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The Company has not conducted any active operations since October 31, 2008. No revenue has been generated by the Company for the fiscal years ended April 30, 2020 and 2019. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management’s assertion that these circumstances may hinder the Company’s ability to continue as a going concern. The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For the fiscal year ended April 30, 2019, the Company had a net loss of $87,009 which comprised of general and administrative expenses including legal, accounting, audit, and other professional service fees incurred in relation to the filing of the Company’s periodic reports on Form 10-K and Form 10-Q.
The $24,917 increase in general and administrative expenses for the current year end was due to increased legal, accounting and audit fees as a result of the recent change of control.
The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company’s cash flows from operating, investing, and financing activities for the years ended April 30, 2020 and 2019:
During the year ended April 30, 2020, the Company incurred a net loss of $111,926 which, after adjusting for an increase in prepaid deposit of $4,000 and an increase in accounts payable of $34,000, resulted in net cash of $73,726 being used in operating activities during the year. By comparison, during the year ended April 30, 2019, the Company incurred a net loss of $87,009 which, after adjusting for prepaid expenses of $667 and a decrease in accounts payable of $6,219, resulted in net cash of $93,895 being used in operating activities during the period.
During the year ended April 30, 2020, the Company paid $100 for an equity investment. The Company did not engage in any investing activities during the year ended April 30, 2019.
During the year ended April 30, 2020, the Company received $67,660 in advances from the Company’s majority shareholder, $6,150 from capital contributions, and $16 for advances on bank overdrafts. By comparison, during the year ended April 30, 2019, the Company received $93,895 from advances from the Company’s majority shareholder.
The Company’ s business is to pursue a business combination through acquisition, or merger with, an existing company. No assurances can be given that the Company will be successful in locating or negotiating with any target company.
Effective June 28, 2019 (“Closing Date”), a further change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Metrowork Equity Sdn. Bhd (“Seller”), and Copper Hill Assets Inc., a British Virgin Island corporation (“Buyer”), Seller assigned, transferred and conveyed to Buyer (i) 1,563,809 shares of common stock of Company and (ii) a promissory note of the Company totaling $355,323. The total consideration paid by Buyer was $375,000, and Seller assumed all of the liabilities of the Company as of the Closing Date.
On September 19, 2019, the Company formed a new subsidiary, Paramount Capital, Inc (“Paramount”), a Wyoming corporation. Paramount has not commenced operations as of this date.
A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person’s immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Notes 5, 7 and 8 below for details of related party transactions in the period presented.
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in the Company’s balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet.
ROU assets represent the right to use an asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases don’t provide an implicit rate, the Company generally uses the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight-line basis over the lease term.
The Company is not party to any lease transactions during the year ended April 30, 2020 or 2019.
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company evaluates tax positions in a two-step process. The Company first determine whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long-term liabilities in the financial statements.
Basic net loss per common share (“EPS”) is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Diluted earnings per share is not presented when their effect is anti-dilutive. No potential dilutive securities were issued and outstanding during the year ended April 30, 2020 or 2019.
As of April 30, 2020 and 2019, the balance of prepayments and deposits was $0 and $4,000, respectively, which related to the annual membership fee for OTC Markets which was amortized monthly over the course of the year. The Company elected not to renew its annual OTC Markets membership fee for fiscal year 2020.
On August 26, 2019, the Company acquired 33.33% of the issued and outstanding common shares of Australian Gold Commodities Ltd (“ACG”), an Australian company, for $100. At the time, the remaining 66.67% of the issued and outstanding common shares of ACG were beneficially owned by our principal shareholder, Copper Hill Assets, Inc. Mr. Anthony Lococo, our sole director, was appointed as a director of ACG. ACG has not commenced operations as of April 30, 2020.
During the period from June 29, 2019 to September 25, 2019, Copper Hill further advanced the sum of $17,500 to the Company to meet its working capital requirements. The promissory note for advances made by Copper Hill as of September 25, 2019 totaled $372,823.
During the period from August 1, 2019 to April 30, 2020, Copper Hill advanced an additional $13,349 to the Company to meet its working capital requirements.
Deferred tax assets and valuation allowance at April 30, 2020 and 2019:
A provision for income taxes has not been made due to net operating loss carry-forwards (“NOLs”) of approximately $1,582,000 (2019 - $1,470,000.) This carryforward is limited due to the changes in control of the Company that took place in the years ended April 30, 2008, 2016 and 2019 in accordance with the provisions under Internal Revenue Code Section 381. The NOLs expire, if not utilized, in the years through 2037, however, NOLs generated subsequent to December 31, 2017 do not expire but may only be used against taxable income to 80%. In response to the novel coronavirus COVID-19, the Coronavirus Aid, Relief, and Economic Security Act temporarily repealed the 80% limitation for NOLs arising in 2018, 2019 and 2020. No tax benefit has been reported in the financial statements.
The actual provision for income tax differs from the amount using the statutory U.S. Federal income tax rate of 21% for the years ended April 30, 2020 and 2019 as follows:
As of April 30, 2020, 7,234,474 shares of common stock were issued, and 7,234,473 shares of common stock were outstanding. As of April 30, 2019, 2,234,474 shares of common stock were issued, and 2,234,473 shares of common stock were outstanding.
Under the terms of the Purchase Agreement described above, the Company’s former principal shareholder, Metrowork, paid off all of the Company’s outstanding liabilities at June 28, 2019, totaling $6,150. As these payments did not represent either a loan to the Company or an equity investment in the Company, they have been accounted for as a capital contribution by Metrowork to the Company.
On May 5, 2020, Locman Superannuation Fund (“Fund”) paid the Company the sum of $14,975 to acquire 200,737 shares of common stock of the Company pursuant to a subscription agreement between the parties. Anthony Lococo, the Company’s controlling shareholder and sole officer and director, is the control person of the Fund. On July 27, 2020, the Fund paid the Company the sum of $15,000 to acquire 207,000 shares of common stock of the Company pursuant to a subscription agreement between the parties.