Background and Overview
Kreido Biofuels, Inc. ("Kreido Biofuels," "we" or the "Company") was
incorporated on February 7, 200,5 under the name Gemwood Productions, for the
purpose of marketing and selling day spa services to tourists at resort
destinations throughout Mexico. On November 2, 2006, we changed our name to
Kreido Biofuels, Inc. in connection with the acquisition of Kreido Laboratories,
Inc., a California corporation, and the disposition of the Gemwood Leasco, Inc.
subsidiary, through which entity the tourist business had been carried out.
Kreido Laboratories was founded to develop proprietary technology for building
micro-composite materials for electronic applications, and developed technology
to improve the speed, completeness and efficiency of certain chemical reactions,
including esterifications and transesterifications, in the pharmaceutical and
special chemical industries. In the first quarter of 2006, Kreido Labs elected
to focus exclusively on the biodiesel industry. This business was not
successful, and we sold the technology and related assets to an unrelated party
on March 5, 2009. After that disposition, we sought unsuccessfully for another
acquisition until the present time. In November of 2018, the Company
discontinued operations of its subsidiary, Kreido Labs, Inc.
Our initial registration statement on Form SB-2, became effective on June 28,
2007. Subsequent to the filing of our Annual Report on Form 10-K for the year
ended December 31, 2008, we continued to file annual and quarterly reports with
the Securities and Exchange Commission on a voluntary basis through the quarter
ended September 30, 2009.
In November 2018, our former majority shareholder and sole officer G. Reed
Petersen approached the then sole officer and director offering to pay off the
debt of the Company. Mr. Petersen paid the sum of $171,509 in consideration of
142,924,167 shares of stock of the Company. On March 2, 2019, the Company filed
a registration statement on Form 10 with the Securities and Exchange Commission.
The registration statement on Form 10 became effective May 1, 2019.
On June 5, 2018, the Company and its sole officer and director, G. Reed
Petersen, entered into that certain Stock Purchase Agreement (the "Stock
Purchase Agreement"), pursuant to which Mr. Petersen agreed to sell to certain
purchasers an aggregate of 142,924,167 shares of common stock of the Company
(the "Control Shares"), representing approximately 73% of the issued and
outstanding stock of the Company, for aggregate cash consideration of $420,000
in accordance with the terms and conditions of the Stock Purchase Agreement. The
Stock Purchase Agreement was included as Exhibit 10.1 to that Amendment No. 1 to
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 6, 2018.
The sale of the Control Shares consummated on June 29, 2018. As a result, the
purchasers hold a controlling interest in the Company and may unilaterally
determine the election of the Board and other substantive matters requiring
approval of the Company's stockholders.
In connection with the sale of the Control Shares, G. Reed Petersen resigned
from his positions as the sole executive officer and director of the Company,
effective June 29, 2018. Mr. Petersen's departure was not due to any dispute or
disagreement with the Company on any matter related to the Company's operations,
policies or practices. Concurrently, the Board of Directors appointed Wai Lim
Wong to fill the vacancies created by Mr. Petersen's resignation, and to serve
as the Company's sole Director, Chief Executive Officer, Chief Financial Officer
and Secretary.
Results of Operations
Following is management's discussion of the relevant items affecting results of
operations for the years ended 2019 and 2018.
Revenues. The Company generated revenues of $-0- during the year ended December
31, 2019 as compared to $-0- for the year ended December 31, 2018.
Operating Expenses. Operating expenses for the year ended December 31, 2019
were $33,336, consisting primarily of professional fees, compared to $38,958 for
the year ended December 31, 2018. The decrease is mainly the result of a
decrease in legal and professional expenses.
Operating expenses consisted of professional fees and general and administrative
fees. The increase in operating expenses resulted from increased professional
and general and administrative fees arising from the sale of the Control Shares.
The filing of the
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Company's Form 10 also added to the increased professional fees. We expect
operating expenses to increase as we continue our process of identifying
prospective acquisition targets and hopefully successfully consummate such an
acquisition.
Other Income (Expense). The Company had net other income of $ -0- for the year
ended December 31, 2019 compared to $ 7,416 during the year ended December 31,
2018.
Net Loss. For the year ended December 31, 2019, the Company had a net loss of
$33,336, as compared to $38,958 for the year ended December 31, 2018. The
increase in net loss was due to the increase in professional fees and general
and administrative fees incurred by the Company.
Liquidity and Capital Resources
As of December 31, 2019, our primary source of liquidity consisted of $-0- in
cash and cash equivalents. Since inception, we have financed our operations
through a combination of short and long-term loans, and through the private
placement of our common stock.
Going Concern Uncertainties.
We have sustained significant net losses which have resulted in a total
stockholders' deficit at December 31, 2019 of ($57,794) and are currently
experiencing a substantial shortfall in operating capital which raises doubt
about our ability to continue as a going concern. Until we successfully
consummate an acquisition with an operating company, we expect to continue to
incur net losses. Depending upon the financial profile of our acquired company,
we may continue in our net loss position even after the acquisition of an
operating company. With the expected cash requirements for the coming months,
without additional cash inflows from an increase in revenues combined with
continued cost-cutting or a receipt of cash from capital investment, there is
substantial doubt as to the Company's ability to continue operations.
There is presently no agreement in place with any source of financing for the
Company, and we cannot be assured that the Company will be able to raise any
additional funds, or that such funds will be available on acceptable terms.
Funds raised through future equity financing will likely be substantially
dilutive to current shareholders. Lack of additional funds will materially
affect the Company and its business and may cause us to cease operations.
Consequently, shareholders could incur a loss of their entire investment in the
Company.
Net Cash Used in Operating Activities.
For the year ended December 31, 2019, net cash used in operating activities was
$0, which consisted primarily of a net loss of $33,336, and increase in account
payable of $13,057, and an increase in related party payables of $20,279.
For the year ended December 31, 2018, net cash used in operating activities was
$9,427, which consisted primarily of a net loss of $38,958, and increase in
account payable of $11,325, an increase in related party payables of $12,233, an
increase in notes payable - short term of $3,973 and an increase in prepaid
expenses of $2,000.
Net Cash Used In/Provided By Investing Activities.
There was no net cash used in or provided by investing activities during the
year ended December 31, 2019, and 2018.
Net Cash Provided By Financing Activities.
For the year ended December 31, 2019, net cash provided by financing activities
was 0.
For the year ended December 31, 2018, net cash provided by financing activities
was $9,427, consisting primarily of proceeds of $21,350 from a related party,
offset by repayments of $11,923 on an outstanding note payable.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
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Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide this information.
Critical accounting policies
The preparation of our financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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. On an on-going basis, management evaluates its
estimates and judgments which are based on historical experience and on various
other factors that are believed to be reasonable under the circumstances. The
results of their evaluation form the basis for making judgments about the
carrying values of assets and liabilities. Actual results may differ from these
estimates under different assumptions and circumstances. Our significant
accounting policies are more fully discussed in Note 2 to our financial
statements contained herein.
Recent accounting pronouncements
The recent accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on our unaudited condensed
consolidated financial statements upon adoption.
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Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Kreido Biofuels IncOpinion on the Financial Statements
We have audited the accompanying balance sheets of Kreido Biofuels Inc (the
"Company") as of December 31, 2019, the related consolidated statements of
operations, changes in shareholders' equity and cash flows, for the year ended
December 31, 2019, and the related notes collectively referred to as the
"financial statements. The financial statement of Kreido Biofuels Inc. As of
December 31, 2018, were audited by other auditors whose report dated April 15,
2019, expressed an unqualify opinion on those statement.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2019, and the
results of its operations and its cash flows for the year ended December 31,
2019, in conformity with U.S. generally accepted accounting principles.
Going Concern
The accompanying financial statements have been prepared assuming the company
will continue as a going concern as disclosed in Note 3 to the financial
statement, the Company has continuously incurred a net loss of $33,336 for the
year ended December 31, 2019, and an accumulated deficit of $49,044,627 at
December 31, 2019. The continuation of the Company as a going concern through
December 31, 2019, is dependent upon improving the profitability and the
continuing financial support from its stockholders. Management believes the
existing shareholders or external financing will provide the additional cash to
meet the Company's obligations as they become due.
These factors raise substantial doubt about the company ability to continue as a
going concern. These financial statements do not include any adjustments that
might result from the outcome of the uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB. We conducted our audits in
accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits, we are required to
obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion
OLAYINKA OYEBOLA & CO.
(Chartered Accountants)
We have served as the Company's auditor since September 2020.
September 24th, 2021.
Lagos Nigeria
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