September 30, 2019 and 2018, respectively. The balance due to related party as
of September 30, 2019 and December 31, 2018 was $172,337 and $5,807,
respectively. The advances are unsecured, payable on demand, and carry no
interest.
NOTE 6 - EQUITY BALANCES AND TRANSACTIONS
The Company has authorized 10,000,000 shares of Preferred Stock and 140,000,000
shares of Common Stock at par value of $0.001. As of September 30, 2019 and
December 31, 2018, the Company had 29,890,066 and 29,890,066 shares of common
stock, and 2,090,000 and 2,090,000 preferred shares, issued and outstanding,
respectively.
During the nine months ended September 30, 2019 and 2018, the Company did not
issue any additional shares of common stock. As of September 30, 2019, no
preferred shares have been converted to shares of common stock.
Convertible Preferred Stock
In December 2017, the Company issued 1,210,000 shares of its Series B
convertible preferred stock at a price of $0.30 per share for gross proceeds of
$363,000 and issued 380,000 shares of its Series B convertible preferred stock
at a price of $0.40 per share for gross proceeds of $152,000. In December 2017,
the Company also issued 500,000 shares of its Series B convertible preferred
stock to a third party as compensation, totaling $160,000, for his consulting
services. The Series B shareholders are entitled, at their option, at any time
after the issuance of the Series B convertible preferred stock, to convert all
or any lesser portion of their shares into the Company's common stock at a
conversion ratio 0.2 and at a price of $1.59 per share.
The holders of the Series B convertible preferred stock have the following
rights and privileges:
• Optional Conversion Rights
Each share of Series B convertible preferred stock is convertible at the option
of the holder into 0.2 shares of common stock at a price of $1.59 per share. The
conversion price per share for the convertible preferred stock shall be adjusted
for certain recapitalizations, splits, combinations, and common stock dividends
or as set forth in the Company's amended and restated certificate of
incorporation. As of September 30, 2019, none of the Series B convertible
preferred stock has been converted to common stock.
• Voting Rights
Each share of convertible preferred stock has 0.2 votes equal to the number of
shares of common stock into which it is convertible.
• Redemption Rights
There are no redemption rights afforded to the holders of convertible preferred
stock. Upon certain change in control events that are outside of the Company's
control, including liquidation, sale or transfer of control of the Company, the
convertible preferred stock is contingently redeemable.
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The holders of the Series B convertible preferred stock are not entitled to
receive dividends and have the same liquidation rights that are possessed by the
holders of the Company's common stock.
The Company evaluated whether or not the Series B convertible preferred stock
above contained embedded conversion options, which meet the definition of
derivatives under ASC Topic 815. The Company concluded that since the above
convertible preferred shares had a fixed conversion rate, the convertible
preferred shares were not derivative instruments.
The convertible preferred shares were analyzed to determine if the convertible
preferred shares have an embedded beneficial conversion feature (BCF). Based on
this analysis, the Company concluded that the effective conversion price was
greater than the fair value of the Company's common stock on the issuance dates
and therefore no BCF was recorded.
The Company recorded its convertible preferred stock at fair value on the dates
of issuance, net of issuance costs. The total fair value of the convertible
preferred stock on the date of issuance and as of September 30, 2019 was
$201,809. As of September 30, 2019, there are a total of 2,090,000 shares
of Series B convertible preferred stock authorized, issued and outstanding.
NOTE 7 - SUBSEQUENT EVENTS
On December 4, 2019, the Company engaged a firm to act as a business development
consultant (the "Consultant") for the Company whereby the Consultant will
prepare and assist the Company in raising approximately US$20 million. The
Consultant will attempt to recruit a lead licensed Broker or Dealer and other
selling syndicate partners.
The Company has evaluated subsequent events that have occurred after the date of
the balance sheet through the date of issuance of these financial statements and
determined that no other subsequent event requires recognition or disclosure to
the financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with our
financial statements, including the notes thereto, appearing in this report and
are hereby referenced. 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, but are not
limited to, those discussed below and elsewhere in this report. You should not
place undue certainty on these forward-looking statements, which apply only as
of the date of this report. We believe it is important to communicate our
expectations. However, our management disclaims any obligation to update any
forward-looking statements whether as a result of new information, future events
or otherwise.
These forward-looking statements are based on our management's current
expectations and beliefs and involve numerous risks and uncertainties that could
cause actual results to differ materially from expectations. You should not
rely upon these forward-looking statements as predictions of future events
because we cannot assure you that the events or circumstances reflected in these
statements will be achieved or will occur. You can identify a forward-looking
statement by the use of the forward-terminology, including words such as "may",
"will", "believes", "anticipates", "estimates", "expects", "continues",
"should", "seeks", "intends", "plans", and/or words of similar import, or the
negative of these words and phrases or other variations of these words and
phrases or comparable terminology. These forward-looking statements relate to,
among other things: our sales, results of operations and anticipated cash flows;
capital expenditures; depreciation and amortization expenses; sales, general and
administrative expenses; our ability to maintain and develop relationship with
our existing and potential future customers; and, our ability to maintain a
level of investment that is required to remain competitive. Many factors could
cause our actual results to differ materially from those projected in these
forward-looking statements, including, but not limited to: variability of our
revenues and financial performance; risks associated with technological changes;
the acceptance of our products in the marketplace by existing and potential
customers; disruption of operations or increases in expenses due to our
involvement with litigation or caused by civil or political unrest or other
catastrophic events; general economic conditions, government mandates; and, the
continued employment of our key personnel and other risks associated with
competition.
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Overview
The Company was incorporated under the laws of the State of Florida on January
13, 2011. We are refocusing and preparing to relaunch the Company through a
variety of strategic acquisitions in the textile, service, agricultural, and/or
industrial sectors to complement and capture the next wave of growth companies
from Asia and New Zealand. There can be no assurance that we will succeed in our
efforts.
Results of Operations for the Three and Nine Months Ended September 30, 2019
Compared to the Three and Nine Months Ended September 30, 2018
Revenues
The Company's revenues were $0 for the three-month and nine-month periods ended
September 30, 2019 and September 30, 2018.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30,
2019 were $63,702 as compared to $7,667 for the three months ended September 30,
2018, and $84,501 for the nine months ended September 30, 2019 as compared to
$26,950 for the nine months ended September 30, 2018. General and administrative
expenses increased primarily due to the higher consulting fees related to the
Company's acquisition and financing activities.
Liquidity and Capital Resources
The Company has had only nominal operations and does not have any cash generated
from business operations. We funded our operating expenses by issuing notes to
related and unrelated parties and borrowing loans from our related parties.
During the year ended December 31, 2017, we also issued convertible preferred
stock for gross proceeds of $515,000. Our plan is to obtain financing from
various investors and complete our acquisition project.
As of September 30, 2019 and December 31, 2018, we had working capital deficits
of $209,278 and $124,721, respectively.
The Company has not yet established an ongoing source of revenue sufficient to
cover its operating costs and allow it to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on the
Company obtaining adequate capital to fund operating losses until it becomes
profitable. If the Company is unable to obtain adequate capital, it could be
forced to cease operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plans focus on a variety of
strategic acquisitions in service, agriculture and industrial companies to
complement and grow its business. The Company is positioning to capture the next
wave of growth companies from Asia. The Company's planned focus is also on
adding value through successful project development, efficient operations, and
opportunistic acquisitions while maintaining a low risk profile through project
diversification, astute financial management and operating in secure
jurisdictions. to obtain such resources for the Company include (i) obtaining
capital from management and significant stockholders sufficient to meet its
minimal operating expenses; (ii) obtaining funding from outside sources through
the sale of its debt and/or equity securities; and (iii) completing a merger
with or acquisition of an existing operating company. However, management
cannot provide any assurances that the Company will be successful in
accomplishing any of its plans. The accompanying financial statements do not
include any adjustments that might result from this uncertainty.
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Net Cash Used in Operating Activities
Net cash used in operating activities was $166,530 for the nine months ended
September 30, 2019. Net cash provided by operating activities was $31,693 for
the nine months ended September 30, 2018 due to the decrease in prepaid expense
of $42,101.
Net Cash Used in Investing Activities
The net cash used in investing activities during the nine months ended September
30, 2019 and 2018 was $0.
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the nine months ended September
30, 2019 was $166,530. Net cash used in financing activities during the nine
months ended September 30, 2018 was $31,693 due to payback of a related party's
loan in the amount of $42,101.
Availability of Additional Funds
Based on our working capital deficit as of September 30, 2019 and zero revenues,
we expect to need additional equity and/or debt financing to continue our
operations during the next 12 months. We expect that our current cash on hand
will not fund our operations through December 2020.
Critical Accounting Policies and Estimates
Our unaudited interim financial statements and accompanying notes have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis. The preparation of unaudited interim
financial statements in conformity with United States generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the unaudited interim financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates. Our
significant estimates and assumptions include amortization, the fair value of
our stock, and the valuation allowance relating to the Company's deferred tax
assets.
Material Commitments
There were no material commitments during the nine months ended September 30,
2019.
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Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, "Compensation - Stock Compensation
(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU
2018-07 expands the scope of Topic 718 to include share-based payment
transactions for acquiring goods and services from nonemployees. ASU 2018-07
also clarifies that Topic 718 does not apply to share-based payments used to
effectively provide (1) financing to the issuer or (2) awards granted in
conjunction with selling goods or services to customers as part of a contract
accounted for under Revenue from Contracts with Customers (Topic 606). ASU
2018-07 is effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. Early adoption is
permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter
beginning January 1, 2019. The adoption of ASU 2018-07 does not have a material
impact on the Company's financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement ("Topic
820"): Disclosure Framework - Changes to the Disclosure Requirements for Fair
Value Measurement ("ASU 2018-13"). The ASU modifies the disclosure requirements
in Topic 820, Fair Value Measurement, by removing certain disclosure
requirements related to the fair value hierarchy, modifying existing disclosure
requirements related to measurement uncertainty and adding new disclosure
requirements, such as disclosing the changes in unrealized gains and losses for
the period included in other comprehensive income for recurring Level 3 fair
value measurements held at the end of the reporting period and disclosing the
range and weighted average of significant unobservable inputs used to develop
Level 3 fair value measurements. This ASU is effective for public companies for
annual reporting periods and interim periods within those annual periods
beginning after December 15, 2019. The Company does not expect the adoption of
ASU 2018-13 to have a material impact on its financial statements.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
Off Balance Sheet Arrangements
As of September 30, 2019, we had no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Disclosure under this section is not required for a smaller reporting company.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that
the information required to be disclosed in the reports that we file under the
Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms, and that such information is accumulated
and communicated to our management, including our President and Treasurer, as
appropriate, to allow timely decisions regarding required disclosures. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance of achieving the desired control
objectives, and in reaching a reasonable level of assurance, management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the
supervision and with the participation of our management, including our
President and Treasurer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of our third fiscal quarter
covered by this report. Based on the foregoing, our President and Treasurer
concluded that our disclosure controls and procedures were not effective at the
reasonable assurance level as of September 30, 2019. It should be noted that the
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.
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Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we plan to initiate the
following series of measures once we have the financial resources to do so:
? We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical
accounting expertise within the accounting function when funds are
available to us. And, we plan to appoint one or more outside directors to
an audit committee resulting in a fully functioning audit committee, which
will undertake the oversight in the establishment and monitoring of
required internal controls and procedures, such as reviewing and approving
estimates and assumptions made by management when funds are available to
us.
? Management believes that the appointment of outside directors to a fully
functioning audit committee would remedy the lack of a functioning audit
committee.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that
occurred during the period covered by this report, which were identified in
connection with management's evaluation required by paragraph (d) of Rules
13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
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