ITEM 1.
FINANCIAL STATEMENTS
INDEX
|
|
Unaudited Consolidated Balance Sheets
|
2
|
|
|
Unaudited Consolidated Statements of Operations
|
3
|
|
|
Unaudited Consolidated Statements of Cash Flows
|
4
|
|
|
Notes to Unaudited Consolidated Financial Statements
|
5
|
LOT78, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
|
|
December 31,
|
|
September 30,
|
|
|
2013
|
|
2013
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
49,947
|
$
|
274,312
|
Accounts receivable
|
|
85,528
|
|
132,422
|
Prepaid expenses and other current assets
|
|
106,490
|
|
63,735
|
Inventory, net
|
|
16,107
|
|
61,460
|
Total current assets
|
|
258,072
|
|
531,929
|
Property and equipment, net
|
|
3,116
|
|
3,614
|
Patents, net
|
|
21,964
|
|
22,457
|
Total assets
|
$
|
283,152
|
$
|
558,000
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
274,318
|
$
|
280,535
|
Accounts payable – related party
|
|
41,797
|
|
26,850
|
Debt due to third parties
|
|
186,314
|
|
137,156
|
Debt due to related parties
|
|
32,976
|
|
32,272
|
Derivative liabilities
|
|
192,214
|
|
434,464
|
Convertible debt due to shareholders
|
|
89,838
|
|
124,610
|
Due to shareholders
|
|
329,760
|
|
322,594
|
Total current liabilities
|
|
1,147,217
|
|
1,358,481
|
Long term debt due to shareholders
|
|
320,659
|
|
313,813
|
Convertible
debt, net of discount of $437,458 and $437,500
|
|
12,542
|
|
12,500
|
Total long term liabilities
|
|
333,201
|
|
326,313
|
Total liabilities
|
$
|
1,480,418
|
|
1,684,794
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, none issued and outstanding
|
|
-
|
|
-
|
Common stock, $0.001 par value per share, 350,000,000 shares authorized, 237,570,283 and 237,403,616 shares issued and outstanding
|
|
237,570
|
|
237,404
|
Additional paid-in capital
|
|
877,673
|
|
865,340
|
Accumulated other comprehensive income (loss)
|
|
17,017
|
|
42,134
|
Accumulated deficit
|
|
(2,329,526)
|
|
(2,271,672)
|
Total stockholders’ deficit
|
|
(1,197,266)
|
|
(1,126,794)
|
Total liabilities and stockholders’ deficit
|
$
|
283,152
|
|
558,000
|
The accompanying notes are an integral part
of the consolidated unaudited financial statements
LOT78, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE LOSS
(unaudited)
|
|
Three Months Ended December 31,
2013
|
|
Three Months Ended December 31, 2012
|
Revenue, net
|
$
|
55,730
|
$
|
58,695
|
Cost of sales
|
|
69,409
|
|
75,384
|
Gross Loss
|
|
(13,679)
|
|
(16,689)
|
Expenses
|
|
|
|
|
Selling, general and administrative expenses
|
$
|
273,576
|
$
|
124,350
|
Depreciation and amortization
|
|
1,531
|
|
1,034
|
Total expenses
|
|
275,107
|
|
125,384
|
Other income (expense)
|
|
|
|
|
Interest expense
|
|
(11,318)
|
|
(10,401)
|
Gain on derivative liabilities
|
|
242,250
|
|
-
|
Total other income (expense)
|
|
230,932
|
|
(10,401)
|
Net loss
|
$
|
(57,854)
|
$
|
(152,474)
|
Foreign currency translation adjustments
|
|
(25,118)
|
|
(57)
|
Comprehensive income (loss)
|
|
(82,972)
|
|
(152,531)
|
Basic and diluted loss per share
|
$
|
(0.00)
|
$
|
(13.24)
|
Weighted average shares of common stock outstanding – basic
|
|
237,477,892
|
|
11,510
|
The accompanying notes are an integral part
of the consolidated unaudited financial statements
LOT78, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
Three months
Ended
|
|
Three months
Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
Cash flows from operating activities
|
|
|
|
|
Net loss
|
$
|
(57,854)
|
$
|
(152,474)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
Depreciation
|
|
964
|
|
77
|
Amortization
|
|
567
|
|
957
|
Gain on derivative liabilities
|
|
(242,250)
|
|
-
|
Debt discount amortization
|
|
42
|
|
-
|
Stock based compensation
|
|
12,500
|
|
-
|
Change in operating assets/liabilities:
|
|
|
|
|
Accounts receivable
|
|
48,862
|
|
96,151
|
Prepaid expenses and other current assets
|
|
(40,608)
|
|
13,423
|
Inventory
|
|
45,840
|
|
671
|
Accounts payable and accrued expenses
|
|
11,293
|
|
(34,033)
|
Net cash provided by (used in) operating activities
|
|
(220,644)
|
|
(75,228)
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from issuance of debt
|
|
45,322
|
|
77,656
|
Repayment of convertible debt to shareholders
|
|
(40,573)
|
|
|
Net cash flows provided by financing activities:
|
|
4,749
|
|
77,656
|
|
|
|
|
|
Effect of foreign currency on cash and cash equivalents
|
|
(8,470)
|
|
14
|
Net increase (decrease) in cash
|
$
|
(224,365)
|
$
|
2,442
|
Cash- beginning of period
|
|
274,312
|
|
-
|
Cash- end of period
|
$
|
49,947
|
$
|
2,442
|
|
|
|
|
|
Cash paid for interest
|
$
|
1,347
|
$
|
-
|
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
Supplementary Non-Cash Information
|
|
|
|
|
Debt discount due to derivative liabilities
|
|
-
|
|
-
|
The accompanying notes are an integral part
of the consolidated unaudited financial statements
Lot78,
Inc.
Notes
to
CONSOLIDATED
Financial Statements
Unaudited
|
1.
|
BASIS OF PRESENTATION & ORGANIZATION
|
Basis of presentation
The accompanying unaudited
interim financial statements of Lot78, Inc. (the “Company”) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”),
and should be read in conjunction with the audited financial statements and notes thereto of the Company contained in Form 10-K
filed with the SEC on January 21, 2014.
In the opinion of
management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been reflected herein. The results of operations for
the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements
that would substantially duplicate the disclosures contained in the audited financial statements for the fiscal year ended September
30, 2013 as reported in the Company’s Form 10-K have been omitted.
Our business is subject to seasonal fluctuations.
Historically, sales of our products have been higher during the second and fourth quarters. As a result, our quarterly and annual
operating results and comparable sales may fluctuate significantly as a result of seasonality
.
Accordingly,
results for any one quarter or year are not necessarily indicative of results to be expected for any other quarter or for any year,
and comparable sales for any particular future period may decrease.
The Company’s financial statements are
prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course
of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow
it to continue as a going concern. The Company has an accumulated deficit since inception to December 31, 2013, of $2,329,526 which
raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.
If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the
Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the
Company through debt and/or equity financing from third parties.
|
3.
|
DEBT – THIRD PARTIES AND RELATED PARTIES
|
At December 31, 2013 and September 30, 2013 debt consists of the
following:
|
December 31, 2013
|
|
September 30, 2013
|
|
|
|
|
|
|
Loans - CI LLC
|
$
|
186,314
|
|
$
|
137,156
|
Loans – Related parties
|
|
32,976
|
|
|
32,272
|
Loans - David Hardcastle – Shareholder ($329,760 short term)
|
|
650,419
|
|
|
636,407
|
Total Debt to shareholders and related parties
|
$
|
869,709
|
|
$
|
805,835
|
During the three
months ended December 31, 2013, the Company received $45,322
from
CI LLC as a short term loan.
Short term loans from CI LLC (“CIL”)
are unsecured and interest free.
Other differences in the loan values
between September 30, 2013 and December 31, 2013 are due to foreign exchange translations.
Long-term loans from David Hardcastle are unsecured
and are currently non-interest bearing. However, once the Company secures significant external financing, the long term loans begin
accruing interest at bank rate plus 2% per annum and will be payable in quarterly installments over a 3 year period.
|
4.
|
CONVERTIBLE DEBT, DERIVATIVE LIABILITIES & FAIR VALUE MEASUREMENTS
|
Convertible Debt – IIMG
Loans from Iceberg Investment Management
Group (“IIMG”) are unsecured and accrue interest at a rate of 2.5% per annum. During the three months ended December
31, 2013, the Company repaid $40,573
to IIMG
.
If the loans remain unpaid by the maturity date,
all amounts are convertible into common stock of the Company at 80% of the Company’s volume weighted average price (“VWAP”)
for the 5 previous days prior to execution of the promissory note.
Convertible Debt – Embedded Derivatives
On August 30, 2013, the Company entered into
an Unsecured Senior Convertible Promissory Note (the “Note”) with Banque Benedict Hentsch & Cie SA (“Banque
Benedict”) for the principal sum of Three Hundred and Fifty Thousand Dollars ($350,000) plus simple interest thereon at the
rate of ten percent (10%) per annum. Banque Benedict has the option at any time to convert the Note in whole into shares of the
common stock of the Company at the conversion rate of $0.125 per share. Unless the Note is earlier converted, the total principal
and unpaid interest is due on September 1, 2016.
On September 9, 2013, the Company entered into
an Unsecured Senior Convertible Promissory Note (the “Note”) with Monument Assets & Resources Company Ltd (“Monument
Assets”) for the principal sum of One Hundred Thousand Dollars ($100,000) plus simple interest thereon at the rate of ten
percent (10%) per annum. Monument Assets has the option at any time to convert the Note in whole into shares of the common stock
of the Company at the conversion rate of $0.125 per share. Unless the Note is earlier converted, the total principal and unpaid
interest is due on September 1, 2016.
The above conversion notes contain a reset
provision whereby the conversion price on the notes can be reduced based on future equity transactions of the Company. As a result,
the conversion options were classified as derivative liabilities at their fair value on the date of issuance. The fair value of
the derivative liabilities exceeded the principal amount of the notes, resulting in a full debt discount of $450,000, $12,542 of
which has been amortized to interest expense from the date of the issuance to December 31 2013.
As defined in FASB ASC 820, fair value is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that
market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the
inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The
Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy
that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level
3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 –
|
Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
|
Level 2 –
|
Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.
|
Level 3 –
|
Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
|
The following table sets forth by level within the fair value hierarchy
the Company’s financial assets and liabilities that were accounted for at fair value as at December 31, 2013.
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities net September 30, 2013
|
|
$
|
-
|
|
$
|
-
|
$
|
434,464
|
$
|
434,464
|
Derivative liabilities net December 31, 2013
|
|
$
|
-
|
|
$
|
-
|
$
|
192,214
|
$
|
192,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the changes in the derivative liabilities
during the period ended December 31, 2013:
Fair value as of October 1, 2013
|
$
|
434,464
|
Change in fair value
|
|
242,250
|
Ending balance as of December 31, 2013
|
$
|
192,214
|
The gain on derivative liabilities of $242,250
in the accompanying consolidated statement of operations consists of the change in fair value of $242,250 noted above.
The
Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent re-measurements. Included
in the model are the following assumptions: stock price at valuation date of $0.0547, exercise price of $0.125, dividend yield
of zero, years to maturity of 2.67, risk free rate of 0.09 – 0.8
percent,
and annualized volatility of 292.63 – 478.27 percent.
|
5.
|
RELATED PARTY TRANSACTIONS
|
As of December 31, 2013, the Company owed an
officer $41,797 for accounting and consultancy fees.
During the three months ended December 31,
2013 the Company issued 166,667 shares of common stock valued at $12,500 for services rendered.
|
7.
|
COMMITMENTS AND CONTINGENCIES
|
In November
2012, Anio Limited (now named Lot 78 UK Limited) entered into a Consulting and Services Agreement with Iceberg
Investments Management Group Limited , a British Virgin Islands corporation. This document includes a provision that Lot78 UK Ltd
would pay a success fee of USD$770,000 on the closing of any financing in the amount exceeding $3,000,000. The amount of
the success fee purportedly payable reduces if the financing is less than $3,000,000. For these purposes, Iceberg have confirmed
that no success fee would be payable if the financing is less than $1,450,000 and $500,000 whether by equity or loan raised from
or introduced by Banque Benedict Hentsch & CIE SA is excluded. If Iceberg is not successful in obtaining financing
for the Company within 18 months of a potential merger or transaction there are provisions that Lot78 UK Ltd provide a convertible
promissory note.
The Company is taking legal advice
on this document, the enforceability of its provisions and reserves its position as to whether such fees will be payable
under or pursuant to this document.
On 2
nd
January
2014, the Company opened a Letter of Credit with Bibby Financial Services amounting to $305,085 for it’s Spring/Summer
14 production. This Letter of Credit was covered by the forward orders received from our customers and the total amount
outstanding as of date of issuance of the financial statements is $5,509.
eND
OF NOTES TO FINANCIALS
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
|
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking
statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by
the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential,
proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements,
you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.
Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from
those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking
statements for any reason.
Overview
Lot78, Inc. (the “Company”) designs,
markets, distributes, and sells apparel under the brand name "Lot78" to fashion-conscious consumers on four continents,
including North America, Europe, Asia, and South America. We seek to be a trend setting leader in the design, marketing, distribution
and sale of luxury street apparel. Our current collection is a full men’s and women’s contemporary ready-to-wear line
which includes leather jackets, t-shirts, sweats, knitwear, accessories, jeans, chinos, and wool coats. We operate in three distinct
but integrated segments: Wholesale, Consumer Direct and Core Services. Our Wholesale segment sells our products to industry-leading
high-end global department stores, specialty retailers and boutiques; our Consumer Direct segment consists of e-commerce sales
through our branded website located at www.lot78.com; and our Core Services segment provides product design, distribution, marketing
and other overhead resources to the other segments.
Executive Summary
Our results for the current quarter were in
line with expectations. Historically, we rely on re orders and online sales for revenues in our first and third quarters with the
bulk of our revenue being generated in the second and fourth quarters co-inciding with the Spring/Summer and Fall/Winter seasons.
We are in the process of looking to have pre
seasonal deliveries to our customers which if successful will generate greater revenues in our first and third quarters.
Plan of Operation
As of December 31, 2013, we had $49,947
of cash on hand. We incurred operating expenses in the amount of $273,576 during the period ended December 31, 2013. These
operating expenses were comprised of general and administrative expenses, professional fees, directors’ and consulting
fees, and other miscellaneous expenses.
Our current cash holdings will not satisfy
our liquidity requirements and we will require additional financing to pursue our planned business activities. We are in the process
of seeking equity and or debt financing to fund our operations over the next 12 months.
If we cannot generate sufficient revenues to
continue operations, we will suspend or cease our operations.
We do not expect the purchase or sale of any
significant equipment and have no current material commitments.
Management believes that if subsequent
placements are successful, we will generate sufficient sales revenue to cover our operating costs within the following twelve
months thereof. However, additional equity and or debt financing may not be available to us on acceptable terms or at all,
and thus we could fail to satisfy our future cash requirements.
Revenues
We earned revenues of $55,730 for the
period ended December 31, 2013 compared to revenues of $58,695 for the period ended December 31, 2012. The decrease in
revenues for the period ended December 31, 2013 can be attributed to our end of season Fall/Winter 13 stock being sold after
the quarter end in February 2014 whereas our old stock for Fall/Winter 12 was sold in December 2012.
Cost of Goods Sold
Cost of goods sold for the period ended December
31, 2013 were $69,409 compared to $75,384 for the period ended December 31, 2012. Cost of goods sold represented 125% of sales
for the period ended December 31, 2013 as compared to 128% for the period ended December 31, 2012. For the period ended December
31, 2013 the decrease can be attributed to a lower write down off stock for Fall/Winter 13 compared to Fall/Winter 12.
Expenses
For the period ended December 31, 2013, total
general and administrative expenses increased $149,226, or 120%, to $273,576. This increase can be attributed to increased professional
fees related to regulatory filings, increased travel costs for Fall/Winter 2013 sales, PR costs, employing an Italian Consultant
for liasing with factories, increase in design team staff and salaries of the CEO and CFO whose costs were not incurred in the
December 2012 quarter. We have also incurred one off costs relating to professional fees of $12,500, pertaining to preparation of
filing of an S-1 document.
Working Capital
|
|
|
|
|
|
|
|
|
At
December 31,
2013
|
|
At
September 30,
2013
|
|
Difference
|
Current Assets
|
$
|
258,072
|
$
|
531,929
|
$
|
(273,857)
|
Current Liabilities
|
$
|
1,147,217
|
$
|
1,358,481
|
$
|
211,264
|
Working Capital
|
$
|
(889,145)
|
$
|
(826,552)
|
$
|
(62,593)
|
Cash Flows
|
|
|
|
|
|
|
Three Months Ended
December 31,
2013
|
|
Three Months Ended
December 31,
2012
|
Net Cash (Used) Provided by Operating Activities
|
$
|
(220,644)
|
$
|
(75,228)
|
Net Cash (Used) Provided by Investing Activities
|
$
|
-
|
$
|
-
|
Net Cash (Used) Provided by Financing Activities
|
$
|
4,749
|
$
|
77,656
|
Net Effect of Foreign Currency Translation
|
$
|
(8,470)
|
$
|
14
|
Net (Decrease) Increase in Cash During the Period
|
$
|
(224,365)
|
$
|
2,442
|
For the period ended December 31, 2013, net
cash used in operating activities was $220,644 as a result of changes in our working capital, a net loss of $57,854 and a non cash
derivative gain of $242,250
For the period ended December 31, 2013, net
cash provided by financing activities was $4,749 as a result of proceeds from debt of $45,322, and repayment of convertible debt
of $40,573.
We will require additional funds to fund our
budgeted expenses in the future. These funds may be raised through equity financing, debt financing, or other sources, which may
result in further dilution in the equity ownership of our shares. For the period ended December 31, 2013 we have managed to raise
$45,322 through debt financing. There is no assurance that we will be able to maintain operations at a level sufficient for an
investor to obtain a return on their investment in our common stock. Furthermore, we may continue to be unprofitable. We will need
to raise additional funds in the future in order to proceed with our budgeted expenses. Additionally, there is no assurance that
any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
Liquidity and Capital Resources
Growth of our operations will be based on our
ability to internally finance from operating cash flows, and the ability to raise funds through equity and/or debt financing to
increase sales and production. Our primary sources of liquidity are: (i) cash from sales of our products; and (ii) financing activities.
Our cash balance as of December 31, 2013 is $49,947.
Our Company has funded some of its operations
through debt financing with related party transactions.
Inflation
The amounts presented in the financial statements
do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would
be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement
costs or by using other inflation adjustments.
Going Concern
For the three months ended December 31, 2013,
our Company has a comprehensive loss of $82,972 and an accumulated deficit of $2,329,526. Our Company intends to fund operations
through operational cash flow and equity/debt financing arrangements. These sources may be insufficient to fund its capital expenditures,
working capital and other cash requirements for the future. In response to these problems, management intends to raise additional
funds through public or private placement offerings. These factors, among others, raise substantial doubt about our Company’s
ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
As of December 31, 2013, we had no off balance
sheet transactions that have had, or are reasonably likely to have, a current or future effect on our financial condition, changes
in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
Our financial statements and accompanying notes
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies
and estimates that we use to prepare for financial statements. A complete summary of these policies is included in the notes to
our financial statements. In general management’s estimates are based on historical experience, on information from third
party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual
results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might
have a material impact on its financial position or results of operations.