UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: DecemberFOR THE FISCAL YEAR ENDED DECEMBER 31, 20132017
Commission File Number: 000-53244
American Retail Group, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 13-1869744 | |||
(State or | ( | Identification Number) |
2770 S. Maryland Pkwy, Suite 314
Las Vegas, Nevada 89109
(Address of principal executive offices, including zipoffices) (Zip code)
(702) 731-3535
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:None
| Title of class | Name of each exchange on which registered | |
| None | N/A |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
Indicate by check mark whetherif the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o☐ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o☐ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ ☒ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☐ No o
Indicate by check mark if disclosure of delinquent filers in responsepursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitionsdefinition of “accelerated filer,” “large accelerated filer,” “accelerated filer”“smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Accelerated filer | ||
| ☐ Smaller reporting company ☒ | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes þ☒ No o
As of June 30, 2017, the number of outstanding shares of the registrant’s common stock held by non-affiliates (excluding shares held by directors, officers and others holding more than 5% of the outstanding shares of the class) was 2,228,429 shares. However, since there was no trading market for the common stock as of that date, it is impracticable to ascertain the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity,those shares as of June 30, 2013, the last daythat date.
As of the registrant’s second fiscal quarter, was $6,364,300.
DOCUMENTS INCORPORATED BY REFERENCE: None
AMERICAN RETAIL GROUP, INC.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements.
Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
i
| Item 1 | Business. |
We are a “shell company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), because we have no or nominal assets (other than cash) and no or nominal operations.
We intend to seek, investigate and, if such investigation warrants, engage in a business combination which may take the form of a “reverse merger” with a private entity whose business presents an opportunity for our stockholders. Our objectives discussed below are extremely general and are not intended to restrict our discretion. This discussion of the proposed business is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities.
We have not yet entered into any definitive agreement, nor do we have any binding commitment or understanding to enter into or become engaged in a transaction.
We are not restricting our search for business combination candidates to any particular industry and will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. Further, we may acquire a venture which is in its preliminary or development stage, one which is already in operation, or in a more mature stage of its corporate existence. Accordingly, business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities difficult and complex.
We believe that there are numerous businesses seeking the perceived benefits of a publicly registered corporation. These benefits are commonly thought to include the following: (i) the ability to use registered securities to acquire assets or businesses; (ii) increased visibility in the marketplace; (iii) ease of borrowing from financial institutions; (iv) improved stock trading efficiency; (v) shareholder liquidity; (vi) greater ease in subsequent capital raising; (vii) compensation of key employees through stock options; (viii) enhanced corporate image; and (ix) a presence in the United States capital market. We have not conducted market research and are not aware of statistical data to support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.
Target companies interested in a business combination with our company may include the following: (i) a company for whom a primary purpose of becoming public is the use of its securities for the acquisition of other assets or businesses; (ii) a company which is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it; (iii) a company which desires to become public with less dilution of its common stock than would occur upon an underwriting; (iv) a company which believes that it will be able to obtain investment capital on more favorable terms after it has become public; (v) a foreign company which may wish an initial entry into the United States securities market; or (vi) a company seeking one or more of the other mentioned perceived benefits of becoming a public company.
We anticipate seeking out a target business through solicitation. Such solicitation may include personal contacts, newspaper or magazine advertisements, mailings and other distributions to law firms, accounting firms, investment bankers, financial advisors and similar persons, the use of one or more World Wide Web sites and similar methods. No estimate can be made as to the number of persons who will be contacted or solicited. Such persons will have no relationship to our management.
The analysis of new business opportunities will be undertaken by or under the supervision of our executive officers and directors, none of whom is a business analyst and it is not anticipated that outside consultants or advisors will be utilized to assist us in the analysis of qualified target companies.
A decision to participate in a specific business opportunity will be made based upon our analysis of the quality of the prospective business opportunity’s management and personnel, assets, the anticipated acceptability of products or marketing concepts, the merit of a proposed business plan, and numerous other factors which are difficult, if not impossible, to analyze using any objective criteria. We have unrestricted flexibility in seeking, analyzing and participating in potential business opportunities.
In our efforts to analyze potential acquisition targets, we will consider, among others, the following kinds of factors: (i) potential for growth, indicated by new technology, anticipated market expansion or new products; (ii) competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole; (iii) strength and diversity of management, either in place or scheduled for recruitment; (iv) capital requirements and anticipated availability of required funds, to be provided by our company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources; (v) the cost of participation by our company as compared to the perceived tangible and intangible values and potentials; (vi) the extent to which the business opportunity can be advanced; and (vii) the accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items.
In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to our limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another entity. We also may acquire stock or assets of an existing business. On the consummation of a transaction it is probable that the present management and stockholders of our company will no longer be in control of the company. In addition, our officers and directors, as part of the terms of the acquisition transaction, likely will be required to resign and be replaced by one or more new officers and directors without a vote of our stockholders.
It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of a transaction, we may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. The issuance of substantial additional securities and their potential sale into any trading market which may develop in our securities may have a depressive effect on that market.
While the actual terms of a transaction to which we may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition as a “tax-free” reorganization under Sections 351 or 368 of the Internal Revenue Code of 1986, as amended.
With respect to any merger or acquisition, negotiations with target company management are expected to focus on the percentage of our company which the target company stockholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, our stockholders will in all likelihood hold a substantially lesser percentage ownership interest in our company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with substantial assets. Any merger or acquisition effected by us can be expected to have a significant dilutive effect on the percentage of shares held by our stockholders at such time.
We will participate in a business opportunity only after the negotiation and execution of appropriate agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants.
We are subject to all of the reporting obligations required by Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the obligation to file audited financial statements of any target business we may acquire as part of our Current Report on Form 8-K to be filed with the SEC upon consummation of a merger or acquisition. If such audited financial statements are not available at closing, or within time parameters necessary to ensure our compliance with the requirements of the Exchange Act, or if the audited financial statements provided do not conform to the representations made by the target company, the closing documents may provide that the proposed transaction will be voidable at the discretion of our present management.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs incurred.
Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
Competition
We will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than us. In view of our limited financial resources and limited management availability, we may be at a competitive disadvantage compared to our competitors.
Employees
We presently have no employees. Vassili Oxenuk our Chief Executive Officer and President, is engaged in outside business activities and anticipates that he will devote to our business a limited time until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.
Our Principal Office
Our principal office is located at 2770 S. Maryland Pkwy, Suite 314, Las Vegas, Nevada 89109. Our telephone number is (702) 731-3535.
Change in Control
In March 2017, Soledad Bayazit, our then Chief Executive Officer, President, sole director and the owner of 20,701,571 of our shares of common stock, representing approximately 90.28% of our outstanding shares of common stock, sold all 20,701,571 shares of common stock to Vassili Oxenuk, for a purchase price of $300,000, of which $150,000 is payable on the second day following the filing of a Report on Form 8-K with respect to the completion of a reverse acquisition by us. In addition, Ms. Bayazit forgave the payment of the indebtedness to her under our 12% secured promissory note due January 12, 2012 in the principal amount of $1,201,000, together with accrued interest thereon of approximately $672,231, together with advances in the aggregate amount of $154,460.
History
American Retail Group, Inc., formerly known as Resource Acquisition Group, Inc. (the “Company”), is a Nevada corporation organized on January 27, 1934.
Effective February 11, 2011 the Company acquired 100% of the stock of American Retail Group, Inc., a Nevada corporation (“ARG”), which at that time owned 100% of the outstanding equity of TOO “SM Market Retail” (“SM Market”), a limited liability company organized under the laws of Kazakhstan (the “2011 Share Exchange”). Pursuant to the share exchange agreement, on February 11, 2011, stockholders of ARG transferred 100% of the outstanding shares of its common stock held by them, in exchange for an aggregate of 20,000,000 newly issued shares of the Company’s common stock. The shares of common stock of the Company acquired by the stockholders of ARG constituted approximately 96.1% of the Company’s issued and outstanding common stock after giving effect to the 2011 Share Exchange.
American Retail Group, Inc. was incorporated in Las Vegas, Nevada on February 16, 2010. Effective March 10, 2010, the Company consummated a share exchange with the owners of SM Market (the “2010 Share Exchange”). As a result of the share exchange, ARG acquired all of the outstanding equity of SM Market in exchange for issuance of 12,000,000 shares of its common stock (the “Shares”).
Effective April 1, 2011, ARG merged with and into the Company. In connection with the merger the name of the Company was changed from Resource Acquisition Group, Inc. to American Retail Group, Inc.
On July 22, 2011, the Company and the former owners of SM Market entered into a Rescission Agreement whereby the parties agreed to rescind the 2010 Share Exchange and to release each other from any potential claims (the “Rescission”). The parties have determined that it is in their best interest to rescind the 2010 Share Exchange and unwind the transaction. Under the Rescission Agreement, all outstanding equity of SM Market was to be returned to the former owners of SM Market and the Shares were to be returned to the Company. In connection with the rescission of the 2010 Share Exchange, El Investment Corp. agreed to return to the Company for cancellation 11,201,603 shares of common stock held by it. The Rescission was completed on September 2, 2011.
As a result of the Rescission, the Company ceased to be engaged in the supermarket business in Kazakhstan and returned to be a shell company as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
Our common stock was previously registered under, and we were subject to the reporting requirements of, the Exchange Act until we terminated our registration by filing a Form 15 on April 14, 2016.
| Item 1A. | Risk Factors |
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this time,report, before making an investment decision. If any of the Company’s purposefollowing risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Notes Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
The purchase of our common stock involves a very high degree of risk.
In evaluating us and our business, you should carefully consider the risks and uncertainties described below and the other information and our consolidated financial statements and related notes included herein. The risks provided below may not be all the risks we face. If any of events described in the risks below actually occurs, our financial condition or operating results may be materially and adversely affected, the price of our common stock may decline, perhaps significantly, and you could lose all or a part of your investment.
An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors before deciding to invest in our company. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth would likely suffer. As a result, you may lose all or part of your investment in our company.
We may require financing to acquire businesses and implement our business plan.
We may require financing to acquire businesses and to implement our business plan. We cannot assure you that we will be successful in obtaining financing or acquiring businesses, or in operating those acquired businesses in a profitable manner.
We expect losses in the future because we have no revenue.
As we have no current revenue, we are expecting losses over the next 12 months because we do not yet have any revenues to offset the expenses associated with operating our company. We are not currently engaged in any revenue generating activities and cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
If our business plans are not successful, we may not be able to continue operations as a going concern and our stockholders may lose their entire investment in us.
We have no revenues. We had a net loss of $(110,360) for the year ended December 31, 2017, and a stockholders’ deficit of ($2,402,550) at December 31, 2017. The report of our independent registered public accountants on our financial statements for the year ended December 31, 2017 states that these conditions, among others, raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our continued operations, which is dependent in turn upon our ability to meet our financial requirements, raise additional capital, and the success of our future operations.
Our principal business objective for the next twelve months will be to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participateengage in a business venture of virtuallycombination with a private entity whose business presents an opportunity for our stockholders. We cannot assure you that we can identify a suitable business opportunity and consummate a business combination.
We do not have any kindagreement for a business combination or nature. This discussion of the proposed business is purposefully general and isother transaction.
We have not meantyet entered into any definitive agreement, nor do we have any binding commitment or understanding to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potentialor become engaged in a merger with, joint venture with or acquisition of, a private or public entity. We cannot assure you that we will successfully identify and evaluate suitable business opportunities. Management anticipatesopportunities or that it maywe will conclude a business combination. We cannot guarantee that we will be able to participatenegotiate a business combination on favorable terms, and there is consequently a risk that future funds allocated to the purchase of our shares will not be invested in only one potentiala company with active business venture becauseoperations.
Our future success is highly dependent on the Company has nominal assetsability of management to locate and limitedattract a suitable acquisition.
The success of our proposed plan of operation will depend to a great extent on the operations, financial resources. This lack of diversification should be considered a substantial risk to shareholderscondition and management of the Company because itidentified target company. While business combinations with entities having established operating histories are preferred, there can be no assurance that we will be successful in locating candidates meeting such criteria. The decision to enter into a business combination will likely be made without detailed feasibility studies, independent analysis, market surveys or similar information which, if we had more funds available to us, would be desirable. In the event we complete a business combination the success of our operations will be dependent upon management of the target company and numerous other factors beyond our control. We cannot assure you that we will identify a target company and consummate a business combination.
There is competition for those private companies suitable for a merger transaction of the type contemplated by management.
We are in a highly competitive market for a limited number of business opportunities which could reduce the likelihood of consummating a successful business combination. We are and will continue to be an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination.
We have not conducted market research to identify business opportunities, which may affect our ability to identify a business to merge with or acquire.
We have neither conducted nor have others made available to us results of market research concerning prospective business opportunities. Therefore, we have no assurances that market demand exists for a merger or acquisition as contemplated by us. It may be expected that any target business or transaction will present a level of risk that conventional private or public offerings of securities or conventional bank financing will not permit the Companybe available. There is no assurance that we will be able to offset potential losses from one venture against gains from another.
Management intends to devote only a limited amount of time to seeking a target company which may adversely impact our ability to identify a suitable acquisition candidate.
While seeking a business combination, Vassili Oxenuk, our Chief Executive Officer and President, anticipates devoting a limited time to our affairs. This limited commitment may adversely impact our ability to identify and consummate a successful business combination.
We are dependent on the services of Vassili Oxenuk, our Chief Executive Officer and President, to obtain capital required to implement our business plan and for identifying, investigating, negotiating and integrating potential acquisition opportunities. The loss of the services of Vassili Oxenuk could have a substantial adverse effect on us.
Our ability to acquire an operating business will be largely contingent on our ability to retain Vassili Oxenuk, our Chief Executive Officer and President, upon whom we will rely to obtain capital required to implement our business plan and for identifying, investigating, negotiating and integrating potential acquisition candidates and to attract and retain a highly qualified corporate and operations level management team. The loss of the services of Vassili Oxenuk could have a substantial adverse effect on us.
The time and cost of preparing a private company to become a public reporting company may preclude us from entering into a merger or acquisition with entities which have recently commenced operations,the most attractive private companies.
Target companies that fail to comply with SEC reporting requirements may delay or which wishpreclude acquisition. Sections 13 and 15(d) of the Exchange Act require reporting companies to utilizeprovide certain information about significant acquisitions, including audited financial statements for the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes.company acquired. The Company may acquire assetstime and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
We may be subject to further government regulation which would adversely affect our operations. Accordingly,
Although we will require external financingbe subject to sustainthe reporting requirements under the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”), since we will not be engaged in the business of investing or trading in securities. If we engage in business combinations which result in our operations, perhaps for a significant period of time. Successful future operations are subject toholding passive investment interests in a number of technicalentities, we could be subject to regulation under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status under the Investment Company Act and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.
Any potential acquisition or merger with a foreign company may subject us to additional risks.
If we enter into a business combination with a foreign concern, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.
If we fail to develop and maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud, as a result, current and potential stockholders could lose confidence in our financial reports, which could harm our business and the trading price of our common stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting. Compliance with Section 404 requires that we strengthen, assess and test our system of internal controls to provide the basis for our report. The process of strengthening our internal controls and complying with Section 404 is expensive and time consuming, and requires significant management attention. We cannot be certain that the measures we undertake will ensure that we will maintain adequate controls over our financial processes and reporting in the future. Furthermore, if we are able to rapidly grow our business, the internal controls that we will need will become more complex, and significantly more resources will be required to ensure our internal controls remain effective. Failure to implement required controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we discover a material weakness in our internal controls, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors’ confidence in our financial statements and harm our stock price. In addition, non-compliance with Section 404 could subject us to a variety of administrative sanctions, including the suspension of trading, ineligibility for listing on the OTC Markets, and the inability of registered broker-dealers to make a market in our continuedcommon stock, which would further reduce our stock price.
Since our principal stockholder beneficially owns approximately 90% of our outstanding of common stock, you will not have the ability to obtain future funding
Our principal officestockholder owns approximately 90% of our outstanding shares of our common stock. As a result, you will not have the ability to determine the outcome of matters requiring the approval of stockholders, including: (a) election of our board of directors; (b) removal of any of our directors; (c) amendments to our Articles of Incorporation or bylaws; (d) adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us, or (e) other significant corporate transactions, including the acquisition of a target business.
There is located at c/o Primary Capital LLC, 80 Wall Street, 5th Floor, New York, NY 10005. Our telephone numberno active trading market for our shares of common stock.
There is (212) 300-0070. no active trading market for our common stock. There can be no assurance that a regular trading market for our securities will develop, or that if one develops, that it will be sustained. The trading price of our securities could be subject to wide fluctuations, in response to announcements by us or others, developments affecting us, and other events or factors. In addition, the stock market has experienced extreme price and volume fluctuations in recent years. These fluctuations have had a substantial effect on the market prices for many companies, often unrelated to the operating performance of such companies, and may adversely affect the market prices of the securities. Such risks could have an adverse effect on the stock’s future liquidity.
Our common stock is quotedsubject to the “Penny Stock” Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience and objectives of the person; and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common shares and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the OTC Bulletinlimited market in penny stocks.
Under our Articles of Incorporation, our Board underof Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stock holders and with the ability to adversely affect stockholder voting power and perpetuate the board’s control over our company.
Our Board of Directors by resolution may authorize the issuance of up to 10,000,000 shares of preferred stock in one or more series with such limitations and restrictions as it may determine, in its sole discretion, with no further authorization by security holders required for the issuance of such shares. The Board may determine the specific terms of the preferred stock, including: designations; preferences; conversions rights; cumulative, relative; participating; and optional or other rights, including: voting rights; qualifications; limitations; or restrictions of the preferred stock.
The issuance of preferred stock may adversely affect the voting power and other rights of the holders of common stock. Preferred stock may be issued quickly with terms calculated to discourage, make more difficult, delay or prevent a change in control of our company or make removal of management more difficult. As a result, the Board of Directors’ ability to issue preferred stock may discourage the potential hostile acquirer, possibly resulting in beneficial negotiations. Negotiating with an unfriendly acquirer may result in terms more favorable to us and our stockholders. Conversely, the issuance of preferred stock may adversely affect the market price of, and the voting and other rights of the holders of the common stock. We presently have no plans to issue any preferred stock.
We may, in the future, issue additional shares of common stock, which would reduce investors’ percent of ownership and may dilute our share value.
Our Articles of Incorporation authorizes the issuance of 200 million shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading symbol “ARGB.”market for our common stock.
Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. We cannot assure you that you will be able to sell shares when you desire to do so.
8
| Item 2 | Properties. |
We do not own any real property. Our corporate headquarters areprincipal office is located at c/o Primary Capital LLC, 80 Wall Street, 5th Floor, New York, New York.2770 S. Maryland Pkwy, Suite 314, Las Vegas, Nevada 89109. The office space is provided to us free of charge by Primary Capital LLC, our shareholder.
| Item 3 | Legal Proceedings. |
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affecteffect on our business, financial condition or operating results.
| Item 5 | Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities. |
Market for Our Common Stock
Our common stock is quoted on the OTC Bulletin BoardOTCPINK under the symbol “ARGB.” The following table shows+Given the highlimited number of record holders and low closing pricesthe fact that we are a “shell company” (as defined in Rule 12b-2 under the Exchange Act), there does not exist an active trading market for the periods indicated.
| Year | High | Low | ||||||
| 2013 | ||||||||
| First Quarter | 0.3099 | 0.3099 | ||||||
| Second Quarter | 0.31 | 0.31 | ||||||
| Third Quarter | 0.31 | 0.31 | ||||||
| Fourth Quarter | 0.42 | 0.42 | ||||||
| 2012 | ||||||||
| First Quarter | 1.1 | 0.1143 | ||||||
| Second Quarter | 0.25 | 0.25 | ||||||
| Third Quarter | 0.516 | 0.25 | ||||||
| Fourth Quarter | 0.3099 | 0.25 | ||||||
Holders
As of April 14, 2014, the number ofMarch 15, 2018, we had approximately 169 record holders of our common shares was approximately 172.
Dividends
Since inception we have not paid a dividend. We have no plans to pay any dividends on our common stockstock. We currently do not anticipate paying any cash dividends in the near future. Weforeseeable future on our common stock. Although we intend to retain allour earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
Payment of dividends in the future will depend upon our earnings, growth, capital requirements, and other factors, which our Board of Directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information about the common stock available for issuance under compensatory plans and arrangements as of December 31, 2017.
(c) | ||||||||||||
| Number of securities | ||||||||||||
| (a) Number of | (b) Weighted average exercise | remaining available for future | ||||||||||
| securities | price of | issuance | ||||||||||
| to be issued | outstanding | under equity | ||||||||||
| upon | options, | Compensation | ||||||||||
| exercise of | warrants and | plans | ||||||||||
| outstanding | rights under | (excluding | ||||||||||
| options, | equity | securities | ||||||||||
| warrants | compensation | reflected in | ||||||||||
| Plan Category | and rights | plans | column (a)) | |||||||||
| Equity compensation | ||||||||||||
| plan approved by | ||||||||||||
| security holders | None | -- | None | |||||||||
| Equity compensation | ||||||||||||
| plans not approved by | ||||||||||||
| security holders | None | -- | None | |||||||||
| Total | None | -- | None |
Sales of Unregistered Equity Securities
Except as previously reported in the registration statement and reports we have filed under the Exchange Act, we did not issue or sell any other unregistered equity securities during 2017.
Purchases of Our Equity Securities
Neither we nor any of our affiliates purchased any equity securities from our stockholders during the fourth quarter of the fiscal year ended December 31, 2017.
Penny Stock Rules
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock” and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the foreseeable future,purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for useus to raise additional capital.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in our business operations.
There can be no assurance that our common stock are entitled to one votewill qualify for each share held on all matters submitted to a vote of our stockholders. Holders ofexemption from the Penny Stock Rule. In any event, even if our common stock are entitled to receive dividends ratably, if any, as may be declared bywere exempt from the Board of Directors out of legally available funds,Penny Stock Rule, we would remain subject to any preferential dividend rightsSection 15(b)(6) of any outstanding preferred stock (there are none currently). Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive ratably our net assets available afterExchange Act, which gives the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock.
| Item 6 | Selected Financial Data. |
This item does not apply to issue from time to time the blank check preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.
| Item 7 | Management’s Discussion And Analysis Of Financial Condition And Results Of Operations. |
The following discussion should be read in conjunction with our financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on January 27, 1934.
Plan of Operations
We are a “shell company” (as that term is defined in Rule 12b-2 under the Company’s purpose is toExchange Act) because we have no assets and no operations
We will seek, investigate, and if such investigation warrants, acquire an interest in business opportunities presented to itus by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The CompanyWe will not restrict itsour search to any specific business, industry, or geographical location and the Companywe may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company’sour virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The CompanyWe may acquire assets and establish wholly-ownedwholly owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
We will attempt to acquire other assets or business operations that will maximize stockholder value. There is no certainty that any such transactions will be consummated. We will seek to establish or acquire businesses or assets via the issuance of shares or debt. In pursuing the foregoing goals, we may seek to expand or change the composition of the Board or make changes to our current capital structure, including issuing additional shares or debt and adopting a stock option plan. We have not yet entered into any definitive agreement, nor do we have any binding commitment or understanding to enter into or become engaged in a transaction.
During the next 12 months, we anticipate incurring costs to file Exchange Act reports, and costs to consummate acquisition. We believe we will be able to meet these costs through amounts, as necessary, to be loaned by or invested in us by our stockholders, management or other investors. We have no specific plans, understandings or agreements with respect to the raising of such funds, and we may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since we have no such arrangements or plans currently in effect, our inability to raise funds for the consummation of an acquisition may have a severe negative impact on our ability to become a viable company.
Results of Operations
We did not have any revenues during the fiscal years ended December 31, 20132017 and 2012.
We incurred operating expenses of $22,030$88,872 and $25,578$0 for the fiscal years ended December 31, 20132017 and 2012,2016, respectively.
We incurred interest expense in the amount of $120,100$21,388 and $120,100 for the fiscal years ended December 31, 20132017 and 2012, respectively, on2016, respectively. The decrease is due to the bridge notes.
We realized a net loss of $142,130$(110,260) and $145,678$(120,100) for the fiscal yearsyear ended December 31, 20132017 and 2012, respectively.
Liquidity and Capital Resources
As of December 31, 20132017 we had $0 in cash. We have financed our operations primarily with the proceeds from the issuance to investorsour former principal stockholder of bridge convertible notes inof $1,201,000. During the aggregateyear ended December 31, 2017, the entire principal amountand accrued interest balance due was forgiven by our former CEO and holder of $1,201,000 in 2010. the notes.
Our former principal stockholder advanced funds to us to finance our operations. During the year ended December 31, 2017, our former principal stockholder loaned $54,486 to us that was used to pay certain vendors. The entire loan payable to her of $154,460 was forgiven during the year ended December 31, 2017.
During year ended December 31, 2017, our new Chief Executive Officer and majority stockholder paid some of our expenses totaling $69,953 and was repaid $16,480.
In July 2017, we sold 1,648 shares of preferred stock for cash proceeds of $16,480.
In connection with the Rescission,sale of her 20,701,571 shares of common stock to Vassili Oxenuk, our chief executive officer has purchased fromformer principal stockholder, Ms. Bayazit, forgave the investors allpayment of the outstanding notes. During the fiscal year ended December 31, 2013,indebtedness to financeher under our operations our chief executive officer has extended loans to us in the total amount12% secured promissory note due January 12, 2012 of $9,290. The balance$1,201,000, together with accrued interest thereon of $74,519 remains outstanding and payable on demand without interest.
To satisfy our cash requirements for the next twelve12 months with our current cash andwe need to obtain additional financing. We cannot assure investors that adequate financing will be available. In the absence of such financing, we may be unable to proceed with our plan of operations.
We require working capital principally to fund our current operations which consist of filing required documents with federal and state regulatory authorities to maintain our status as in compliance with applicable requirements, and seeking a merger or acquisition candidate. There are no commitments from banks or other lending sources, including from officers and directors, for lines of credit or similar short-term borrowing. In the absence of financing from third parties, we are dependent upon our principal stockholder to meet any operating expenses that we may incur, including those described above.
Since we had no revenues or earnings from operations, with no significant assets or financial resources, we will in all likelihood sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in our incurring a net loss until we consummate a business combination with a profitable business.
In order to complete any acquisition, we may be required to supplement our available cash and other liquid assets with proceeds from borrowings, the sale of additional securities, including the private placement of restricted stock and/or a public offering, or other sources. There can be no assurance that any such required additional funding will be available or favorable to us.
Our business plan may require substantial funding from a public or private offering of our common stock in connection with a business acquisition, for which we have no commitments. We may actively pursue other financing or funding opportunities at such time as a business acquisition opportunity becomes available.
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.
Critical Accounting Policies and Estimates
Going concern
As shown in the accompanying financial statements, the Companyat December 31, 2017 we had limitedno cash, a deficit working capital of ($72,392) and an accumulated deficit a total deficit,of ($2,402,550), and a net loss throughof ($110,260) for the year ended December 31, 2013,2017, which raise substantial doubt about the Company’sour ability to continue as a going concern.
The Company’s future success is dependent upon,report of our independent registered public accountants on our financial statements as of and for the year ended December 31, 2017 states that these conditions, among other things, itsothers, raise substantial doubt about our ability to raise additional capital or to securecontinue as a future business combination. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations. Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive cash flow.
Our future success is dependent upon, among other things, our ability to seek newraise additional capital from ownersor to secure a future business combination. There is no guarantee that we will be able to raise enough capital or generate revenues to sustain our operations. Our management believes it can raise the appropriate funds needed to support its business plan and related parties to provide needed funds.
Recent Accounting Pronouncements
In May 2011,January 2017, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU No. 2011-04, "Fair Value Measurement: Amendmentsan Accounting Standards Update (“ASU”) 2017-01,Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to Achieve Common Fair Value Measurementassist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and Disclosure Requirements in U.S. GAAP and IFRS" ("ASU 2011-04"). ASU 2011-04 defines fair value, clarifies a framework to measure fair value, and requires specific disclosures of fair value measurements.consolidation. The guidance will beis effective for interim and annual reporting periods beginning after January 1, 2012December 15, 2017 and is requiredshould be applied prospectively on or after the effective date. We are in the process of evaluating the impact of this ASU on our financial statements.
In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be applied retrospectively.presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We are in the process of evaluating the impact of this ASU on our financial statements.
In October 2016, the FASB issued ASU 2016-16,Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We are in the process of evaluating the impact of this ASU on our financial statements.
In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company doesis in the process of evaluating the impact of this ASU on its statements of cash flows.
In March 2016, the FASB issued ASU 2016-09,Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09, which amends several aspects of accounting for employee share- based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholdingrequirements, and classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, with early adoption permitted. The adoption of this ASU did not have an impact on our financial statements.
In February 2016, the FASB issued ASU 2016-02,Leases (Topic 842) ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. We are in the process of evaluating the impact of this ASU on our financial statements.
We do not believe the adoption of ASU 2011-04 willthat any other recently issued, but not yet effective, accounting standards if currently adopted would have a material impacteffect on itsthe accompanying financial statements.
| Item 7A | Item Quantitative And Qualitative Disclosures About Market Risk. |
This item does not apply to smaller reporting companies.
| Item 8 | Financial Statements And Supplementary Data. |
Our financial statements and notes of this Form 10-K appear afterbeginning on page F-1, immediately following the signature page toof this Form 10-K.
| Item 9 | Changes In And Disagreements With Accountants On Accounting And Financial Disclosure. |
None
| Item 9A | Controls And Procedures. |
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures included a review(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of their objectives1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Report.
These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and design,reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our implementationmanagement, including our CEO and CFO to allow timely decisions regarding required disclosure.
Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of themDecember 31, 2017, at the reasonable assurance level. Our management concluded that our disclosure controls and their effect onprocedures were not effective due to the information generated for uselimited number of personnel we have in our organization, which does not allow sufficient segregation of various accounting duties, and the lack of familiarity of such personnel with Generally Accepted Accounting Principles. We believe our financial statements presented in this quarterly report on Form 10-K. In the course10-Q fairly present, in all material respects, our financial position, results of the controls evaluation, we reviewed any data errors or control problems that we had identifiedoperations, and sought to confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions ofcash flows for all periods presented herein.
Inherent Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-K and Form 10-Q. Many of the components ofdo not expect that our disclosure controls and procedures are also evaluated on an ongoing basis. The overall goals of these various evaluation activities are to monitor our disclosure controlswill prevent all error and proceduresall fraud. A control system, no matter how well conceived and to modify them as necessary. The Company’s management evaluatedoperated, can provide only reasonable, not absolute, assurance that the effectivenessobjectives of the Company’s disclosurecontrol system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and procedures (as definedthere can be no assurance that any design will succeed in Sec. 240.13a-15(e) or 240.15d-15(e)) asachieving its stated goals under all potential future conditions. Further, the design of December 31, 2013. Ina control system must reflect the course of that evaluation, the Company’s management determined thatfact that there is limited segregationare resource constraints, and the benefits of duties amongst the Company’s employees with respectcontrols must be considered relative to the Company’s preparation and reviewtheir costs. Because of the Company’s financial statements. This material weakness is a result of the Company’s limited number of employees. This material weakness may affect management’s ability to effectively review and analyze elements of the financial statement closing process and prepare financial statementsinherent limitations in accordance with U.S. GAAP. Based on itsall control systems, no evaluation of these controls can provide absolute assurance that all control issues and procedures required by paragraph (b)instances of Sec. 240.13a-15fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or 240.15d-15, the Company’s management found the Company’s disclosure controlsmistake. In particular, many of our current processes rely upon manual reviews and proceduresprocesses to be ineffective.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act).reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions may occur or that the degree of compliance with the policies or procedures may deteriorate.
Our management has conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’sour internal control over financial reporting as of December 31, 2013. In making this assessment, management used the framework2017. This evaluation was based on criteria set forth in the report entitled “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO, framework summarizes eachInternal Control-Integrated Framework. Based upon such assessment, our Chief Executive Officer and Chief Financial Officer have concluded that our internal controls over financial reporting were effective as of December 31, 2017.
This report shall not be deemed to be filed for purposes of Section 18 of the componentsSecurities Exchange Act of a Company’s internal control system, including (i)1934, or otherwise subject to the control environment, (ii) risk assessment, (iii) control activities, (iv) informationliabilities of that section, and communication, and (v) monitoring. Based on that evaluation, the managementis not incorporated by reference into any filing of the Company, has concluded, aswhether made before or after the date hereof, regardless of the end of the fiscal year covered by this Annual Report on Form 10-K, due to a lack of segregation of duties that our internal control over financial reporting has not been effective. However, at this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. The Company intends to remedy the material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the Company’s employees as soon as the Company has the financial resources to do so. Management is required to apply judgmentany general incorporation language in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The rules of the Securities and Exchange Commission do not require an attestation of the Management’s report was not subject to attestation by our registered public accounting firm because as a smaller reporting company we are not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Controls
There washave been no changechanges in the Company’sour internal control over financial reporting that occurred during the fourthour fiscal quarter of the fiscal year covered by this Annual Report on Form 10-Kended December 31, 2017 that hashave materially affected, or is reasonablyare reasonable likely to materially affect, the Company’sour internal control over financial reporting, other than what has been reported above.
| Item 9B. | Other Information |
None.
| Item 10 | Directors And Executive Officers And Corporate Governance. |
Our directors and executive officers are:
| Name | Age | Position | ||
| Vassili Oxenuk | 52 | President, Chief Executive Officer, Chief Financial Officer and a Director | ||
| Zarina Mamyrkulova | 36 | Corporate Secretary and Treasurer | ||
| Pavel Pronin | 34 | Director |
Vassili Oxenuk has been a member of our Board of Directors, President and CEO since March 2017. He also served as a director of our company from March 2010 to June 24, 2011. Since 2009, Mr. Oxenuk has been the owner and Managing Member of Oxenuk Management, LLC, a registered investment advisor (RIA) headquartered in Las Vegas, Nevada. In addition, since 1996, Mr. Oxenuk has been the owner and Managing Member of Oxenuk Management Corp., which provides consulting and advisory services to companies located in Eastern Europe and the CIS. Mr. Oxenuk has over 20 years of entrepreneurial, venture capital and private equity experience, and has been involved in the management of various venture capital companies that have primarily focused on providing development capital to early stage, high technology companies in Eastern Europe, and has worked with companies from Russia, Kazakhstan, Ukraine and China seeking to have their securities publicly traded. He became a shareholder of a number of broker-dealers doing investment banking; was doing advisors services and created several Investment Funds. Mr. Oxenuk is currently a member of the Board of Directors of several private companies. Mr. Oxenuk graduated from the high school for talented students specialized in physics and mathematics sponsored by the Moscow State University. Mr. Oxenuk has a B.S. in Mathematics from the Mozhaisky Military Space Academy, St. Petersburg, Russia, and a B.A. in Law from the Adygey State University, Russia. He is the author of the book “Realization of Investment Management Functions” and numerous articles on strategic planning, economic development and leadership styles. We believe that Mr. Oxenuk is well suited to sit on our Board based on his extensive experience in venture capital and private equity and in management solutions advising companies in Eastern Europe and CIS on business development and expansion of operations.
In September 2012, an action alleging, among other matters, securities fraud was commenced against Mr. Oxenuk in the United States District Court, District of Nevada. The action was commenced by, among others, Eduard Lozovsky, Dmytro Tykhonov and Igor Yefremov. In the complaint, certain of the plaintiffs allege that they gave $3 million to Mr. Oxenuk to invest on their behalf and that he never returned their money despite repeated requests. In addition, Mr. Lozovsky alleges that he gave Mr. Oxenuk funds to establish a public presence for TBM Holdings, a company in which he was a principal shareholder, and that Mr. Oxenuk failed to do so. On December 5, 2012, a default judgement was entered in favor of the plaintiffs against Mr. Oxenuk in the amount of $5,148,191.47, as well as post judgement interest.
Zarina Mamyrkulova has been Corporate Secretary and Treasurer of our company since April 2017. Through a private company owned by her since 2013, Ms. Mamyrkulova acts as a consultant to non-US persons and businesses seeking to establish a business presence in the United States. As part of the services rendered, Ms. Mamyrkulova assists in the formation of entities and the preparation of annual reports and filings. In a number of instances, Ms. Mamyrkulova serves as an officer of the private companies formed for others. Ms. Mamyrkulova graduated from Kazakh State National University (named after Al Farabi) with a degree in law in 2000. She also received a degree from Kazakh State University of International Relationships and International Languages in 2002 and a Certificate in Business Administration with a Concentration in Finance from UCLA in 2009.
Pavel Pronin has been a director of our company since April 2017. He has been General Director of IPOS, LLC, a Russian company since March 2014. From November 2006 to December 2011, he was employed by Promtechnokom OOO, in Moscow, initially as Business Development Manager and from January 2008 as Head of its Oil and Gas Equipment Sales Department. From January 2005 to April 2006, Mr. Pronin was Dispatching Manager at Mosregiongaz OOO, Gazprom OAO, in Moscow. Mr. Pronin graduated from Gubkin Russian State Oil and Gas University (Moscow) in 2004, has a qualification of an Engineer, pipeline engineering, construction and operation. Mr. Pronin is a graduate of the Russian Presidential Academy of National Economy and Public Administration (Moscow), Graduate School of Corporate Management at Russian Academy of National Economy under the Government of the Russian Federation, and AFW (Academy of Management and Economics, Bad Harzburg, Germany), Euromanagement: business development management in 2008-2009. He graduated with an MBA degree from Graduate School of Corporate Management, Academy of National Economy and IEMI (International Business School, Paris, France) in 2009-2011.
All directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
| Name | Age | Position with American Retail Group, Inc. | Since | |||
| Soledad Bayazit | 49 | President, Chief Executive Officer, Chief Financial Officer, | 2011 | |||
| Secretary, Treasurer and Director |
Except for the indigent in Almaty. Ms. Bayazit was also the President of Paola LLC after she founded the company in 1993. Paola owned and operated manufacturing facilities usedjudgement entered against Mr. Oxenuk in the production of work clothes for industrial organizations in Kazakhstan. During the period from 1983 to 1993, Ms. Bayazit held various positions within the Ministry of Consumer Goods of the USSRcase commenced against him by among others, Eduard Lozovsky, Dmytro Tykhonov and Kazakhstan (from 1991). These positions were Senior Economist (1983-1987), Chief of the Planning Department (1987-1989), Controller (1989-1990), Chief Financial Officer (1990-1992) and Vice President (1992-1993). Ms. Bayazit received a B.A. in Economics and Trade Management and in Finance and Credit from Karagandy Economic University in 1983, and an M.B.A. from the Kaliningrad State Technical University in 2012. We believe that Ms. Bayazit’s qualifications and her almost 20 years of experienceIgor Yefremov in the consumer goods industryUnited States District Court, District of Kazakhstan provide a unique perspective forNevada, our Board.
| ● | had any bankruptcy petition filed by or against any business of which was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time, |
| ● | been convicted in a criminal proceeding and none of our directors is |
| ● | been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or |
| ● | been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacate |
Board Committees
The Board presently consists of one director.
The Board does not have a nominating committee. There are no specific, minimum qualifications that the Board believes must be met by a candidate recommended by the Board. Currently, the entire Board decides on nominees followed by the Board'sBoard’s review of the candidates'candidates’ resumes and interviews of candidates. Based on the information gathered, the Board then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominees.
Currently, the Board functions as an audit committee and performs some of the same functions as an audit committee, including the following: (i) selection and oversight of the Company'sCompany’s independent accountant; (ii) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; and (iii) engaging outside advisors. The Company is not a "listed company"“listed company” under SEC rules and therefore is not required to have an audit committee comprised of independent directors.
The Board does not have a compensation committee and is not required to have such a committee because the Company is not a "listed company"“listed company” under SEC rules.
Audit Committee Financial Expert
The Board of Directors has determined that we do not have an Audit Committee financial expert, as defined under Item 407(d)(5)(i) of Regulation S-K, serving on our Audit Committee. The[The Board has determined that its sole memberMr. Oxenuk is able to read and understand fundamental financial statements and has substantial business experience that results in that member'smember’s financial sophistication.
Director Independence
Our Board has determined that Pavel Pronin is an independent director, as defined by the Rules of NASDAQ, Marketplace Rule 5605(a)(2).
Director Compensation
Employee directors do not receive any compensation for their services as directors. For the Securities Exchange Act of 1934, which requires generally that such persons file reports regarding ownership of transactions in securities of the Company on Forms 3, 4, and 5. Based solely on its review of such forms received by it, the Company believes that all Section 16(a) filing requirements applicable to its officers and directors were complied with during the fiscal year ended December 31, 2012.
Code of Ethics
The rules of the Securities and Exchange Commission requires us to either adopt a code of ethics that applies to our Chief Executive Officer and Chief Financial Officer or explain why we have not adopted such a code of ethics. For purposes of item 406 of Regulation S-K, the term “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
| ● | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; | |
| ● | Full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company; | |
| ● | Compliance with applicable governmental law, rules and regulations; | |
| ● | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and | |
| ● | Accountability for adherence to the code. |
We have not adopted a code of ethics, but plan to do so upon completion of a reverse acquisition with an operating business.
| Item 11 | Executive Compensation. |
The following is a summary ofcompensation table sets forth the total compensation weearned by, paid to, or accrued for our Chief Executive Officer, our only executive officers,officer, for services rendered in all capacities to our company during the two yearsyear ended December 31, 2013 and 2012. No executive officer received compensation in excess of $100,000 for2017.
Summary Compensation Table
| Name and Position(s) | Year | Salary ($) | Stock Awards | All other Compensation | Total Compensation | |||||||||||||
| Vasseli Oxenuk (1) | 2017 | $ | 0 | -- | $ | 0 | $ | 0 | ||||||||||
| Soledad Bayazit(2) | 2017 | $ | 0 | -- | $ | 0 | $ | 0 | ||||||||||
| CEO and CFO | 2016 | $ | 0 | -- | $ | 0 | $ | 0 | ||||||||||
| (1) | Mr. Oxenuk was appointed CEO and CFO in March 2017. |
| (2) | Ms. Bayazit resigned as our CEO and CFO in March 2017. |
Employment Agreements
We do not have any employment agreements with any of those two years.our executive officers.
18
Stock Option Grants
We do not have any equity incentive plans and we did not issue any equity awards or stock options forduring the years ended December 31, 20132017.
Option Exercises and 2012.
None of the named executive officers exercised any stock options during the year ended December 31, 2013, none2017, or held any outstanding stock options as of the members of our Board of Directors received compensation for their service as a director. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMEN AND RELATED STOCKHOLDER MATTERS.
Change in Control
In March 2017, Soledad Bayazit, our then Chief Executive Officer, President, sole director and the owner of 20,701,571 of our shares of common stock, representing approximately 90.28% of our outstanding shares of common stock, sold all 20,701,571 shares of common stock to Vassili Oxenuk, for a purchase price of $300,000, of which $150,000 is payable on the second day following the filing of a Report on Form 8-K with respect to the completion by us of a reverse acquisition. In addition, Ms. Bayazit forgave the repayment of all indebtedness due to her from us, including under our 12% secured promissory note due January 12, 2012 in the principal amount of $1,201,000, together with accrued interest thereon of $672,231, and advances in the aggregate amount of $154,460.
Security Ownership
The following table sets forth certain information with respect toabout the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) our chief executive officer and our top three most highly compensated officers and (iv) all executive officers and directors as a group,common stock as of the date of this report.
Name | Office | Shares Beneficially Owned(1) | Percent of Class(2) | |||||||
| Officers and Directors | ||||||||||
| Soledad Bayazit(3) | Director, CEO and CFO | 20,701,571 | 89.6 | |||||||
| All officers and directors as a group (1 person named above) | 20,701,571 | 89.6 | ||||||||
| 5% Securities Holders | ||||||||||
| Oxenuk Equity Fund Corp. (4) | 1,300,000 | 5.7 | ||||||||
| each of our directors; and | ||
| ● | all of our executive officers and directors as a group. |
Unless otherwise noted below, the address of each beneficial owner listed on the table is c/o American Retail Group, 2770 S. Maryland Pkwy, Suite 318, Las Vegas, Nevada 89109. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws, where applicable. As of March 15, 2018, we had outstanding 22,930,000 shares of common stock.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 15, 2018. We, however, did not deem these shares outstanding for the purpose of computing the percentage ownership of any other person.
| Name | Shares Beneficially Owned(1) | Percent (2) | ||||||
| Directors and Named Executive Officers: | ||||||||
| Vasseli Oxenuk | 20,701,571 | 90.28 | % | |||||
| Pavel Pronin | 0 | -- | ||||||
| Soledad Bayazit(1) | 0 | -- | ||||||
| All Directors and Officers | 20,701,571 | 90.28 | % | |||||
| -- | ||||||||
| Holders of More Than 5% of Outstanding Shares: | ||||||||
| Oxenuk Equity Fund Corp. (2) | 1,300,000 | 5.70 | % | |||||
| (1) | Ms. Bayazit resigned as a director, CEO and CFO in March 2017. |
| (2) | Vassili Oxenuk has the voting and investment powers over the shares held by Oxenuk Equity Fund Corp. The address of Oxenuk Equity Fund Corp. is 2770 S. Maryland Pkwy, Suite |
| Item 13. | Certain Relationships And Related Transactions, And Director Independence. |
Transactions with related persons
The following includes a summary of $100,000 and $55,500 as of December 31, 2010 and 2009, respectively,certain transactions, including all those which occurred since January 1, 2017, or any currently proposed transaction, in consideration for the loans extended by him to fund the Company’s operations. The notes originally carried a fixed rate of 15%. Principal and interestwhich we were or are to be paid ata participant and the occurrenceamount involved exceeded or exceeds the lesser of $120,000 or one percent of the following events: a) Any financing in excessaverage of $25,000, b) A change of control ofour total assets at year-end for the board, c) The issuance of shares equal to or greater than 10% of the outstanding in any 12 month period or other securitieslast two completed fiscal years, and in which upon conversionany related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would equatebe paid or received, as applicable, in arm’s-length transactions.
Our former principal stockholder advanced funds to an issuance in excess of 10% ofus to finance our operations. During the outstanding, d) The occurrence of any business combination transaction.
In connection with the Company’s former chief financial officer and director agreed to forego accrued salariessale of $31,459.50 owed to him.
During year ended December 9, 2010, September 9, 2011 and on any conversion or payment date as applicable. The Company’s obligations under the notes were guaranteed by Oxenuk Equity Fund Corp. Vassili Oxenuk, who was a director of the Company until his resignation on September 24, 2011, has the voting and investment powers over the shares held by Oxenuk Equity Fund Corp.
Insider Transactions Policies and payable on demand without interest. During the fiscal year ended December 31, 2013, to finance our operations our chief executive officer has extended loans to us in the total amount of $9,920. The balance of $74,519 remains outstanding and payable on demand without interest.
The Company does not currently have independent directors as defined by the Rules of NASDAQ, Marketplace Rule 5605(a)(2).an insider transaction policy.
| Item 14 | Principal Accountant Fees And Services. |
The following table sets forthis a summary of the fees billed to the Companyus for professional services rendered by the Company’sour registered independent auditorspublic accountants for the fiscal year ended December 31, 20132017 and by December 31, 20122016:
| Fiscal year ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Audit Fees | $ | 12,750 | $ | 12,750 | ||||
| Audit Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | - | $ | - | ||||
| All Other Fees | $ | - | $ | - | ||||
| Total | $ | 12,750 | $ | 12,750 | ||||
Audit Fees. Consists of fees billed for (i)professional services rendered for the audit of the Company’s annualour financial statements and the review of the Company’s quarterlyinterim financial statements (ii)included in quarterly reports and services renderedthat are normally provided in connection with statutory and regulatory filings or engagements.
Audit Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’sour financial statements thatand are not reported as Audit Fees, and (iii)under “Audit Fees”.
Tax Fees. Consists of fees billed for professional services rendered in connection withfor tax preparation, compliance, tax advice and assistance.
| SERVICES | 2013 | 2012 | ||||||
| Audit Fees | $ | 10,000 | $ | 10,000 | ||||
| Audit - Related Fees | -0- | -0- | ||||||
| Tax fees | -0- | -0- | ||||||
| All Other Fees | -0- | -0- | ||||||
| Total | $ | 10,000 | $ | 10,000 | ||||
All Other Fees. Consists of fees for product and services other than the services reported above.
Board of Directors’ Pre-Approval Policies
Our Board of Directors’ (“BOD”) policy is to engaging our accountantspre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit related services, tax services, and other services. Pre-approval is generally provided for up to perform aone year, and any pre-approval is detailed as to the particular service our Audit Committee obtains an estimate foror category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the service to be performed. The Audit CommitteeBOD regarding the extent of services provided by the independent auditors in accordance with its procedures approved allthis pre-approval and the fees for the services performed to date. The BOD may also pre-approve particular services on a case-by-case basis.
Our BOD has reviewed our audited financial statements contained in our Annual Report on Form 10-K for the 2016 fiscal year. The BOD also has been advised of the matters required to be discussed pursuant to PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), which includes, among other items, matters related to the conduct of the audit of our financial statements.
Our BOD has considered whether the provision of services described above.other than audit services is compatible with maintaining auditor independence. Based on the review and discussions referred to above, the BOD has determined that the audited financial statements be included in our Annual Report on Form 10-K for our 2016 fiscal year for filing with the SEC.
| ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
| (a) | The following documents have been filed as a part of this Annual Report on Form 10-K. |
| 1. | Financial Statements Years Ended 12/31/2017 and 12/31/2016 |
| 2. | Financial Statement Schedules. |
All schedules are omitted because they are not applicable or not required or because the required information is included in the Financial Statements or the Notes thereto.
| 3. | Exhibits: |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
| American Retail Group, Inc. | ||
| Date: April 2, 2018 | By: | /s/ |
Vassili Oxenuk Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) | ||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities andindicated on the dates indicated.
| Title | ||||
| /s/ | Chief Executive Officer, Chief Financial Officer and a Director | |||
| Vassili Oxenuk |
| Pavel Pronin |
Financial Statements
December 31, 2017 and 2016
Contents
To TheShareholders and the Board of Directors
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of American Retail Group, Inc. (“the Company”) as of December 31, 20132017 and 2012,2016, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the two years then ended. in the period ended December 31, 2017 and the related notes (collectively referred to as “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion
These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audit.
We conducted our auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not requiredmisstatement, whether due to have, nor were we engagederror or fraud. Our audits included performing procedures to perform, an auditassess the risks of its internal control overmaterial misstatement of the financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditstatements, whether due to error or fraud, and performing procedures that are appropriate in the circumstances, 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. An audit also includesrespond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. 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 statement presentation.statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.
The accompanying financial statements have beenwere prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, as of December 31, 2017 the Company had no cash, a working capital deficit, an accumulated deficit, and does not currently have anyhas no revenue generating operations. These conditions, among others, raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.uncertainty
We have served as the Company’s auditor since 2017.
MJF & Associates
Los Angeles, California
March 28, 2018
| F-2 |
| AMERICAN RETAIL GROUP, INC. | ||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| December 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS: | ||||||||
| Cash and cash equivalents | $ | - | $ | - | ||||
| TOTAL ASSETS | $ | - | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS' (DEFICIT) | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | 19,874 | $ | 7,134 | ||||
| Notes Payable - related party | 1,201,000 | 1,201,000 | ||||||
| Accrued interest - related party | 290,543 | 170,443 | ||||||
| Loan payable - related party | 74,519 | 65,229 | ||||||
| Total current liabilities | 1,585,936 | 1,443,806 | ||||||
| Total liabilities | 1,585,936 | 1,443,806 | ||||||
| STOCKHOLDERS' (DEFICIT) | ||||||||
| Preferred stock, $.0001 par value, 10,000,000 shares authorized; | ||||||||
| -0- shares issued and outstanding | - | - | ||||||
| Common stock, $.0001 par value, 200,000,000 shares authorized; | ||||||||
| 22,930,000 and 22,930,000 shares issued and outstanding at | ||||||||
| December 31, 2013 and 2012, respectively | 2,293 | 2,293 | ||||||
| Additional paid-in capital | 283,694 | 283,694 | ||||||
| Accumulated Deficit | (1,871,923 | ) | (1,729,793 | ) | ||||
| Total stockholders' (deficit) | (1,585,936 | ) | (1,443,806 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | - | $ | - | ||||
Balance Sheets
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | - | $ | - | ||||
| Total current assets | - | - | ||||||
| TOTAL ASSETS | $ | - | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 22,919 | $ | 54,486 | ||||
| Due to stockholder | 49,473 | - | ||||||
| Notes payable - related party | - | 1,201,000 | ||||||
| Accrued interest - related party | - | 672,231 | ||||||
| Loan payable - related party | - | 99,974 | ||||||
| Total current liabilities | 72,392 | 2,006,303 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value $0.0001; 10,000,000 shares authorized; 1,648 shares issued and outstanding | - | - | ||||||
| Common stock, par value $0.0001; 200,000,000 shares authorized; 22,930,000 shares issued and outstanding | 2,293 | 2,293 | ||||||
| Additional paid in capital | 2,327,865 | 283,694 | ||||||
| Accumulated deficit | (2,402,550 | ) | (2,292,290 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (72,392 | ) | (2,006,303 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | - | ||||
The accompanying notesfootnotes are an integral part of these condensed financial statementsstatements.
| F-3 |
| AMERICAN RETAIL GROUP, INC. | ||||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||||
| Year Ended | Year Ended | |||||||
| December 31, 2013 | December 31, 2012 | |||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | 22,030 | 25,578 | ||||||
| Total operating expenses | 22,030 | 25,578 | ||||||
| LOSS FROM OPERATIONS | (22,030 | ) | (25,578 | ) | ||||
| OTHER EXPENSE | ||||||||
| Interest expense | 120,100 | 120,100 | ||||||
| NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | (142,130 | ) | (145,678 | ) | ||||
| BASIC LOSS PER COMMON SHARE | $ | (0.01 | ) | $ | (0.01 | ) | ||
| WEIGHTED AVERAGE SHARES OUTSTANDING | 22,930,000 | 22,930,000 | ||||||
Statements of Operations
| Years Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenue | $ | - | $ | - | ||||
| Operating expenses: | ||||||||
| General and administrative expenses | 88,872 | - | ||||||
| Total operating expenses | 88,872 | - | ||||||
| Loss from operations | (88,872 | ) | - | |||||
| Other expense: | ||||||||
| Interest expense | (21,388 | ) | (120,100 | ) | ||||
| Total other expense | (21,388 | ) | (120,100 | ) | ||||
| Net loss | $ | (110,260 | ) | (120,100 | ) | |||
| Weighted average common shares outstanding - basic and diluted | 22,930,000 | 22,930,000 | ||||||
| Net loss per common share - basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) | ||
The accompanying notesfootnotes are an integral part of these condensed financial statementsstatements.
| F-4 |
| AMERICAN RETAIL GROUP, INC. | ||||||||
| CONDENCED STATEMENTS OF CASH FLOWS | ||||||||
| Year Ended | Year Ended | |||||||
| December 31, 2013 | December 31, 2012 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) | $ | (142,130 | ) | $ | (145,678 | ) | ||
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Expenses paid by related party | - | - | ||||||
| Accrued interest to related parties | 120,100 | 120,100 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 12,740 | (27,732 | ) | ||||
| Net cash used in operating activities | (9,290 | ) | (53,310 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of subsidiary | - | - | ||||||
| Net cash used in investing activities | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of loan from related party | 9,290 | 53,310 | ||||||
| Net cash provided by financing activities | 9,290 | 53,310 | ||||||
NET (DECREASE) IN CASH AND CASH EQUIVALENTS | - | - | ||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | - | - | ||||||
CASH AND CASH EQUIVALENTS - END OF YEAR | $ | - | $ | - | ||||
Statements of Stockholders’ Deficit
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2015 | - | $ | - | 22,930,000 | $ | 2,293 | $ | 283,694 | $ | (2,172,190 | ) | $ | (1,886,203 | ) | ||||||||||||||
| Net loss | - | - | - | - | - | (120,100 | ) | (120,100 | ) | |||||||||||||||||||
| Balance, December 31, 2016 | - | - | 22,930,000 | 2,293 | 283,694 | (2,292,290 | ) | (2,006,303 | ) | |||||||||||||||||||
| Sale of preferred stock for cash | 1,648 | - | - | - | 16,480 | - | 16,480 | |||||||||||||||||||||
| Forgiveness of related party debt | 2,027,691 | 2,027,691 | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (110,260 | ) | (110,260 | ) | |||||||||||||||||||
| Balance, December 31, 2017 | 1,648 | $ | - | 22,930,000 | $ | 2,293 | $ | 2,327,865 | $ | (2,402,550 | ) | $ | (72,392 | ) | ||||||||||||||
The accompanying notesfootnotes are an integral part of these condensed financial statementsstatements.
| F-5 |
| AMERICAN RETAIL GROUP, INC. | ||||||||||||||||||||||||||||
| CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIT | ||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid - In | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance, January1, 2012 | 22,930,000 | 2,293 | - | - | 283,694 | (1,584,114 | ) | (1,298,128 | ) | |||||||||||||||||||
| Net loss | (145,678 | ) | (145,678 | ) | ||||||||||||||||||||||||
| Balance, December 31, 2012 | 22,930,000 | 2,293 | - | - | 283,694 | $ | (1,729,792 | ) | $ | (1,443,806 | ) | |||||||||||||||||
| Net loss | (142,130 | ) | (142,130 | ) | ||||||||||||||||||||||||
| Balance, December 31, 2013 | 22,930,000 | 2,293 | - | - | 283,694 | $ | (1,871,922 | ) | $ | (1,585,936 | ) | |||||||||||||||||
Statements of Cash Flows
| Years Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (110,260 | ) | $ | (120,100 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | (31,567 | ) | - | |||||
| Accrued interest | 21,388 | 120,100 | ||||||
| Net cash used in operating activities | (120,439 | ) | - | |||||
| FINANCING ACTIVITIES: | ||||||||
| Advances from stockholder | 65,953 | - | ||||||
| Repayments to stockholder | (16,480 | ) | ||||||
| Proceeds from sale of preferred stock | 16,480 | |||||||
| Loan from related party | 54,486 | - | ||||||
| Net cash provided by financing activities | 120,439 | - | ||||||
| NET INCREASE IN CASH | - | - | ||||||
| CASH, BEGINNING OF PERIOD | - | - | ||||||
| CASH, END OF PERIOD | $ | - | $ | - | ||||
| CASH PAID FOR: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income taxes | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
| Forgiveness of related party debt | $ | 2,027,691 | $ | - | ||||
The accompanying notesfootnotes are an integral part of these condensed financial statements
| F-6 |
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2012
Note 1 -– Organization and Operations
Organization and Line of Business
American Retail Group, Inc., formerly known as Resource Acquisition Group, Inc. (the “Company”), is a Nevada corporation organized on January 27, 1934.
Currently the Company’s purpose is to seek, investigate, and if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature.
Change in Control
In March 2017, Soledad Bayazit, the Company’s then Chief Executive Officer, President, sole director and the owner of 20,701,571 of our shares of common stock, representing approximately 90.28% of our outstanding shares of common stock, sold all 20,701,571 shares of common stock to Vassili Oxenuk, for a purchase price of $300,000, of which $150,000 is payable on the second day following the filing of this registration statement. In addition, Ms. Bayazik forgave the payment of the indebtedness to her under our 12% secured promissory note due January 12, 2012
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP).
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of AmericaUS GAAP requires management to make estimates and assumptions that affect thecertain reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actualdisclosures. Accordingly, actual results could differ from those estimates.
Financial Instruments
The Company follows FASB ASC 825-10-50-10 “Financial Instruments-Overall-Disclosure” Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825Financial Instrumentsfor its financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts payable and accrued expenses and notes payable to a related party, approximate their fair values because of the short maturity of these instruments.
Fair Value of Financial Instruments
FASB ASC Topic 820,Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825,Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. |
As of December 31, 2017 and 2016, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.
| F-7 |
AMERICAN RETAIL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2017 and 2016
Income Taxes
The Company usesaccounts for income taxes in accordance with ASC Topic 740,Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, in accordance with ASC Topic 740, “Income Taxes.” Under this method, incomewhereby deferred tax expense isassets are recognized for the amount of: (i) taxes payable or refundable for the current yeardeductible temporary differences, and (ii) deferred tax consequencesliabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of temporary differences resulting from matters that have been recognized in an entity’s financial statements orassets and liabilities and their tax returns.bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable incomereduced by a valuation allowance when, in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilitiesopinion of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence,management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.
Under ASC 740, a tax position taken or expected tois recognized as a benefit only if it is “more likely than not” that the tax position would be takensustained in a tax return. ASC Topic 740.10.40 provides guidanceexamination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We haveexamination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
Basic and Diluted Loss Per Share
Loss per share is calculated in accordance with ASC Topic 260,Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were no potentially dilutive securities outstanding during the year ended December 31, 2017 and 2016.
Note 3 – Going Concern
The Company'sCompany’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, the Company has no cash, has losses and an accumulated deficit, and does not have any revenue generating operations.a working capital deficiency. The Company does not currently have any revenue generating operations. These conditions, among others, raise substantial doubt about the ability of the Company to continue as a going concern.
In view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company'sCompany’s ability to, meets its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.
Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive cash flow. Management intends to seek new capital from owners and related parties to provide needed funds.
| F-8 |
AMERICAN RETAIL GROUP, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2012
Note 4 – Related Party Transactions
Ms. Soledad Bayazit, the Company’s former Chief Executive Officer, and sole director purchased all the outstandingand majority stockholder, held 10% secured notes from the noteholders for the aggregate amountdue January 12, 2012 of $1,201,000.
To finance ourthe Company’s operations our chief executive officer hasMs. Bayazit extended loans to us in the total amount of $53,310 and $9,920, respectively.Company. The remaining balance at December 31, 20132016 of $74,519 is$99,974 was presented as Loanloan payable – related party in the accompanying consolidated balance sheet, suchsheet. The loan iswas non-interest bearing and due on demand.
During year ended December 31, 2017, the Company’s new Chief Executive Officer and majority stockholder paid expenses of the Company totaling $65,953 and was repaid $16,480. The balance due of $49,473 is presented as due to stockholder in the accompanying balance sheet. The amount is non-interest bearing and payable upon demand.
Note 5 – Stockholders’ Equity
In July 2017, the Company sold 1,648 shares of preferred stock for cash proceeds of $16,480.
Note 6 – Income Taxes
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized.
Note 67 – Subsequent Events
In January 2017, the FASB issued an Accounting Standards Update (“ASU”) 2017-01,Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied prospectively on or after the effective date. The Company has evaluated all subsequent events that occurred up tois in the timeprocess of evaluating the Company's issuanceimpact of this ASU on its financial statements.
In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.
In October 2016, the FASB issued ASU 2016-16,Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.
| F-9 |
AMERICAN RETAIL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2017 and 2016
In March 2016, the FASB issued ASU 2016-09,Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, with early adoption permitted. The adoption of this ASU did not have an impact on the Company’s financial statements.
In February 2016, the FASB issued ASU 2016-02,Leases (Topic 842) ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15,Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The adoption of this ASU did not have an impact on the Company’s financial statements.
In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
F-10