UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 000-31705
GHST World Inc. |
(Exact name of registrant as specified in charter) |
Delaware | 91-2007477 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
Identification No.) | ||
667 Madison Avenue 5th Floor New York, NY | ||
(Address of principal executive offices) | (Zip Code) |
+1 (212) 634-6860 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check markcheckmark whether the registrant has (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 o☐ No þ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 o☒ No o☐
Indicate by check markcheckmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | |||
Non-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 standard provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☒
As of June 11, 2021, the issuer had 523,908,071 shares of its common stock, $0.001 par value per share, outstanding.
Explanatory Note
The GHST World Inc. (the “Registrant”) is timely filing this quarterly report on Form 10-Q which is due June 22, 2021, following the May 8, 2021 effective date of its registration statement on Form 10.
TABLE OF CONTENTS
Page | ||||||
Item 1 | Financial Statements | 1 | ||||
Consolidated Balance Sheets - As of March 31, 2021 and June 30, 2020 | 1 | |||||
Consolidated Statements of Operations – | 2 | |||||
Consolidated Statements of Stockholders’ Equity (Deficit) – For the Nine Months Ended March 31, 2021 and 2020 | 3 | |||||
Consolidated Statements of Cash Flows – For the Nine Months Ended March 31, 2021 and 2020 | 4 | |||||
Notes to Consolidated Financial Statements | 5 | |||||
Item | ||||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | |||||
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 12 | ||||
Item 4 | Controls and Procedures | 13 | ||||
Part II - Other Information | ||||||
Item | ||||||
Legal Proceedings | 14 | |||||
Item | Risk Factors | 14 | ||||
Item | Unregistered Sales of Equity Securities and Use of Proceeds | 14 | ||||
Item | Defaults Upon Senior Securities | 14 | ||||
Item 4 | Mine Safety Disclosures | 14 | ||||
Item 5 | Other Information | 14 | ||||
Item 6 | Exhibits | 14 | ||||
14 | ||||||
Signatures | 16 |
i |
Consolidated Balance Sheets
Unaudited
March 31, 2021 | June 30, 2020 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 55,576 | $ | 292 | ||||
Total Current Assets | 55,576 | 292 | ||||||
Other Asset | ||||||||
Other assets | 115,000 | 115,000 | ||||||
Patent costs | 41,811 | 33,786 | ||||||
Total Assets | $ | 212,387 | $ | 149,078 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 9,986 | $ | 7,092 | ||||
Advances from related parties | 13,687 | 8,336 | ||||||
Common stock payable | 123,232 | 148,163 | ||||||
Common stock payable - related parties | 94,552 | 94,552 | ||||||
Total Current Liabilities | 241,457 | 258,143 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, Series A, $0.001 par value; 5,000,000 shares authorized; | ||||||||
6,000 shares issued and outstanding at June 30, 2020 and 2019 | 6 | 6 | ||||||
Preferred stock, Series B, $0.001 par value; 5,000,000 shares authorized; | ||||||||
2,200 shares issued and outstanding at June 30, 2020 and 2019 | 2 | 2 | ||||||
Common stock, $0.001 par value, 700,000,000 shares authorized; | ||||||||
523,908,071 and 397,942,449 shares issued at March 31, 2021 and June 30, 2020 | 523,909 | 397,943 | ||||||
Additional paid-in-capital | 8,656,124 | 8,608,680 | ||||||
Accumulated deficit | (9,209,111 | ) | (9,115,696 | ) | ||||
Total Stockholders’ Deficit | (29,070 | ) | (109,065 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 212,387 | $ | 149,078 |
The accompanying notes are an integral part of these consolidated financial statements.
Ghost Technology, Inc. | ||||||||
(A Development Stage Company) | ||||||||
Balance Sheets | ||||||||
December 31, 2010 | June 30, 2010 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 3,419 | $ | 87,866 | ||||
Prepaid expenses | 1,750 | $ | - | |||||
Loan receivable - related party | - | 130,000 | ||||||
Other | - | 1,077 | ||||||
Total Current Assets | 5,169 | 218,943 | ||||||
Prepaid technical services costs, net | 591,667 | - | ||||||
Total Assets | $ | 596,836 | $ | 218,943 | ||||
Liabilities and Stockholders’ Equity (Deficit) | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 153,840 | $ | 44,383 | ||||
Due to related parties | 43,500 | 43,500 | ||||||
Due to former related parties | 28,000 | 28,000 | ||||||
Total Current Liabilities | 225,340 | 115,883 | ||||||
Stockholders’ Equity (Deficit) | ||||||||
Preferred stock, Series A, $0.001 par value; 5,000,000 shares authorized; | ||||||||
2,000 shares issued and outstanding | 2 | 2 | ||||||
Common stock, $0.001 par value, 300,000,000 shares authorized; | ||||||||
179,014,691 and 175,996,122 shares issued at December 31, 2010 and June 30, 2010, respectively | ||||||||
178,884,691 and 175,996,122 outstanding at December 31, 2010 and June 30, 2010, respectively | 179,015 | 175,996 | ||||||
Common stock to be issued ( 350,000 common shares at par) | 350 | |||||||
Additional paid-in capital | 6,831,695 | 6,155,064 | ||||||
Deficit accumulated during the development stage | (6,509,566 | ) | (6,228,002 | ) | ||||
Treasury stock, at cost (130,000 common shares) | (130,000 | ) | - | |||||
Total Stockholders’ Equity (Deficit) | 371,496 | 103,060 | ||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 596,836 | $ | 218,943 |
Consolidated Statements of Operations
Unaudited
For the Three Months ended March 31, | For the Nine Months ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | 131 | ||||||||
Operating expenses: | ||||||||||||||||
General and administrative expenses | 46,777 | 6,806 | 93,415 | 26,928 | ||||||||||||
Stock based compensation | — | — | — | — | ||||||||||||
Total operating expenses | 46,777 | 6,806 | 93,415 | 26,928 | ||||||||||||
Net loss | $ | (46,777 | ) | $ | (6,806 | ) | $ | (93,415 | ) | $ | (26,797 | ) | ||||
Net loss per common share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average number of common shares outstanding - basic and diluted | 514,601,805 | 397,942,449 | 444,955,690 | 397,942,449 |
The accompanying notes to unauditedare an integral part of these consolidated financial statements.
Ghost Technology, Inc. | ||||||||||||||||||||
(A Development Stage Company) | ||||||||||||||||||||
Statements of Operations | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Three Months Ended December 31 | For the Six Months Ended December 31 | From November 12, 1999 (inception) to | ||||||||||||||||||
2010 | 2009 | 2010 | 2009 | December 31, 2010 | ||||||||||||||||
Revenues | $ | - | $ | - | $ | 25,000 | $ | - | $ | 85,000 | ||||||||||
General and administrative expenses | 152,392 | 64,154 | 306,564 | 155,290 | 6,594,566 | |||||||||||||||
Net loss | $ | (152,392 | ) | $ | (64,154 | ) | $ | (281,564 | ) | $ | (155,290 | ) | $ | (6,509,566 | ) | |||||
Net loss per common share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.14 | ) | |||||
Weighted average number of common shares outstanding - basic and diluted | 177,196,829 | 175,969,122 | 176,569,920 | 175,494,899 | 45,020,536 |
2 |
Six Months Ended December 31, | From November 12, 1999 (Inception) to | |||||||||||
2010 | 2009 | December 31, 2010 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | $ | (281,564 | ) | $ | (155,290 | ) | $ | (6,509,566 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Stock issued for services | 10,000 | 55,000 | 2,026,584 | |||||||||
Stock issued for license | - | - | 2,877,547 | |||||||||
Depreciation | - | - | 5,667 | |||||||||
Amortization of prepaid technical service costs | 8,333 | - | 8,333 | |||||||||
Impairment of long lived assets | - | - | 128,700 | |||||||||
General and administrative expenses - contributed by related party | - | 58,160 | 404,161 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Other current asset | 1,077 | (1 | ) | - | ||||||||
Prepaid expenses | (1,750 | ) | (14,444 | ) | (1,750 | ) | ||||||
Accounts payable and accrued expenses | 109,457 | 36,531 | 153,840 | |||||||||
Net Cash Used In Operating Activities | (154,447 | ) | (20,044 | ) | (906,484 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Loans to related party | - | - | (130,000 | ) | ||||||||
Purchase of equipment | - | - | (134,367 | ) | ||||||||
Net Cash Used In Investing Activities | - | - | (264,367 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from related party loans | - | - | 43,500 | |||||||||
Proceeds from loan | - | 21,000 | 300,000 | |||||||||
Proceeds - former related parties | - | - | 28,000 | |||||||||
Proceeds from sale of common stock and subscription receivable | 70,000 | - | 402,770 | |||||||||
Contributed capital - related party | - | - | 400,000 | |||||||||
Net Cash Provided By Financing Activities | 70,000 | 21,000 | 1,174,270 | |||||||||
Net increase (decrease) in cash | (84,447 | ) | 956 | 3,419 | ||||||||
Cash - beginning of period | 87,866 | 6 | - | |||||||||
Cash - end of period | $ | 3,419 | $ | 962 | $ | 3,419 | ||||||
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Cash paid during the year/period for: | ||||||||||||
Interest | $ | - | $ | - | $ | - | ||||||
Taxes | $ | - | $ | - | $ | - | ||||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Conversion of loan to common stock | $ | - | $ | - | $ | (300,000 | ) | |||||
Acquisition of treasury stock in exchange for related party loan receivable | $ | 130,000 | $ | - | $ | 130,000 |
Consolidated Statement of Stockholders' Deficit
For the Nine Months ended March 31, 2021
Unaudited
Preferred Stock | Preferred Stock | Common Stock, | Additional | Stock | Total | ||||||||||||||||||||||||||||||||||||
Series A | Series B | $.001 Par Value | Paid in | Subscription | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Deficit | Deficit | ||||||||||||||||||||||||||||||||
Balance June 30, 2020 | 6,000 | $ | 6 | 2,200 | $ | 2 | 397,942,449 | $ | 397,943 | $ | 8,608,680 | $ | — | $ | (9,115,696 | ) | $ | (109,065 | ) | ||||||||||||||||||||||
Issuance of shares in exchange of debt | 25,000,000 | $ | 25,000 | $ | (69 | ) | $ | 24,931 | |||||||||||||||||||||||||||||||||
Issuance of shares for cash | 100,965,622 | $ | 100,966 | $ | 47,513 | $ | 148,479 | ||||||||||||||||||||||||||||||||||
Net loss for the nine months ended March 31, 2021 | — | — | — | — | — | — | — | — | (93,415 | ) | (93,415 | ) | |||||||||||||||||||||||||||||
Balance March 31, 2021 | 6,000 | $ | 6 | 2,200 | $ | 2 | 523,908,071 | $ | 523,909 | $ | 8,656,124 | $ | — | $ | (9,209,111 | ) | $ | (29,070 | ) |
The accompanying notes to unauditedare an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
Unaudited
For the Nine Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (93,415 | ) | $ | (26,797 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock issued for services | — | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | — | 318 | ||||||
Accounts payable and accrued expenses | 2,894 | (5,681 | ) | |||||
Net Cash Used In Operating Activities | (90,521 | ) | (32,160 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Patent costs | (8,025 | ) | — | |||||
Net Cash Used In Investing Activities | (8,025 | ) | — | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Advances to related parties | 5,351 | 14,667 | ||||||
Sale of common stock | 148,479 | 8,735 | ||||||
Net Cash Provided By Financing Activities | 153,830 | 23,402 | ||||||
Net increase (decrease) in cash | 55,284 | (8,758 | ) | |||||
Cash - beginning of period | 292 | 2,085 | ||||||
Cash - end of period | $ | 55,576 | $ | 133 | ||||
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the year/period for: | ||||||||
Interest | $ | — | $ | — | ||||
Taxes | $ | — | $ | — | ||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Issuance of common stock in exchange for debt | $ | 24,931 | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
4 |
March 31, 2010
Unaudited
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
Background
GHST World Inc. (“the Company”), formerly GHST International, Inc., Ghost Technology, Inc and IA Europe Group Inc. (“IAEG”), is a Delaware Corporationcorporation that was incorporated on November 12, 1999. The Company previously filed U.S. Securities and Exchange Commission (“SEC”) filings as General Telephony.com, Inc. (“GTI”) prior to its name change. On January 16, 2008,December 6, 2002, IAEG merged with GTI in a transaction treated as a reverse acquisition and recapitalization.
The Company is a holding company for various technology and other activities. The Company has acquired and is developing several patents in the technology sector.
On June 29, 2019, the Company changed its name to Ghost Technology, Inc.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Liquidity and Going Concern
The Company's financial statements are presented as thosehave been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of a development stage company. Activities during the development stage primarily include negotiating distribution agreements and marketing the territory for distribution outletsbusiness for the product.foreseeable future. The Company while seeking to implement its business plan, will look to obtain additional debt and/or equity related funding opportunities.had a net loss of $37,656 for the year ended June 30, 2020 and $93,415 for the Nine months ended March 31, 2021. The Company has generated minimal revenues since inception.an accumulated deficit of $9,209,111 and a stockholders’ deficit of $29,070 as of March 31, 2021 and used $90,521 in cash flow from operating activities for the nine months ended March 31, 2021.
Management believes these conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. The ability to continue as a going concern is dependent upon profitable future operations, positive cash flows, and additional financing.
Management intends to raise money through investors as needed to support its working capital needs.. Currently the Company intends to raise capital from its existing shareholders and from the possible sale of a minority interest in its subsidiaries. Management cannot provide any assurances that the Company will be successful in completing these undertakings and accomplishing any of its plans.
5 |
Notes to Consolidated Financial Statements
March 31, 2021 and June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Presentation
The consolidated financial statements have been prepared in conformity with U.S. GAAP. The consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Amendment 2 to Form 10 filed on May 7, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of the following wholly owned subsidiaries:
· | GHST Art World, Inc |
· | GHST Sport Inc. |
· | IoTT world Inc. |
All intercompany balances and transactions have been eliminated in consolidation.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it is a credit counterparty, and as such, it believes that any associated credit risk exposures are limited.
Use of Estimates
The preparation of financial statements in conformity with U.S.accounting principles generally accepted accounting principlesin the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Such estimates and assumptions impact, among others, the following: the fair value of share-based payments and transactions and a full valuation allowance on deferred tax assets due to continuing losses.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
6 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
March 31, 2021 and June 30 2010, respectively.
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Risks and Uncertainties
The Company operates in an industryis undertaking a new business venture that is subject to intense competition and change in consumer demand. The Company's operations areinherently subject to significant riskrisks and uncertainties, including financial, operational, technological and operationalother risks including the potentialthat could potentially have a risk of business failure. Also, see Note 4 regarding going concern matters.
Impairment of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
The Company accounts for income taxesimpairment of long-lived assets in accordance with accounting guidance now codifiedAccounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, (“ASC 360”). Long-lived assets consist primarily of property, plant and equipment. In accordance with ASC 360, the Company periodically evaluates long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When triggering event indicators are present, the Company obtains appraisals on an asset by asset basis and will recognize an impairment loss when the sum of the appraised values is less than the carrying amounts of such assets. The appraised values, based on reasonable and supportable assumptions and projections, require subjective judgments. Depending on the assumptions and estimates used, the appraised values projected in the evaluation of long-lived assets can vary within a range of outcomes. The appraisals consider the likelihood of possible outcomes in determining the best estimate for the value of the assets. As of March 31, 2021 and June 30, 2020, the Company did not recognize any impairment losses.
Intangible Assets
The Company capitalizes external costs, such as FASB ASC Topic 740, “filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. The Company expenses costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. The Company will amortize capitalized patent costs for internally generated patents on a straight-line basis over ten years, which represents the estimated useful lives of the patents. The ten-year estimated useful life for internally generated patents is based on management’s assessment of such factors as the integrated nature of the portfolios being licensed, the overall makeup of the portfolio over time, and the length of license agreements for such patents. The Company assesses the potential impairment to all capitalized net patent cost when events or changes in circumstances indicate that the carrying amount of its patent portfolio may not be recoverable. For the nine months ended March 31, 2021 the Company has capitalized $8,025 of patent costs. As of March 31, 2021 total patent cost totaled $41,811.
Income Taxes,” which requires that
Deferred tax assets and liabilities are recognized for the Company recognize deferredfuture tax liabilities and assets based on theconsequences attributable to temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and the respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates in effectexpected to apply to taxable income in the years thein which those temporary differences are expected to reverse.be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax benefit (expense) results fromexpense represents the change during the period in netthe deferred tax assets orand deferred tax liabilities. ADeferred tax assets are reduced by a valuation allowance is recorded when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
GHST WORLD, INC.
Accounting guidance now codified as FASB ASC Topic 740-20, Notes to Consolidated Financial Statements
“Income TaxesMarch 31, 2021 and June 30 2020
Unaudited
NOTE 2 – Intraperiod Tax Allocation,”SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements
The effect of income tax positions taken in previously filed tax returns oris recognized only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns including a decision whetheron an ongoing basis. The Company’s tax returns are subject to fileexamination by federal and state taxing authorities for the years ended June 30, 2007 through 2019. However, the Company's federal net operating losses for tax years ending June 30, 2019 and 2020 will remain subject to examination until the losses are utilized or expire. Under the Tax Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017, Net Operating Losses (“NOLs”) incurred for tax years beginning before January 1, 2018, will be able to be carried forward for 20 years. For NOLs incurred in tax years beginning after December 31, 2017, these NOLs will be subject to the new limitations imposed by TCJA. Under the new law, an NOL can offset only 80% of taxable income in any given tax year. Furthermore, NOLs can no longer be carried back, they must be carried forward. The 20-year carryforward period has been replaced with an indefinite carryforward period for NOLs incurred for tax years beginning after December 31, 2017. The Company’s NOL for the year ended June 30, 2020 will be subject to the 20-year carryforward period and would be utilized before any NOLs incurred for tax years beginning after December 31, 2017. The Company’s NOL incurred for the year ended June 30, 2019 and 2020 are subject to the new rules of TCJA. The NOL carryforwards for the periods ended June 30, 2020 and 2019 are approximately $48,000 and $37,000, respectively and the total NOL carryforward to the year ended June 30, 2020 is approximately $2.6 million.
Stock Based Compensation
The Company applies the fair value method of ASC 718, Share Based Payment, formerly Statement of Financial Accounting Standards ("SFAS") No. l23R "Accounting for Stock Based Compensation", in accounting for its stock-based compensation. This accounting standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period, if any. As the Company does not have sufficient, reliable, and readily determinable values relating to fileits common stock, the Company has used the stock value pursuant to its most recent sale of stock for purposes of valuing stock-based compensation.
Recent Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a particular jurisdiction.Cloud Computing Arrangement that is a Service Contract”, which aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years beginning after December 15, 2020.
GHST WORLD, INC.
Notes to Consolidated Financial Statements
March 31, 2021 and June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In January 2017, the FASB ASC Topic 740-20 requiresissued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” in order to simplify the measurement of goodwill impairment by eliminating Step 2 from the goodwill impairment test. Currently, Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that any liability created for unrecognized tax benefits is disclosed. The applicationgoodwill. In computing the implied fair value of FASB ASC Topic 740-20 may also affectgoodwill under Step 2, an entity had to perform procedures to determine the tax basesfair value at the impairment testing date of its assets and liabilities following the same procedure that would be required for purchase price allocation in a business combination. Under the amendments in this ASU, a goodwill impairment loss will be measured using the difference between the carrying amount and therefore may changethe fair value of the reporting unit limited to the total carrying amount of that reporting unit’s goodwill. The guidance in this ASU also eliminates the requirements for any reporting unit with a zero or create deferred tax liabilitiesnegative carrying amount to perform a qualitative assessment. However, entities must disclose the amount of goodwill allocated to each reporting unit with a zero or assets.negative carrying amount. The amendments in this ASU are to be applied on a prospective basis and became effective for the Company as of January 1, 2020, but early adoption is permitted for any impairment tests performed after January 1, 2017. The Company would recognize interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2010 and June 30, 2010is currently evaluating the Company didimpact of adopting this new standard but does not record any liabilities for uncertain tax positions.expect that it will have a material effect on its consolidated financial statements.
There are no other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not orthat are not believed by managementexpected to have a material impacteffect on the Company's presentfinancial statements.
NOTE 3 – OTHER ASSETS
On June 29, 2019, the Company acquired all the stock of GHST Art World, Inc, a Florida corporation, whose principle assets consisted of 119 art paintings and reproductions. The Company issued 43,478,000 shares of common stock and paid $15,000 in cash to effectuate the acquisition. The Company valued the stock at the fair market value of the stock on the date of issuance or future financial statements.
NOTE 4 Going Concern
The Company obtained a patent dated June 30, 2020, which is a protection device used in sporting activity with the capability to monitor data from the device. The Company has capitalized the patent costs totaling $41,811 and $33,786, respectively at March 31, 2021 and June 30, 2020. The Company will amortize the patent over the useful life of the patent once it is placed in service. No amortization was recorded for the Nine months ended March 31, 2021 and for the year ended June 30, 2020.
NOTE 5 – COMMON STOCK PAYABLE
The Company has an agreement with certain investors to convert their investment into common stock of the Company at a price equal to the average value of the stock over the previous Nine months. The conversion is contingent on the Company effectuating a 1-for-100 reverse stock split and upon a change in the accompanying financial statements,Company’s name. As of March 31, 2021, and June 30, 2020, the Company has received a working capital deficittotal of $220,171$217,784 and $242,715 respectively.
On August 20, 2020, certain investors agreed to accept 25,000,000 shares at December 31, 2010,an average price of approximately $0.001 in exchange for $24,931 of previously paid subscriptions.
These events are subject to clearance with the Financial Industry Regulatory Authority (“FINRA”) which previously declined to approve our application. We believe FINRA did so because we had previously failed to file required reports with the Securities and Exchange Commission (the “SEC”), which subsequently revoked our registration under the Securities Exchange Act of 1934 (the “Exchange Act”). Our delinquency occurred under prior management with a net loss of $281,564 and net cash used in operations of $154,447 for the six months ended December 31, 2010.
We have again registered with the SEC under the Exchange Act through debt and/or equity marketsour effective Form 10. On June 10, 2021, we filed a new application with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence.
9 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
March 31, 2021 and June 30 2020
Unaudited
NOTE 6 – RELATED PARTY TRANSACTIONS
At March 31, 2021, the Company advanced $130,000owed related parties a total of $13,687. These shareholder loans are unsecured, non-interest bearing and are due on demand. See note 3 as these amounts that will be converted to common stock are from related parties.
As shown in Note 3, the Company has committed to converting certain debts to equity. Included in the debts is $94,552 as of March 31, 2021 of amounts due from related parties that will also be converted as described in Note 3.
In connection with the sales of common stock the Company paid a total of $13,903, of which $9,183 as a fee to the son of the Chairman of the Board and $4,720 to a director, which was due on April 1, 2011. company owned by the CFO.
These transactions were in the normal course of operations and were measured at a value that represents the amount of consideration established and agreed to by the related parties.
NOTE 7 – STOCKHOLDERS’ EQUITY
The loan was not interest bearing. Subsequently, the Company was advised by securities counsel that the loan would have been a violation of the Sarbanes-Oxley Act of 2002, which prohibits loans to officers and directors, following effectiveness of the Form 10. The Company’s Board of Directors agreed on August 19, 2010 to accept 130,000has authorized 700,000,000 shares of common stock, owned by this director,$0.001 par value, of which 523,908,071 shares are issued and outstanding as of March 31, 2021.
Common Stock Issuances
On August 20, 2020, certain investors agreed to accept 25,000,000 shares at an average price of approximately $0.001 in exchange for the loan receivable, based on the estimated fair value per common share$24,931 of $1.00, which was based upon the fair value of stock issued in connection with a debt conversion in March 2010. This debt holder was a third partypreviously paid subscriptions.
In November and the conversion rate represented the best evidence of fair value. These shares are reflected as treasury stock on the accompanying balance sheet.
In March 2021, the Company entered into a Technology Services Agreement ( the "Agreement") with Ghost Technology SpA, a related party. Ghost Technology SpA is wholly owned by a shareholder, executive officer and director of the Company. The Agreement providesreceived $23,316 in exchange for the exclusive management and technical operations of the Company's defender patent over a 6-year period. As consideration the Company issued 3,000,00010,137,183 common shares with a fair market valueat average price of $600,000 (also see Note 6A) and will pay Ghost Technology SpA a fee ranging from $0.012$0.0023 per impression per month and reducing to $.009 for impressions greater than 50,000,000 per month. share.
NOTE 8- INCOME TAXES
The Company has recorded the issuance as a non-current asset and is amortizing it over the 6-year li feaccumulated losses of the agreement.
*****
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our liquiditystatements regarding the Company’s patents and anticipated costspatent applications, the development, marketing and sale of its products including its Smart Shin Guard, product development efforts, the implementation of its business plan and expected timelines for meeting its objectives, the need for capital to start our business.fund and grow its operations, and liquidity. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that couldmay cause actual results to differ materially from those in thethese forward-looking statements include the conditions of the global credit and capital markets and the failure to agree upon final terms in a definitive agreement.
Overview
We are a holding company for various technology and other activities. As of the date of this Report, our principal business strategy is seeking to exploit a patent and obtain and exploit future patents for the Smart Shin Guard. The Smart Shin Guard is a wearable protective device used while playing soccer and certain other sports combined with data collection and analysis technology that monitors players’ individual and collective physical and performance-based metrics and transmits this information to a separate module in real-time.
We have not generated any revenue and need substantial additional financing to market our services. We recently filed a registration statement on Form 10 with the SEC, which became effective May 8, 2021, pursuant to which we became subject to the periodic and current reporting requirements under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.
Fiscal Quarter Ended March 31, 2021 Compared to the Fiscal Quarter Ended March 31, 2020.
We had no revenues in the three months ended March 31, 2021 and 2020, and we sustained net losses of $46,777 and $6,806, respectively, in those periods. During the three months ended March 31, 2021, expenses consisted primarily of general and administrative expenses, including professional fees for legal and financial services, and expenses incurred in connection with our product development efforts. During the period ended March 31, 2020, our expenses consisted primarily of general and administrative costs.
Liquidity and Capital Resources
Net Cash used by Operating Activities:
For the nine months ended March 31, 2021, the Company used net cash of approximately $90,521 in operating activities as compared to approximately $32,160 for the nine months ended March 31, 2020. The increase in cash used from operations was due to an increase in professional fees to prepare and file our Form 10 and related compliance costs in becoming an SEC reporting company, and expenses incurred in connection with our product development efforts.
In the three months ended March 31, 2021, we entered into two agreements with third party developers. One such agreement provides for the development of our Smart Shin Guard, and the other provides for the development of a smart phone application for use in conjunction with our Smart Shin Guard. Under these agreements, we have agreed to pay the service providers a total of approximately €142,000 (approximately $173,000). We began making payments under these agreements during the period covered by this Report.
Cash Used in Investing Activities:
For nine months ended March 31, 2021 and 2020, the Company used $8,025 and $0 in investing activities. Our cash used in investing activities in the period ended 2021 consisted of patent costs.
Cash Flows from Financing Activities:
Cash flows from financing activities for the nine months ended March 31, 2021 were $153,830 compared to $23,402 for the nine months ended March 31, 2020.
We have approximately $30,307.40 in available cash as of June 11, 2021 and for the past two years we have been relying on loans from our current investors and related parties and proceeds from sales of our common stock to fund our operations. As reflected in the Financial Statements contained elsewhere in this Report, management has expressed substantial doubt about our ability to continue as a going concern for the next 12 months from the date these Financial Statements were issued, unless we can raise the required capital or generate material revenue to fund our operations.
We do not have sufficient capital to support our operations for the next 12 months and will dependent upon on the proceeds from a financing, which may consist of sales of our common stock, the issuance of debt securities and/or issuance of securities convertible into shares of our common stock, any of which could have a dilutive effect on our existing shareholders. We intend to raise capital from existing investors or from the sale of a minority interest in our subsidiaries if and to the extent possible. We estimate that we will need to raise at least $1,000,000 in order to meet our working capital needs for the next 12 months. We plan to phase in our expenses and grow our business as working capital is available.
Significant Accounting Policies and Recent Accounting Pronouncements
Please see the notes to our Financial Statements for information about our Significant Accounting Policies and Recent Accounting Pronouncements.
COVID-19 Update
The COVID-19 pandemic has had a significant adverse effect on the economy throughout the world. While economies in certain jurisdictions and geographic areas have begun to reopen in the wake of the pandemic, if the pandemic and government action in response thereto result in a prolonged economic recession or depression, or if there are delays in reopening in areas in which we intend to do business, the Company’s development and implementation of its business plan and our ability to commence and grow our operations, as well as our ability to generate material revenue therefrom, will be required by law.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements as of March 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.RISK
Not applicable.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls
We carried out an evaluation, under the supervision and with the participation of our Principalmanagement, including our Chief Executive Officer and PrincipalChief Financial Officer, required by Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”)Officers, of the effectiveness of our disclosure controls and procedures, as defined in RuleRules 13a-15(e) underand 15d-15(e) of the Exchange Act. Based on their evaluation, our management has concluded that our disclosure controls and procedures were ineffectiveAct as of the end of the period covered by this reportreport. Based on that evaluation, our Chief Executive Officer and Chief Financial Officers have concluded that our disclosure controls and procedures as of March 31, 2021 were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’sSecurities and Exchange Commission’s rules and forms because of a material weakness in the Company’s internal control over financial reporting. Specifically, the Company did not maintain effective controls to identify and is accum ulatedmaintain segregation of duties to support the identification, authorization, approval, accounting for, and communicated to our management, including our Principalthe disclosure of related-party transactions and non-routine transactions. One individual, the Chief Executive Officer, initiates related-party transactions and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal ControlsControl Over Financial Reporting
There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II –II: OTHER INFORMATION
From time-to-time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this Report, we are not aware of any other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On or about March 1, 2021, the Company sold 10,137,183 shares of common stock for an aggregate purchase price of $23,316 to those unregistered securities previously disclosed in reports filed with the SEC, we have sold securities without registrationan investor. The transaction was exempt under Regulation S of the Securities Act of 1933 (the “Securities Act”).
Incorporated by Reference | Filed or Furnished | ||||||||||||
Exhibit # | Exhibit Description | Form | Date | Number | Herewith | ||||||||
2.1 | Certificate of Merger | 10-K | 2/18/10 | 3.1 | |||||||||
3.1 | Certificate of Incorporation | 10-K | 2/18/10 | 3.2 | |||||||||
3.2 | Certificate of Designation | 10-K | 2/18/10 | 3.3 | |||||||||
3.3 | Amendment to the Certificate of Incorporation | 10-K | 2/18/10 | 3.5 | |||||||||
3.4 | Correction to the Certificate of Incorporation | 10-K | 2/18/10 | 3.6 | |||||||||
3.5 | Amendment to the Certificate of Incorporation | 10-K | 2/18/10 | 3.7 | |||||||||
3.6 | Amended and Restated Bylaws | 10-K | 2/18/10 | 3.8 | |||||||||
10.1 | Defender Agreement | 10-K | 2/18/10 | 10.4 | |||||||||
10.2 | Summary of CEO and CFO Compensation Arrangements* | 10-Q | 11/15/10 | 10.2 | |||||||||
10.3 | Technology Services Agreement | Filed | |||||||||||
31.1 | Certification of Principal Executive Officer (Section 302) | Filed | |||||||||||
31.2 | Certification of Principal Financial Officer (Section 302) | Filed | |||||||||||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer (Section 906) | Furnished |
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
Incorporated by Reference | Filed or Furnished | |||||||||
Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
2.1 | Certificate of Merger | 10-K | 2/18/2010 | 3.2 | ||||||
3.1 | Amended and Restated Certificate of Incorporation | 10-12G | 3/9/2021 | 3.1 | ||||||
3.2 | Certificate of Designation | 10-K | 2/18/2010 | 3.3 | ||||||
3.3 | Amended and Restated Bylaws | 10-12G | 3/9/2021 | 3.3 | ||||||
10.1 | Development Agreement between the Company and Hemar AG dated January 4, 2021** | 10-12G/A | 4/21/2021 | 10.2 | ||||||
10.2 | Development Agreement between the Company and Applica srl dated February 2, 2021** | 10-12G/A | 4/21/2021 | 10.3 | ||||||
31.1 | Certification of Principal Executive Officer (302) | Filed | ||||||||
31.2(a) | Certification of Principal Financial Officer (302) | Filed | ||||||||
31.2(b) | Certification of Principal Financial Officer (302) | Filed | ||||||||
32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | ||||||||
101.INS | XBRL Instance Document | Filed | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed |
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
** Management compensatory plan or arrangement
+ Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request.
Copies of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Ghost Technology,GHST World Inc., 20801 Biscayne Blvd., Suite 403, Aventura, Florida 33180.667 Madison Avenue, 5th Floor, New York, NY 10065.
15 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GHST World Inc. | |||
Dated: | June 18, 2021 | By: | /s/ Edoardo Riboli |
Edoardo Riboli,Chief Executive Officer | |||
(Principal Executive Officer) | |||
Dated: | June 18, 2021 | By: | /s/ Marcello Appella |
Marcello Appella, Chief Financial Officer | ||||
(Principal Financial Officer) | ||||
Dated: | June 18, 2021 | By: | /s/ Paolo Sangiovanni | |
Paolo Sangiovanni, Chief Financial Officer | ||||
(Principal Financial Officer) |