NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
GH Capital Inc. (the “Company”),
a Florida corporation, was formed on May 5, 2014 and commenced operations in October 2014. The Company provides online payment
processing services to consumers, primarily in Europe.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance
with Regulation S-X of the Securities and Exchange Commission (the “SEC”). The Company’s fiscal year ends on
September 30, of each year.
Going Concern
These financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the
normal course of business. As reflected in the accompanying financial statements, the Company had a net loss of $61,144 and $76,450
for the periods ended September 30, 2015 and 2014, respectively. The net cash used in operations were $11,056 and $0 for the periods
ended September 30, 2015 and 2014, respectively. Additionally, the Company had an accumulated deficit of $137,594 at September
30, 2015. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow
positive, or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or
equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common
stock, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or
secure additional lending in the near future, management expects that the Company will need to curtail its operations. These financial
statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in
conformity with U.S. GAAP 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 consolidated financial statements and the reported
amounts of revenues and expenses during the year. Actual results could be affected by those estimates. Included in these estimates
are assumptions used in determining the lives of long-lived assets, valuation allowances for deferred tax assets and the fair value
of the Company’s common stock, which from time to time may be issued in exchange for services provided in lieu of cash.
GH CAPITAL INC.
NOTES TO FINANICAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Fair Value of Financial Instruments
The Company adopted the guidance of ASC Topic
820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and
establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices
in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices
for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets
that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable
market data.
Level 3-Inputs are unobservable inputs which
reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset
or liability based on the best available information.
The carrying amounts reported in the balance
sheets for cash, prepaid expenses and other, accounts payable, deferred revenues, and due to related parties approximate their
fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities
that are required to be presented on the balance sheets at fair value in accordance with the accounting guidance.
ASC Topic 825-10 “Financial Instruments”
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If
the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
Cash and Cash
Equivalents
For purposes of the consolidated statements
of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date
and money market accounts to be cash equivalents.
GH CAPITAL INC.
NOTES TO FINANICAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Concentration of Credit Risk
The Company maintains its cash in financial
institutions for which balances are insured up to Federal Deposit Insurance Corporation limits of $250,000 per account. At times,
cash balances may exceed the federally insured limits.
Two customers, one of which is a related party,
currently account for all of the Company’s revenues.
Capitalized Development Costs
Software development
costs related to the development of the Company’s electronic payment platform software, which is developed for internal use,
falls under the accounting guidance of ASC Topic 350-40,
Intangibles Goodwill and Other–Internal Use Software
, in
which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application
development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as
incurred. Costs capitalized during the application development stage include external direct costs of materials and services consumed
in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated
with, and who devote time to, the internal-use computer software. Once the project is substantially complete and ready for its
intended use these costs are amortized on a straight-line basis over the technology's estimated useful life of three years. No
amortization expense was recorded for the year ended September 30, 2015.
Impairment of Long-lived Assets
In accordance with ASC Topic 360, the Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the asset’s estimated fair value and its book value.
Foreign Currency Transactions
The reporting and functional currency of the
Company is the U.S. dollar. Transactions denominated in foreign currencies are translated into the functional currency at the exchange
rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange
rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations
as incurred. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations
of the Company.
GH CAPITAL INC.
NOTES TO FINANICAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Revenue Recognition
The Company recognizes revenue when persuasive
evidence of a sale arrangement exists, services have been rendered, the sales price is fixed and determinable and collectability
is reasonably assured. The Company’s revenue is currently comprised of monthly recurring services provided to customers,
for whom charges are contracted for over a specified period of time. Payments received from customers that are related to future
periods are recorded as deferred revenue until the service is provided.
Stock-Based Compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of
the cost of employee and director services received in exchange for an award of equity instruments over the period the employee
or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting
Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange
for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date.
The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then
current fair value, at each subsequent reporting date.
Income Taxes
The Company recognizes deferred tax liabilities
and assets based on the temporary differences between the financial statement and tax bases of assets and liabilities that will
result in future taxable or deductible amounts, based on enacted tax laws and rates in effect for the year in which the differences
are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and
income tax purposes consist primarily of timing differences such as stock-based compensation and deferred revenue. A valuation
allowance is provided against net deferred tax assets when the Company determines it is more likely than not that it will fail
to generate sufficient taxable income to be able to realize the deferred tax assets.
GH CAPITAL INC.
NOTES TO FINANICAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Income Taxes (continued)
The Company follows the accounting guidance
for uncertainty in income taxes using the provisions of ASC 740,
Income Taxes
. Using that guidance, tax positions initially
need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination
by the tax authorities. As of September 30, 2015 and 2014, the Company had no uncertain tax positions that qualify for either
recognition or disclosure in the financial statements. The Company has not filed its income tax returns for the periods ended
September 30, 2014 and for the year ended September 30, 2015. These tax years are subject to examination. The Company recognizes
interest and penalties related to uncertain income tax positions in other expense. However, no such interest and penalties were
recorded as of September 30, 2015.
Research and Development
Research and development costs are expensed
as incurred.
Loss per Common
Share and Common Share Equivalent
Basic loss per share
excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock
that then shared in the income of the Company. The Company had no dilutive securities outstanding during the years ended September
30, 2015 and 2014.
Impact of Recently Issued Accounting Standards
From time to time, the FASB or other standards
setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting
Standards Update (“ASU”).
In April of 2015, the FASB issued ASU No. 2015-03,
Interest – Imputation of Interest (Subtopic 835-30); Simplifying the Presentation of Debt Issuance Costs
, which is
effective for fiscal years beginning after December 15, 2015. The amendments in this Update require that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt, consistent
with debt discounts. Early adoption is permitted. The Company does not believe that adoption of this ASU will have a material impact
on its financial statements.
In August 2014, the FASB issued ASU No. 2014-15,
Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern (“ASU 2014-15”)
, which is effective for annual periods ending after December
15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. Under ASU 2014-15, entities will
be required to formally assess their ability to continue as a going concern and provide disclosures under certain circumstances.
While current practice regarding such disclosures is often guided by U.S. auditing standards, the new standard explicitly requires
the assessment at interim and annual periods, and provides management with its own disclosure guidance. The standard can be adopted
early. The Company is currently assessing the impact that adopting these new assessment and disclosure requirements will have on
its financial statements and footnote disclosures.
GH CAPITAL INC.
NOTES TO FINANCIAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Impact of Recently Issued Accounting Standards (continued)
In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, “
Revenue from Contracts with Customers (Topic 606),
” (“ASU 2014-09”). ASU 2014-09
outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers
and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model
provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects
to receive in exchange for those goods or services. ASU 2014-09 is effective for public entities for annual reporting periods beginning
after December 15, 2016 and interim periods within those periods. Early adoption is not permitted. The FASB has approved a one-year
deferral of the effective date with the option to early adopt using the original effective date. Entities may use either a full
retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company is currently assessing the impact that adopting
this new accounting guidance will have on its financial statements and footnote disclosures.
NOTE 3 - STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has 10,000,000 shares of preferred
stock authorized. Preferred stock may be issued in one or more series. The Company’s board of directors is authorized to
issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to
be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of such series. No shares of preferred stock have been issued as of
September 30, 2015 and 2014.
Common Stock
On May 5, 2014, the Company issued 20,000,000
shares of its common stock to the Company’s founder at a value of $.055 per shares in exchange for the founder paying $11,000
of Company expenses. In connection with issuance of these common shares, the Company recorded a subscription receivable of $11,000
which was reflected on the accompanying balance sheet at September 30, 2014 and was received in fiscal 2015 in the form of legal
and other expenses paid by the founder.
On May 8, 2014, the Company issued 170,000
shares of common stock to a consultant for marketing services rendered. These common shares were valued at a negotiated price of
$.12 per share, resulting in a charge to professional fees expense in the statement of operations. The negotiated price was used
to value these shares because no market had been established for the stock, based on a lack of any prior transactions with any
entity other than the Company's founder. This resulted in a charge of $20,400 to professional fees expense in the statement of
operations.
GH CAPITAL INC.
NOTES TO FINANCIAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 3 - STOCKHOLDERS’ EQUITY (continued)
Common Stock (continued)
During the period from May 5, 2014 (inception)
to September 30, 2014, the Company issued 9,000,000 shares of common stock to initial investors in exchange for the initial investors’
payment of the Company’s legal fees and expenses totaling $50,250. In connection with issuance of these common shares, during
the period from May 5, 2014 (inception) to September 30, 2014, the Company reduced accounts payable by $34,875, the amount that
such investors paid for Company legal fees and other expenses, and recorded a subscription receivable of $15,375 which was reflected
on the accompanying balance sheet at September 30, 2014. In October 2014, such investors paid additional legal fees and expenses
on behalf of the Company and the Company reduced the subscription receivable. The 9,000,000 shares of common stock were valued
at a range from $.0055 to $.0058 per common share.
During the period from June 2014 to September
30, 2014, the Company issued 62,000 shares of common stock to consultants for services rendered. These common shares valued at
a range from $.08 to $.12 per common share or $5,300. The negotiated price was used to value these shares because no market had
been established for the stock, based on a lack of any prior transactions with any entity other than the Company's founder. This
resulted in a charge of $5,300 to professional fees expense in the statement of operations.
From December 2014 to May 2015, the Company
issued an aggregate of 4,343,750 shares of common stock to investors at a range from $.03 to $.18 per common share for cash proceeds
of $146,000.
On April 15, 2015, the Company entered into
an agreement with a member of its Board of Directors. In exchange for this member’s service to the Company as a director
and Chief Operating Officer, the Company issued 150,000 shares of restricted common stock valued at $.16 per share, representing
the most recent cash price paid per share, for a total value of $24,000 to the Director. The shares vest in four equal tranches
every four months through April 15, 2016. The Company recorded compensation cost using the graded vesting method. Accordingly,
the Company recorded compensation expense of $18,250 during the year ended September 30, 2015 to represent the vested portion and
a prepaid expense of $5,750 at September 30, 2015 to represent the unvested portion.
In July 2015, the Company issued 70,000 shares
of common stock valued at $.16 per common share or $11,200 to a third party vendor as part of a product development agreement.
The shares were valued at the most recent cash price paid per share. In connection with these shares, the Company recorded capitalized
development costs of $11,200.
At September 30, 2015, the Company had 490
million shares of common stock authorized and 33,795,750 shares of common stock were outstanding.
GH CAPITAL INC.
NOTES TO FINANCIAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 4 - INCOME TAXES
The Company maintains deferred tax assets and
liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset has been fully offset by
a valuation allowance because of the uncertainty of the attainment of future taxable income. The Company did not have an income
tax provision or benefit for the year ended September 30, 2015 or for the period from May 5, 2014 (inception) to September 30,
2014. The Company has incurred losses and therefore has provided a full valuation allowance against net deferred tax assets as
of September 30, 2015 and 2014.
The items accounting for the difference between
income taxes at the effective statutory rate and the provision for income taxes for the year ended September 30, 2015 and for the
period from May 5, 2014 (inception) to September 30, 2014 were as follows:
|
|
|
Year Ended September 30, 2015
|
|
For the Period from May 5, 2014 (inception) to September 30, 2014
|
|
Income tax benefit at U.S. statutory rate of 35%
|
|
$
|
(21,400
|
)
|
|
$
|
(26,757
|
)
|
|
State income tax, net of federal benefit
|
|
|
(2,140
|
)
|
|
|
(2,675
|
)
|
|
Stock-based compensation
|
|
|
7,026
|
|
|
|
9,895
|
|
|
Change in valuation allowance
|
|
|
16,514
|
|
|
|
19,537
|
|
|
Total provision for income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company’s approximate net deferred
tax assets as of September 30, 2015 and 2014 were as follows:
|
|
|
September 30, 2015
|
|
September 30, 2014
|
|
Deferred Tax Assets:
|
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
36,051
|
|
|
$
|
19,537
|
|
|
Total deferred tax assets
|
|
|
36,051
|
|
|
|
19,537
|
|
|
Valuation allowance
|
|
|
(36,051
|
)
|
|
|
(19,537
|
)
|
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
At September 30, 2015, the Company had U.S.
net operating loss carryforwards of $93,644 for income tax purposes, which expire in varying amounts through 2035. The amount of
any benefit from the Company’s U.S. tax net operating losses is dependent on: (1) its ability to generate future taxable
income, and (2) the unexpired amount of net operating loss carryforwards available to offset amounts payable on such taxable
income. Any change in ownership greater than fifty percent under IRC section 382 places significant annual limitations on the use
of the Company’s U.S. net operating losses to offset any future taxable U.S. income that may be generated.
The valuation allowance increased by $16,514
and $19,537 for the periods ended September 30, 2015 and 2014, respectively.
GH CAPITAL INC.
NOTES TO FINANCIAL STATEMENTS
For the Year Ended September 30, 2015 and
For the Period from
May 5, 2014 (Inception) to September 30,
2014
NOTE 5 - RELATED PARTY TRANSACTIONS
On March 30, 2015, the Company entered into
a services contract with Global Humax Cyprus Ltd. (“Cyprus”), a related party. Under the terms of the contract, the
Company will provide services to Cyprus for a period of two years from the date of the agreement. The Company received payments
under the contract totaling $16,000, which is being recognized as revenue over the term of the agreement. For the year ended September
30, 2015, revenues – related party amount to $4,000 and at September 30, 2015, deferred revenue – related party amounted
to $12,000.
During the years ended September 30, 2015 Cyprus
paid various general and administrative expenses on behalf of the Company in the amount of $3,183. These advances are non-interest
bearing and are due on demand.
The Company paid cash compensation to a member
of its board of directors in the amount of $4,800 in connection with a written agreement with the director (see Note 3).
NOTE 6 - SUBSEQUENT EVENTS
On November 22, 2015, the Company issued 35,000
shares of common stock to an attorney for legal services rendered. The fair value of the shares was determined by using the most
recent sale price of the common stock of $0.18 per common share. In connection with issuance of these common shares, the Company
recorded stock-based professional fees of $6,300 for the six months ended March 31, 2016.
On January 7, 2016, the Company issued 70,000
shares of common stock valued at $.18 per common share or $12,600 to a third party vendor as part of a product development agreement.
The shares were valued at the most recent cash price paid per share. In connection with these shares, the Company recorded capitalized
development costs of $12,600.
On May 19, 2016, the Company issued 146,667 shares of common stock for accounting services rendered. The fair value of the 146,667 shares was determined by using the most recent sale price of the common stock of $0.18 per common share for a fair value of $26,400 which will be recorded as stock-based accounting fees over the service period.
GH CAPITAL INC.
CONDENSED BALANCE SHEETS
|
|
|
March 31,
|
|
September 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
56,964
|
|
|
$
|
128,627
|
|
|
Marketable securities
|
|
|
11,294
|
|
|
|
—
|
|
|
Prepaid expenses and other current assets
|
|
|
1,037
|
|
|
|
12,875
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
69,295
|
|
|
|
141,502
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized development costs, net
|
|
|
65,474
|
|
|
|
20,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
134,769
|
|
|
$
|
162,202
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
16,847
|
|
|
$
|
1,463
|
|
|
Due to related parties
|
|
|
3,183
|
|
|
|
3,183
|
|
|
Deferred revenue - related party
|
|
|
8,000
|
|
|
|
12,000
|
|
|
Deferred revenue
|
|
|
—
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
28,030
|
|
|
|
31,646
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock ($0.0001 par value; 10,000,000 shares authorized; No shares
|
|
|
|
|
|
|
|
|
|
issued and outstanding at March 31, 2016 and September 30, 2015)
|
|
|
—
|
|
|
|
—
|
|
|
Common stock ($0.0001 par value; 490,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
|
33,900,750 and 33,795,750 shares issued and outstanding at
|
|
|
|
|
|
|
|
|
|
March 31, 2016 and September 30, 2015, respectively)
|
|
|
3,390
|
|
|
|
3,380
|
|
|
Additional paid-in capital
|
|
|
283,660
|
|
|
|
264,770
|
|
|
Accumulated deficit
|
|
|
(178,054
|
)
|
|
|
(137,594
|
)
|
|
Accumulated other comprehensive loss - marketable securities
|
|
|
(2,257
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
106,739
|
|
|
|
130,556
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
134,769
|
|
|
$
|
162,202
|
|
See accompanying condensed notes to unaudited financial statements.
GH CAPITAL INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third party
|
|
$
|
7,500
|
|
|
$
|
5,000
|
|
|
$
|
15,000
|
|
|
$
|
5,000
|
|
|
Related party
|
|
|
2,000
|
|
|
|
6,000
|
|
|
|
4,000
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
9,500
|
|
|
|
11,000
|
|
|
|
19,000
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
2,996
|
|
|
|
697
|
|
|
|
5,769
|
|
|
|
697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
6,504
|
|
|
|
10,303
|
|
|
|
13,231
|
|
|
|
10,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
4,162
|
|
|
|
—
|
|
|
|
9,512
|
|
|
|
—
|
|
|
Professional fees
|
|
|
25,869
|
|
|
|
7,271
|
|
|
|
36,507
|
|
|
|
12,637
|
|
|
Other selling, general and administrative expenses
|
|
|
1,662
|
|
|
|
509
|
|
|
|
4,553
|
|
|
|
860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
31,693
|
|
|
|
7,780
|
|
|
|
50,572
|
|
|
|
13,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(25,189
|
)
|
|
|
2,523
|
|
|
|
(37,341
|
)
|
|
|
(3,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from foreign currency transactions
|
|
|
22
|
|
|
|
—
|
|
|
|
(674
|
)
|
|
|
—
|
|
|
Loss on sale of marketable securities
|
|
|
(2,445
|
)
|
|
|
—
|
|
|
|
(2,445
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expenses), net
|
|
|
(2,423
|
)
|
|
|
—
|
|
|
|
(3,119
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain before income taxes
|
|
|
(27,612
|
)
|
|
|
2,523
|
|
|
|
(40,460
|
)
|
|
|
(3,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
|
|
$
|
(27,612
|
)
|
|
$
|
2,523
|
|
|
$
|
(40,460
|
)
|
|
$
|
(3,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(27,612
|
)
|
|
$
|
2,523
|
|
|
$
|
(40,460
|
)
|
|
$
|
(3,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale marketable securities
|
|
|
(2,868
|
)
|
|
|
—
|
|
|
|
(2,257
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(30,480
|
)
|
|
$
|
2,523
|
|
|
$
|
(42,717
|
)
|
|
$
|
(3,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income per Common Share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
33,896,135
|
|
|
|
32,732,000
|
|
|
|
33,853,318
|
|
|
|
31,520,462
|
|
See accompanying condensed notes to unaudited financial statements.
GH CAPITAL INC.
CONDENSED STATEMENTS OF CASH FLOWS
|
|
|
For the Six Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(40,460
|
)
|
|
$
|
(3,194
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Stock-based compensation and fees
|
|
|
11,613
|
|
|
|
—
|
|
|
Loss on sale of marketable securities
|
|
|
2,445
|
|
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Subscription receivable
|
|
|
—
|
|
|
|
5,300
|
|
|
Accounts receivable
|
|
|
—
|
|
|
|
(11,000
|
)
|
|
Prepaid expenses
|
|
|
6,525
|
|
|
|
—
|
|
|
Accounts payable
|
|
|
15,384
|
|
|
|
5,883
|
|
|
Deferred revenue - related party
|
|
|
(4,000
|
)
|
|
|
—
|
|
|
Deferred revenue
|
|
|
(15,000
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(23,493
|
)
|
|
|
(3,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
(19,162
|
)
|
|
|
—
|
|
|
Proceeds from sale of marketable securities
|
|
|
3,166
|
|
|
|
—
|
|
|
Capitalized development costs
|
|
|
(32,174
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(48,170
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from related party advances
|
|
|
—
|
|
|
|
3,005
|
|
|
Overdraft in bank
|
|
|
—
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
—
|
|
|
|
3,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(71,663
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
128,627
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
56,964
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Common stock issued for subscription receivable
|
|
$
|
—
|
|
|
$
|
100,000
|
|
|
Reduction of subscription receivable in exchange for accounts payable
|
|
$
|
—
|
|
|
$
|
21,075
|
|
|
Common stock issued for capitalized development costs
|
|
$
|
12,600
|
|
|
$
|
—
|
|
See accompanying condensed notes to unaudited financial statements.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
GH Capital Inc. (the “Company”),
a Florida corporation, was formed on May 5, 2014 and commenced operations in October 2014. The Company provides online payment
processing services to consumers, primarily in Europe.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance
with Regulation S-X of the Securities and Exchange Commission (the “SEC”). The Company’s fiscal year ends on
September 30, of each year.
Going Concern
These financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the
normal course of business. As reflected in the accompanying financial statements, the Company had a net loss of $40,460 and $3,194
for the six months ended March 31, 2016 and 2015, respectively. The net cash used in operations were $23,493 and $3,011 for the
six months ended March 31, 2016 and 2015, respectively. Additionally, the Company had an accumulated deficit of $178,054 at March
31, 2016. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow
positive, or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or
equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common
stock, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or
secure additional lending in the near future, management expects that the Company will need to curtail its operations. These financial
statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in
conformity with U.S. GAAP 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 consolidated financial statements and the reported
amounts of revenues and expenses during the year. Actual results could be affected by those estimates. Included in these estimates
are assumptions used in determining the lives of long-lived assets, valuation allowances for deferred tax assets and the fair value
of the Company’s common stock, which from time to time may be issued in exchange for services provided in lieu of cash.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Fair Value of Financial Instruments
The Company adopted the guidance of ASC Topic
820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and
establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Inputs are unadjusted quoted prices
in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs are unadjusted quoted prices
for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets
that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable
market data.
Level 3-Inputs are unobservable inputs which
reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset
or liability based on the best available information.
The carrying amounts reported in the balance
sheets for cash, prepaid expenses and other current assets, accounts payable, due to related parties, deferred revenue –
related party and deferred revenue approximate their fair market value based on the short-term maturity of these instruments. The
Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance
with the accounting guidance.
The Company’s financial instruments consist
primarily of marketable securities and certain accrued liabilities. Marketable securities are adjusted to fair value each balance
sheet date, based on quoted prices; which are considered level 1 inputs (see note 3). The estimated fair value is not necessarily
indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The fair
value of marketable securities categorized as Level 1 that are measured on a recurring basis totaled $11,294 and $0 as of March
31, 2016 and September 30, 2015, respectively.
ASC Topic 825-10 “Financial Instruments”
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If
the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
Cash and Cash Equivalents
For purposes of the consolidated statements
of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date
and money market accounts to be cash equivalents
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Concentration of Credit Risk
The Company maintains its cash in financial
institutions for which balances are insured up to Federal Deposit Insurance Corporation limits of $250,000 per account. At times,
cash balances may exceed the federally insured limits.
Two customers, one of which is a related party,
currently account for all of the Company’s revenues.
Marketable Securities
Pursuant to ASC 320, Investments – Debt
and Equity Securities, marketable securities held by the Company are held for an indefinite period of time and thus are classified
as available-for-sale securities. The fair value is based on quoted market prices for the investment as of the balance sheet date.
Realized investment gains and losses are included in the statement of operations, as are provisions for other than temporary declines
in the market value of available for-sale securities. Unrealized gains and unrealized losses deemed to be temporary are excluded
from earnings (losses), net of applicable taxes, as a component of other comprehensive income (loss). Factors considered in judging
whether an impairment is other than temporary include the financial condition, business prospects and creditworthiness of the issuer,
the length of time that fair value has been less than cost, the relative amount of decline, and the Company’s ability and
intent to hold the investment until the fair value recovers. Realized gains and losses and decline in value judged to be other
than temporary on available-for-sale securities are included in the statements of operations. The cost of securities sold or disposed
is determined on First in First out, or FIFO method.
Capitalized Development Costs
Software development
costs related to the development of the Company’s electronic payment platform software, which is developed for internal use,
falls under the accounting guidance of ASC Topic 350-40,
Intangibles Goodwill and Other–Internal Use Software
, in
which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application
development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as
incurred. Costs capitalized during the application development stage include external direct costs of materials and services consumed
in developing or obtaining internal-use software and payroll and payroll-related costs for employees who are directly associated
with, and who devote time to, the internal-use computer software. Once the project is substantially complete and ready for its
intended use these costs are amortized on a straight-line basis over the technology's estimated useful life of three years. No
amortization expense was recorded for the three and six months March 31, 2016 and 2015. In May 2016, the Company began amortizing
its capitalized development costs.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Impairment of Long-lived Assets
In accordance with ASC Topic 360, the Company
reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between
the asset’s estimated fair value and its book value.
Foreign Currency Transactions
The reporting and functional currency of the
Company is the U.S. dollar. Transactions denominated in foreign currencies are translated into the functional currency at the exchange
rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange
rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations
as incurred. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations
of the Company.
Revenue Recognition
The Company recognizes revenue when persuasive
evidence of a sale arrangement exists, services have been rendered, the sales price is fixed and determinable and collectability
is reasonably assured. The Company’s revenue is currently comprised of monthly recurring services provided to customers,
for whom charges are contracted for over a specified period of time. Payments received from customers that are related to future
periods are recorded as deferred revenue until the service is provided.
Stock-Based Compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of
the cost of employee and director services received in exchange for an award of equity instruments over the period the employee
or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting
Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange
for an award based on the grant-date fair value of the award.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date.
The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then
current fair value, at each subsequent reporting date.
Income Taxes
The Company recognizes deferred tax liabilities
and assets based on the temporary differences between the financial statement and tax bases of assets and liabilities that will
result in future taxable or deductible amounts, based on enacted tax laws and rates in effect for the year in which the differences
are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and
income tax purposes consist primarily of timing differences such as stock-based compensation and deferred revenue. A valuation
allowance is provided against net deferred tax assets when the Company determines it is more likely than not that it will fail
to generate sufficient taxable income to be able to realize the deferred tax assets.
The Company follows the accounting guidance
for uncertainty in income taxes using the provisions of ASC 740,
Income Taxes
. Using that guidance, tax positions initially
need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination
by the tax authorities. As of March 31, 2016 and September 30, 2015, the Company had no uncertain tax positions that qualify
for either recognition or disclosure in the financial statements. The Company has not filed its income tax returns for the
period ended September 30, 2014 and for the year ended September 30, 2015. These tax years are subject to examination. The Company
recognizes interest and penalties related to uncertain income tax positions in other expense. However, no such interest and penalties
were recorded as of March 31, 2016 and September 30, 2015.
Research and Development
Research and development costs are expensed
as incurred.
(Loss) Income per
Common Share and Common Share Equivalent
Basic (loss) income
per share excludes dilution and is computed by dividing (loss) income available to common stockholders by the weighted-average
number of common shares outstanding during the period. Diluted (loss) income per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the income of the Company. The Company had no dilutive securities outstanding during the three
and six months ended March 31, 2016 and 2015.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recently Issued Accounting Standards
From time to time, the FASB or other standards
setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting
Standards Update (“ASU”).
In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, “
Revenue from Contracts with Customers (Topic 606),
” (“ASU 2014-09”). ASU 2014-09
outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers
and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model
provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects
to receive in exchange for those goods or services. ASU 2014-09 is effective for public entities for annual reporting periods beginning
after December 15, 2016 and interim periods within those periods. Early adoption is not permitted. The FASB has approved a one-year
deferral of the effective date with the option to early adopt using the original effective date. Entities may use either a full
retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company is currently assessing the impact that adopting
this new accounting guidance will have on its financial statements and footnote disclosures.
Recently Issued Accounting Standards (continued)
In August 2014, the FASB issued ASU 2014-15,
Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,
that will require management
to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances.
In connection with each annual and interim period, management will assess if there is substantial doubt about an entity’s
ability to continue as a going concern within one year after the issuance date. Substantial doubt exists if it is probable that
the entity will be unable to meet its obligations within one year after the issuance date. The new standard defines substantial
doubt and provides example indicators. Disclosures will be required if conditions give rise to substantial doubt. However, management
will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. This standard is effective
for public entities for annual periods ending after December 15, 2016. Earlier application of this standard is permitted. This
standard is not expected to have a material effect on the Company’s financial position, results of operations and cash flows.
On March 30, 2016, the
FASB issued ASU No. 2016-09 (“ASU 2016-09”) to amend the accounting guidance for share-based payment accounting. The
areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including
the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the
statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and early adoption is permitted.
Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying consolidated financial statements.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 3 – MARKETABLE SECURITIES
The Company classifies
its marketable securities as available-for-sale securities, which are carried at their fair value based on the quoted market prices
of the securities with unrealized gains and losses, net of deferred income taxes, reported as accumulated other comprehensive income
(loss), a separate component of stockholders’ equity. Realized gains and losses on available-for-sale securities are included
in net earnings in the period earned or incurred. The Company did not have any short-term investments as of September 30, 2015.
For the three and six months ended March 31, 2016, realized losses from the sale of available-for-sale securities were $2,445 and
$2.445, respectively.
The following summarizes
the carrying value of marketable securities as of March 31, 2016:
|
|
|
March 31, 2016
|
|
Historical cost
|
|
$
|
13,551
|
|
|
Unrealized loss included in accumulated other comprehensive loss
|
|
|
(2,257
|
)
|
|
Balance, marketable securities, at fair value
|
|
$
|
11,294
|
|
NOTE 4 - RELATED PARTY TRANSACTIONS
On March 30, 2015, the Company entered into
a services contract with Global Humax Cyprus Ltd. (“Cyprus”), a related party. Under the terms of the contract, the
Company will provide services to Cyprus for a period of two years from the date of the agreement. The Company received payments
under the contract totaling $16,000, which is being recognized as revenue over the term of the agreement. For the six months ended
March 31, 2016 and 2015, revenues – related party amount to $4,000 and $6,000, respectively, and at March 31, 2016 and September
30, 2015, deferred revenue – related party amounted to $8,000 and $12,000, respectively.
During the six months ended March 31, 2015,
Cyprus paid various general and administrative expenses on behalf of the Company in the amount of $2,995. These advances are non-interest
bearing and are due on demand. At March 31, 2016 and September 30, 2015, the Company owed Cyprus $3,173.
During the six months ended March 31, 2015,
the Company’s Chief Executive Officer advanced $10 to the Company for working capital purpose. The advance is non-interest
bearing and payable on demand. At March 31, 2016 and September 30, 2015, the Company owed its Chief Executive Officer $10.
For the six months ended March 31, 2016 and
2015, the Company paid cash compensation to a member of its board of directors in the amount of $4,200 and $0 in connection with
a written agreement with the director, respectively.
GH CAPITAL INC.
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2016
NOTE 5 - STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has 10,000,000 shares of preferred
stock authorized. Preferred stock may be issued in one or more series. The Company’s board of directors is authorized to
issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to
be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of such series. No shares of preferred stock have been issued as of
March 31, 2016 and September 30, 2015.
Common Stock
On November 22, 2015, the Company issued 35,000
shares of common stock to an attorney for legal services rendered. The fair value of the shares was determined by using the most
recent sale price of the common stock of $0.18 per common share. In connection with issuance of these common shares, the Company
recorded stock-based professional fees of $6,300 for the six months ended March 31, 2016.
On January 7, 2016, the Company issued 70,000
shares of common stock valued at $.18 per common share or $12,600 to a third party vendor as part of a product development agreement.
The shares were valued at the most recent cash price paid per share. In connection with these shares, the Company recorded capitalized
development costs of $12,600.
NOTE 6 – SUBSEQUENT EVENTS
On May 19, 2016, the Company issued 146,667
shares of common stock for accounting services rendered. The fair value of the 146,667 shares was determined by using the most
recent sale price of the common stock of $0.18 per common share for a fair value of $26,400 which will be recorded as stock-based
accounting fees over the service period.
