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 September 30, 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 Avenue5th Floor New York, | ||
| (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. Yeso☒ 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). Yeso☒ 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☐ Noþ
As of November 10, 2021, the issuer had shares of its common stock, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
| Page | ||||||
| Financial Statements | 1 | |||||
| Consolidated Balance Sheets | 1 | |||||
| Consolidated Statements of Operations – For the Three | 2 | |||||
| Consolidated Statements of Stockholders’ Equity (Deficit) – For the Three Months Ended September 30, 2021 and 2020 | 3 | |||||
| Consolidated Statements of Cash Flows – For the | 4 | |||||
| Notes to Consolidated Financial Statements | 5 | |||||
| Item 2 | ||||||
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | |||||
| Item 3 | ||||||
| Quantitative and Qualitative Disclosures | 13 | |||||
| Item 4 | ||||||
| Controls and Procedures | 13 | |||||
| Part II - Other Information | ||||||
| Item 1 | Legal Proceedings | 14 | ||||
| Item | 14 | |||||
| Item 2 | ||||||
| Unregistered Sales of Equity Securities and Use of Proceeds | 14 | |||||
| Item 3 | ||||||
| Defaults Upon Senior Securities | 14 | |||||
| Item 4 | Mine Safety Disclosures | 14 | ||||
| Item | 14 | |||||
| Item 6 | Exhibits | 14 | ||||
| 14 | ||||||
| Signatures | 16 | |||||
| i |
PART I –I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| Ghost Technology, Inc. | ||||||||
| (A Development Stage Company) | ||||||||
| Balance Sheets | ||||||||
March 31, 2011 | June 30, 2010 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 517 | $ | 87,866 | ||||
| Loan receivable - related party | - | 130,000 | ||||||
| Other | - | 1,077 | ||||||
| Total Current Assets | 517 | 218,943 | ||||||
| Prepaid technical services costs, net - related party | 566,667 | - | ||||||
| Total Assets | $ | 567,184 | $ | 218,943 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 200,446 | $ | 44,383 | ||||
| Due to related parties | 44,750 | 43,500 | ||||||
| Due to former related parties | 28,000 | 28,000 | ||||||
| Total Current Liabilities | 273,196 | 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; | ||||||||
| 178,960,449 and 175,996,122 shares issued at March 31, 2011 and June 30, 2010, respectively | 178,961 | 175,996 | ||||||
| Common stock to be issued ( 350,000 common shares at par) | 350 | - | ||||||
| Additional paid-in-capital | 6,726,750 | 6,155,064 | ||||||
| Deficit accumulated during the development stage | (6,612,075 | ) | (6,228,002 | ) | ||||
| Total Stockholders’ Equity (Deficit) | 293,988 | 103,060 | ||||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 567,184 | $ | 218,943 | ||||
GHST World Inc.
Consolidated Balance Sheets
Unaudited
| September 30, 2021 | June 30, 2021 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 4,099 | $ | 7,350 | ||||
| Total Current Assets | 4,099 | 7,350 | ||||||
| Other assets | 115,000 | 115,000 | ||||||
| Patent costs | 39,181 | 39,181 | ||||||
| Total Assets | $ | 158,280 | $ | 161,531 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 16,393 | $ | 14,528 | ||||
| Advances from related parties | 38,022 | $ | 16,241 | |||||
| Common stock payable | 233,117 | 217,784 | ||||||
| Total Current Liabilities | 287,532 | 248,553 | ||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, Series A, $ par value; shares authorized; shares issued and outstanding at June 30, 2020 and 2019 | 6 | 6 | ||||||
| Preferred stock, Series B, $ par value; shares authorized; shares issued and outstanding at June 30, 2020 and 2019 | 2 | 2 | ||||||
| Common stock, $0.001 par value, 300,000,000 shares authorized; 5,295,582 and 5,239,832 shares issued at September 30, 2021 and June 30 2021 | 5,296 | 5,240 | ||||||
| Additional paid-in-capital | 9,191,461 | 9,174,792 | ||||||
| Accumulated deficit | (9,326,017 | ) | (9,267,062 | ) | ||||
| Total Stockholders’ Deficit | (129,252 | ) | (87,022 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 158,280 | $ | 161,531 | ||||
The accompanying notes to unauditedare an integral part of these consolidated financial statements.
| 1 |
| Ghost Technology, Inc. | ||||||||||||||||||||
| (A Development Stage Company) | ||||||||||||||||||||
| Statements of Operations | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
For the Three Months Ended March 31, | For the Nine Months Ended March 31, | From November 12, 1999 (inception) to | ||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | March 31, 2011 | ||||||||||||||||
| Revenues | $ | - | $ | 60,000 | $ | 25,000 | $ | 60,000 | $ | 85,000 | ||||||||||
| General and administrative expenses | 102,507 | 60,922 | 409,073 | 216,212 | 6,697,075 | |||||||||||||||
| Net loss | $ | (102,507 | ) | $ | (922 | ) | $ | (384,073 | ) | $ | (156,212 | ) | $ | (6,612,075 | ) | |||||
| 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 | 179,295,297 | 175,716,122 | 177,468,396 | 175,560,994 | 47,927,616 | |||||||||||||||
GHST World Inc.
Consolidated Statements of Operations
Unaudited
| For the Three Months Ended September 30 | ||||||||
| 2021 | 2020 | |||||||
| Revenues | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| General and administrative expenses | 58,955 | 10,147 | ||||||
| Total operating expenses | 58,955 | 10,147 | ||||||
| Net loss | $ | (58,955 | ) | $ | (10,147 | ) | ||
| Net loss per common share - basic and diluted | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | 5,245,478 | 4,193,905 | ||||||
The accompanying notes to unauditedare an integral part of these consolidated financial statements.
| 2 |
| (A Development Stage Company) | ||||||||||||
| Statements of Cash Flows | ||||||||||||
| (Unaudited) | ||||||||||||
Nine Months Ended March 31, | From November 12, 1999 (Inception) to | |||||||||||
| 2011 | 2010 | March 31, 2011 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss | $ | (384,073 | ) | $ | (156,212 | ) | $ | (6,612,075 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Stock issued for services | 35,000 | 55,000 | 2,051,584 | |||||||||
| Stock issued for license | - | - | 2,877,547 | |||||||||
| Depreciation | - | - | 5,667 | |||||||||
| Amortization of prepaid research and development | 33,333 | - | 33,333 | |||||||||
| Impairment of long lived assets | - | - | 128,700 | |||||||||
| General and administrative expenses - contributed by related party | - | 68,160 | 404,161 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | - | (60,000 | ) | - | ||||||||
| Other current asset | 1,077 | (1,078 | ) | - | ||||||||
| Prepaid expenses | - | (2,083 | ) | - | ||||||||
| Accounts payable and accrued expenses | 156,064 | 13,670 | 200,447 | |||||||||
| Net Cash Used In Operating Activities | (158,599 | ) | (82,543 | ) | (910,636 | ) | ||||||
| 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 | 1,250 | 31,000 | 44,750 | |||||||||
| Proceeds from loan | - | - | 300,000 | |||||||||
| Proceeds - former related parties | - | - | 28,000 | |||||||||
| Proceeds from sale of common stock and subscription receivable | 70,000 | 300,000 | 402,770 | |||||||||
| Contributed capital - related party | - | - | 400,000 | |||||||||
| Net Cash Provided By Financing Activities | 71,250 | 331,000 | 1,175,520 | |||||||||
| Net increase (decrease) in cash | (87,349 | ) | 248,457 | 517 | ||||||||
| Cash - beginning of period | 87,866 | 6 | - | |||||||||
| Cash - end of period | $ | 517 | $ | 248,463 | $ | 517 | ||||||
| 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 | ||||||
| Retirement of treasury stock | $ | (130,000 | ) | $ | - | $ | (130,000 | ) | ||||
| Common stock issued for services and recorded as a prepaid asset | $ | 600,000 | $ | - | $ | 600,000 | ||||||
GHST World Inc.
Consolidated Statement of Stockholders' Deficit
For the Year Ended June 30, 2021 and the Three Months Ended September 30, 2021
(Unaudited)
| Preferred Stock | Preferred Stock | Common Stock | Additional | Total | ||||||||||||||||||||||||||||||||
| Series A | Series B | $0.001 Par Value | Paid in | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance June 30, 2020 | 6,000 | $ | 6 | 2,200 | $ | 2 | 3,980,176 | $ | 3,980 | $ | 9,002,643 | $ | (9,115,696 | ) | (109,065 | ) | ||||||||||||||||||||
| Issuance of common stock for cash, net of issuance costs | 1,009,656 | 1,010 | 147,468 | 148,478 | ||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for debt | 250,000 | 250 | 24,681 | 24,931 | ||||||||||||||||||||||||||||||||
| Net loss for the year ended June 30, 2021 | — | — | — | — | — | — | (151,366 | ) | (151,366 | ) | ||||||||||||||||||||||||||
| Balance June 30, 2021 | 6,000 | $ | 6 | 2,200 | $ | 2 | 5,239,832 | $ | 5,240 | $ | 9,174,792 | $ | (9,267,062 | ) | $ | (87,022 | ) | |||||||||||||||||||
| Issuance of common stock in exchange for debt | 55,750 | 56 | 16,669 | 16,725 | ||||||||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2021 | — | — | — | — | — | — | (58,955 | ) | (58,955 | ) | ||||||||||||||||||||||||||
| Balance September 30, 2021 | 6,000 | $ | 6 | 2,200 | $ | 2 | 5,295,582 | $ | 5,296 | $ | 9,191,461 | $ | (9,326,017 | ) | $ | (129,252 | ) | |||||||||||||||||||
The accompanying notes to unauditedare an integral part of these consolidated financial statements.
| 3 |
GHST World Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Three Months Ended September 30 | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (58,955 | ) | $ | (10,147 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | 1,865 | (3,769 | ) | |||||
| Net Cash Used In Operating Activities | (57,090 | ) | (13,916 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Patent costs | 0 | (1,640 | ) | |||||
| Net Cash Used In Investing Activities | — | (1,640 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advances to related parties | 21,781 | 15,713 | ||||||
| Increase in common stock payable | 32,058 | — | ||||||
| Issuance of common stock for cash | — | |||||||
| Net Cash Provided By Financing Activities | 53,839 | 15,713 | ||||||
| Net increase (decrease) in cash | (3,251 | ) | 157 | |||||
| Cash - beginning of period | 7,350 | 292 | ||||||
| Cash - end of period | $ | 4,099 | $ | 449 | ||||
| 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 | $ | 16,725 | $ | 24,931 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
September 30, 2021 and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.
Unaudited
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
Background
GHST World Inc. (“the Company”), is a Delaware Corporationcorporation that was incorporated on November 12, 1999.
The Company licensedis a holding company for various technology and other activities. The Company has acquired and is developing several patents in the technology for a product known as “Defender" - an electronic device which is directly integrated in a television set. It maintains all the basic functions of a television, but as soon as advertisements are broadcast, the “Defender" changes the TV channel to stored advertisements that are directed to the viewer based on previously determined content. The license covers the Unites States, Canada and Mexico and is for an indefinite period.
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 $151,366 for the year ended June 30, 2021. The Company has generated minimal revenues since inception.an accumulated deficit of $9,267,062 and a stockholders’ deficit of $87,022 as of June 30, 2021 and used $143,930 in cash flow from operating activities for the year then ended. The Company had an additional operating loss amounting to $48,385 for the three months ended September 30, 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 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
September 30, 2021 and June 30 2021
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Presentation
The accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the SEC’s regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company’s financial position, results of operations, cash flows, and stockholders’ equity for the periods presented. The results for the three months ended Septembeer 30, 2021 are not necessarily indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 filed with the SEC.
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
September 30, 2021 and June 30 2021
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash
Cash and Cash Equivalents
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 codified as FASB Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, (“ASC Topic 740, “Income Taxes,” which requires360”). 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 deferred tax liabilities and assetsan 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 September 30, 2021 and June 30, 2021, the Company did 0t recognize any impairment losses.
Intangible Assets
The Company capitalizes external costs, such as 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 three months ended September 30, 2021 and 2020 the Company has capitalized $0, and $1,640 of patent costs. As of September 30, 2021 patent cost totaled $39,181.
| 7 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
September 30, 2021 and June 30 2021
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences 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.
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 file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability createdexamination by federal and state taxing authorities for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. The Company would recognize interest and penalties related to unrecognized tax benefits in income tax expense. At March 31, 2011 andyears ended June 30, 20102007 through 2021. However, the Company did not recordCompany's federal net operating losses for tax years ending June 30, 2020 and 2021 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 liabilitiesgiven 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 uncertainNOLs incurred for tax positions.
GHST WORLD, INC.
Notes to Consolidated Financial Statements
September 30, 2021 and June 30 2021
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 its 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 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.
On July 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The standard modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The adoption of ASU 2018-13 did not have a material effect on our consolidated financial statements and disclosures.
There are no other recent accounting pronouncements that are expected to have a material effect on the Company's financial statements.
NOTE 3 – PATENTS
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 $39,181, at September 30, 2021 and June 30, 2021. The Company will amortize the patent over the useful life of the patent once it is placed in service. NaN amortization was recorded for the three months ended September 30, 2021 and 2020.
NOTE 4 – 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 six months. The conversion is contingent on the Company effectuating a 1-for-100 reverse stock split which was effected on September 30, 2021. As of September 30, 2021, and June 30, 2021, the Company has a total of $233,117 and $217,784, respectively that has not been converted to common stock. During the three months ended September 30, 2021 certain investors agreed to accept a total of shares at an average price of approximately $ in exchange for $ of previously paid as subscriptions.
NOTE 5 Related Party Transactions
At September 30, 2021 and June 30, 2021, the Company advanced $130,000 toowed related parties a director, which was due on April 1, 2011. The loan was not interest bearing. Subsequently, the Company was advised by securities counsel that the loan would have been a violationtotal of the Sarbanes-Oxley Act of 2002, which prohibits38,022 and $16,241, respectively. These shareholder loans to officers and directors, following effectiveness of the Form 10. The Company’s Board of Directors agreed on August 19, 2010 to accept 130,000 shares of common stock, owned by this director, in exchange for the loan receivable, based on the estimated fair value per common share 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 party and the conversion rate represented the best evidence of fair value. The Company cancelled and retired the shares as of March 31, 2011.
As shown in Note 4, the Company issued 400,000 shareshas committed to converting certain debts to equity. Included in the debts is $104,094 as of common stock for services to a consultantSeptember 30, 2021 of amounts due from related parties that will also be converted as described in Note 4.
These transactions were in the normal course of operations and director for services rendered having a fair value of $40,000 ($0.10/share), based upon the fair value of the services rendered over the period July 1, 2009 to April 15, 2010. The fair value of the services provided reflected a more readily determinable fair value than the shares issued. The Company expensed these stock issuances as a component of general and administrative expense.
| 9 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
September 30, 2021 and June 30 2021
Unaudited
NOTE 6 – STOCKHOLDERS’ EQUITY
On August 7, 2021, the board approved amending its articles of incorporation to reduced the number of authorized shares from 700,000,000 to of which are reserved for common stock and for preferred stock. The amendment was effective on September 9, 2021. Effective on September 30, 2021, the Company expensed thiseffectuated a 100-1 reverse stock issuance as a component of general and administrative expense.
Common Stock Issuances
During the three months ended September 30, 2010,2021 the Company issued 3,000,000 shares at a average price of common Stock to Ghost Technology SpA (see Note 5) as considerationapproximately $ in exchange for a 6-year Technology services agreement contract entered into between the entities. previously paid stock subscriptions.
NOTE 7 – INCOME TAXES
The Company has determinedaccumulated losses of approximately $9.3 million since its inception. For income tax purposes, the Company has operating loss carryforwards of approximately $2.7 million from tax years beginning before January 1, 2021, that begin to expire in 2027. These operating losses are subject to the limitations which were enacted in the Tax Cuts and Jobs Act (“TCJA”). These operating losses can offset only 80% of taxable income in any given tax year. The carryover period for these operating losses is indefinite. No federal or state tax asset has been reported in the financial statements, because the Company believes there is a 50% or greater chance that the fair valuecarryforwards will expire unused. Accordingly, the potential tax benefits of the issuance is $600,000 or $.20 per share based upon the sale of stock for cash to third parties during the quarter. Management believes that this is the most reasonable method for determining fair value.
NOTE 8 – SUBSEQUENT EVENTS
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued 75,758 shares in January 2011. Additionally the agreement provides for a monthly retainer of $10,000, payable in $5,000 cash and $5,000 in stock. As of March 31, 2010, the Company owes the service provider $40,000 under the agreement, included in accounts payable and accrued expenses, of which $30,000 is due in cash and $10,000 in common stock.
*****
| 10 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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 following discussionSmart Shin Guard is a wearable protective device used while playing soccer and certain other sports combined with data collection and analysis should be readtechnology that monitors players’ individual and collective physical and performance-based metrics and transmits this information to a separate module in conjunction withreal-time.
We have not generated any revenue and need substantial additional financing to market our unaudited consolidated financial statements and related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements asservices. We recently filed a result of certain factors, including but not limited to those set forth under “Risk Factors” in ourregistration statement on Form 10 filed on August 20, 2010.
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, 2011September 30, 2021 Compared to the Three MonthsFiscal Quarter Ended March 31, 2010.
We had no revenue forrevenues in the three months ended March 31, 2011 as compared to $60,000September 30, 2021 and 2020, and we sustained net losses of $58,955 and $10,147, respectively, in revenue forthose periods. During the same period in 2010. The revenues from the prior year's quarter were non-recurring.
We do not expect to generate material revenue unless and administrativeuntil we can implement our business plan and begin marketing and selling our product(s) in sufficient quantities, which has been delayed due to COVID-19 impacts on our development efforts and on league play which adversely affects both our product development and marketing capabilities. In order to become profitable, we will need to establish a sufficient market for our product, including internationally, to offset our development, manufacturing and advertising costs, forand our ability to do so will be subject to a number of factors, many of which will be beyond our control.
Liquidity and Capital Resources
Net Cash used by Operating Activities:
For the ninethree months ended March 31, 2011 were $409,073September 30, 2021, the Company used net cash of approximately $57,090 in operating activities as compared to $216,212approximately $13,916 for the same period in 2010 or an increase of 89.2%. This increase was primarily the result of increased professional fees relating to the Company recent Form 10 filing, for salaries and rent totaling $102,775 accrued to our officers $65,000 accrued for consulting agreements and amortization of $33,333 of technical services and development costs .
In the ninethree months ended March 31, 2011September 30, 2021, we continued our product development efforts under two agreements with third party developers. One such agreement provides for the development of our Smart Shin Guard, and 2010, no cash transactions occurredthe 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 continued / completed making payments under these agreements during the period covered by this Report. Following completion of these projects, assuming further testing of the product yields satisfactory results, we intend to shift our focus to producing and marketing our product, including locating league players and teams to assist with advertising in exchange for free use of our products. As of the date of this Report, our Smart Shin Guard has been deployed at one Italian Series C football team to assist with testing, monitoring and improving upon our product’s functionality, a process which is expected to last for several months.
| 11 |
Cash Used in Investing Activities:
For three months ended September 30, 2021 and 2020, the Company used $0 and $1,640 in investing activities.
Cash Flows from Financing Activities:
Cash flows from financing activities was primarilyfor the three months ended September 30, 2021 were $53,839 compared to $15,713 for the three months ended September 30, 2020.
We have approximately $4,099 in available cash as of September 30, 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 be 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 common stocka minority interest in March 2010our subsidiaries if and in October 2010.
On September 23, 2021, we filed a Certificate of Amendment to our unaudited financial statements included in this report for discussionCertificate of related party transactions.
Cautionary Note Regarding Forward Looking Statements
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 statements regarding the development, marketing and sale of the Smart Shin Guard, arrangements with soccer teams and players, the implementation of our liquiditybusiness plan and anticipated costsexpected timelines for meeting objectives, our authorized common stock and the use thereof to startsatisfy prior loans, and our business.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 conditionsrisks arising from the new impact of the COVID-19 pandemic, including its impact on regional and global crediteconomies, global supply chain disruptions, shortages and capital marketsdelays which may adversely affect our ability to develop, manufacture and sell our products within the intended timeframes or at all, delays in or suspensions of soccer league play particularly in areas in which we plan to further develop and market our product, and the failure to agree upon final termsrisks summarized our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 in a definitive agreement.
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.
| 12 |
COVID-19 Update
The COVID-19 pandemic has had a significant adverse effect on the economy throughout the world, including recently by contributing to continued supply chain disruptions and suspensions of football (soccer) league play. 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 hindered. As of the date of this Report, the Company is unable to predict the impact the pandemic may be required by law.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements as of September 30, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
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 September 30, 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 accumulatedmaintain 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 reportReport that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 13 |
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.
ITEM 1A.1.A – RISK FACTORS.
Not applicable to smaller reporting companies.
During the three months September 30, 2021 the Company issued a total of 55,750 shares to those unregistered securitiescertain investors at an average price of approximately $0.3 in exchange for $16,725 of previously disclosed in reports filed with the SEC, we have sold securities withoutpaid as subscriptions. The transactions were exempt from registration under Section 4(a)(2) under the Securities Act of 1933 (the “Securities Act”).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
On September 23, 2021, we filed a Certificate of Amendment to our Certificate of Incorporation to effect a 1-for-100 reverse stock split of our common stock.
On November 2, 2021, we filed a Certificate of Amendment to our Certificate of Incorporation to reduce our authorized capital stock from 710,000,000 shares consisting of 700,000,000 authorized shares of common stock and 10,000,000 authorized shares of preferred stock to 310,000,000 shares consisting of 300,000,000 authorized shares of common stock and 10,000,000 authorized shares of preferred stock.
ITEM 6 – EXHIBITS
| 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 Amendment to Certificate of Incorporation (Reverse Stock Split) | Filed | ||||||||
| 3.3 | Certificate of Amendment to Certificate of Incorporation (Decrease in Authorized Capital) | Filed | ||||||||
| 3.4 | Certificate of Designation | 10-K | 2/18/2010 | 3.3 | ||||||
| 3.5 | 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.
| Exhibit | Incorporated by Reference | Filed or Furnished | ||||||||||
| # | 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 | 10-Q | 2/14/11 | 10.3 | ||||||||
| 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 | ||||||||||
** 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.
| 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: | November 15, 2021 | By: | /s/ Edoardo Riboli |
| Edoardo Riboli,Chief Executive Officer | |||
(Principal Executive Officer) | ||||
| By: | /s/ | Marcello Appella | ||
| Marcello Appella, Chief Financial Officer | ||||
(Principal Financial | ||||
| Dated: | November 15, 2021 | By: | /s/ Paolo Sangiovanni | |
| Paolo Sangiovanni, Chief Financial Officer | ||||
(Principal Financial Officer) |
| 16 |