NOTES TO FINANCIAL STATEMENTS
July 31, 2016
(unaudited)
Note 1. Description of Business and Summary of Significant
Accounting Policies
Organization
Interactive
Multi-Media Auction Corporation. (the “Company”) was
incorporated under the laws of the British Virgin Islands on July
13, 2012. The Company is in the business of an internet based
marketer, auctioneer, dealer and broker of high quality and unique
products and services for fine art, fashion, design and
décor.
Interim Period Financial Statements
The
accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) for interim
financial information and with the Securities and Exchange
Commission’s instructions. Accordingly, they do not include
all the information and footnotes required by GAAP for complete
financial statements. The results of operations reflect interim
adjustments, all of which are of a normal recurring nature and, in
the opinion of management, are necessary for a fair presentation of
the results for such interim period. The results reported in these
interim financial statements should not be regarded as necessarily
indicative of results that may be expected for the entire year.
Certain information and note disclosure normally included in
financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to the Securities and Exchange
Commission’s rules and regulations. These unaudited interim
financial statements should be read in conjunction with the audited
financial statements for the year ended October 31, 2015, as filed
with the Securities and Exchange Commission on February 10,
2016.
Going Concern
The
Company’s financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States 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 generated any revenue since
commencement of the development stage, has an accumulated deficit,
and has had no positive cash flows from operations. It is the
Company’s intention to raise additional equity to finance
development of a market for its products until positive cash flows
can be generated from its operations. However, there can be no
assurance that such additional funds will be available to the
Company when required or on terms acceptable to the Company. Such
limitations could have a material adverse effect on the
Company’s business, financial condition or operations, and
these financial statements do not include any adjustment that could
result. Failure to obtain sufficient additional funding would
necessitate the Company to reduce or limit its operating activities
or even discontinue operations.
Cash
Cash
equivalents with maturity dates less than 90 days from the date of
origination are considered to be cash equivalents for all financial
reporting purposes. The Company currently has cash equivalents of
$13,988 as of July 31, 2016.
Fair Value Measurements
Fair
value is defined as the exchange price that will be received for an
asset or paid to transfer a liability (an exit price) in the
principal. Valuation techniques used to measure fair value should
maximize the use of observable inputs and minimize the use of
unobservable inputs. To measure fair value, the Company uses the
following fair value hierarchy based on three levels of inputs, of
which the first two are considered to be observable and the third
unobservable:
Level 1
– Quoted prices in active markets for identical assets or
liabilities.
Level 2
– Inputs other than Level 1 that are observable, either
directly or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
Level 3
– Unobservable inputs are supported by little or no market
activity and are significant to the fair value of the assets or
liabilities.
Revenue Recognition
The
Company recognizes revenue when it is realized or realizable and
earned. The Company considers revenue, which includes charges on a
transactional and other basis, realized or realizable and earned
when the following criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred or services have been
rendered, price is fixed and determinable, and collectability is
reasonably assured.
Advertising Expenses
Advertising
costs are expensed as incurred. The Company did not incur any
advertising costs during the three and nine month periods ended
July 31, 2016 and 2015.
Income Taxes
Deferred
income tax assets and liabilities are determined based on temporary
differences between financial reporting and tax bases of assets and
liabilities, operating loss, and tax credit carryforwards, and are
measured using the enacted income tax rates and laws that will be
in effect when the differences are expected to be recovered or
settled. Realization of certain deferred income tax assets is
dependent upon generating sufficient taxable income in the
appropriate jurisdiction. The Company records a valuation allowance
to reduce deferred income tax assets to amounts that are more
likely than not to be realized. The initial recording and any
subsequent changes to valuation allowances are based on a number of
factors (positive and negative evidence). The Company considers its
actual historical results to have a stronger weight than other,
more subjective, indicators when considering whether to establish
or reduce a valuation allowance.
The
Company continually evaluates its uncertain income tax positions
and may record a liability for any unrecognized tax benefits
resulting from uncertain income tax positions taken or expected to
be taken in an income tax return. Estimated interest and penalties
are recorded as a component of interest expense and other expense,
respectively.
Because
tax laws are complex and subject to different interpretations,
significant judgment is required. As a result, the Company makes
certain estimates and assumptions in: (1) calculating its income
tax expense, deferred tax assets, and deferred tax liabilities; (2)
determining any valuation allowance recorded against deferred tax
assets; and (3) evaluating the amount of unrecognized tax benefits,
as well as the interest and penalties related to such uncertain tax
positions. The Company’s estimates and assumptions may differ
significantly from tax benefits ultimately realized.
As the
Company is incorporated in the British Virgin Islands as an
international corporporation it is not subject to any corporate
income taxes in the British Virgin Islands..
Net Loss Per Share
Basic
net loss per share is calculated by dividing the net loss
attributable to common shareholders by the weighted average number
of common shares outstanding in the period. Diluted loss per share
takes into consideration common shares outstanding (computed under
basic loss per share) and potentially dilutive securities. For the
nine month periods ended July 31, 2016 and 2015, there are no
outstanding stock options and warrants. Common shares issuable are
considered outstanding as of the original approval date for
purposes of earnings per share computations.
Foreign Currencies
Assets
and liabilities recorded in foreign currencies are translated at
the exchange rate on the balance sheet date. Revenue and expenses
are translated at average rates of exchange prevailing during the
year. Translation adjustments resulting from this process are
recorded to Other Comprehensive Income.
For the
three and nine month periods ended July 31, 2016 and 2015 the
Company did not have material translation adjustments and
accordingly, no statement of comprehensive income (loss) is
included in the accompanying financial statements.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the fiscal year. The Company bases its estimates on historical
experience, current conditions and on other assumptions that it
believes to be reasonable under the circumstances. Actual results
could differ from those estimates and assumptions.
Financial Instruments
The
Company has the following financial instruments: accounts payable
and loan payable. The carrying value of these financial instruments
approximates their fair value due to their liquidity or their
short-term nature.
Share Issuances for Services, Debt Instruments and
Interest
The
Company issues instruments to non-employees for the receipt of
goods and services, and, in certain circumstances the settlement of
short-term loan arrangements. The applicable GAAP
establishes that share-based payment transactions
with nonemployees shall be measured at the fair value of the
consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
In these transactions, the Company issues unregistered and
restricted equity instruments. Additionally, the Company currently
has no shares of freely-tradeable stock with a quoted market price
(a Level 1input within the GAAP hierarchy).
When unregistered common shares are issued for the settlement of
short-term financing arrangements (that are not initially
convertible), the reacquisition price of the extinguished financing
arrangement is determined by the value of the debt which is more
clearly evident, and no
additional inducement expense is
recognized.
In situations in which the Company issues unregistered restricted
common shares in exchange for goods and services, and the value of
the goods and services are not the most reliably measurable, the
Company recognizes the fair value of the unregistered restricted
equity instruments based on the value of similar instruments issued
in private placements in exchange for cash in the most recent
transactions (a Level 2 input within the GAAP hierarchy). The
Company has determined this methodology reflects the risk adjusted
fair value of its unregistered restricted equity instruments using
a commercially reasonable valuation technique.
Comprehensive Income (Loss)
Our
company has no components of other comprehensive income (loss) and
accordingly, no statement of comprehensive income (loss) is
included in the accompanying financial statements.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standard Update (“ASU”) 2014-09
– Revenue From Contracts with Customers, which will supersede
nearly all existing revenue recognition guidance under U.S. GAAP.
The core principal of this ASU is that an entity should recognize
revenue when it transfers promised goods or services to customers
in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
This ASU also requires additional disclosure about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from customer contracts, including significant judgments and
changes in judgments and assets recognized from costs incurred to
obtain or fulfill a contract.
In June
2014, the Financial Accounting Standards Board issued Accounting
Standards Update No. 2014-10, which eliminated certain financial
reporting requirements of companies previously identified as
"Development Stage Entities" (Topic 915). The amendments in this
ASU simplify accounting guidance by removing all incremental
financial reporting requirements for development stage entities.
The amendments also reduce data maintenance and, for those entities
subject to audit, audit costs by eliminating the requirement for
development stage entities to present inception-to-date information
in the statements of income, cash flows, and shareholder
equity. Early application of each of the amendments is
permitted for any annual reporting period or interim period for
which the entity's financial statements have not yet been issued
(public business entities) or made available for issuance (other
entities). Upon adoption, entities will no longer present or
disclose any information required by Topic 915. The Company
has adopted this standard.
The
original effective date for ASU 2014-09 would have required the
Company to adopt beginning in its first quarter 2017. In July 2015,
the FASB voted to amend ASU 2014-09 by approving a one year
deferral of the effective date as well as providing the option to
early adopt the standard on the original effective date.
Accordingly, the Company may adopt the standard in either its first
quarter of 2017 or 2018. The new revenue standard may be applied
retrospectively to each prior period presented or retrospectively
with the cumulative effect recognized as of the date of adoption.
The Company is currently evaluating the timing of its adoption and
the impact of adopting the new revenue standard on its financial
statements.
Note 2. Long-term Loan Payable
The
loan of $27,500, payable to a shareholder of the Company, is
unsecured, non-interest bearing and due on or before October 31,
2017.
Note 3. Related Party Transactions
During
the nine months ended July 31, 2016 and 2015 shareholders of the
Company advanced $17,408 and $40,041, respectively. The balances
owing as at July 31, 2016 of $101,284 is included in advances due
to shareholders.
During
the nine months ended July 31, 2016 and 2015 the Company’s
president and sole director provided managements services in the
amount of $1,000 and $nil, respectively.
Note 4. Share Capital
The
Company is authorized to issue 400,000,000 shares of capital stock,
par value of $0.00025.
The
shares can be divided into such classes and series as the directors
may determine. As at July 31, 2016 the Company only has one class
and series of shares.
On
December 30, 2014, the Board of Directors approved the
forward-split of the issued and outstanding common stock on the
basis of four new shares for each share, effective upon the
approval of the regulatory authorities. The Company’s common
stock was forward-split effective as of February 3,
2015.
The
application of the forward-split has been shown retroactively in
these financial statements.
During
the nine months ended July 31, 2016, the Company:
●
On April 29, 2016
issued 1,000,000 shares for cash proceeds of $25,000.
For
additional details of stock issuances prior to the nine months
ended July 31, 2016 please see the Form 10-K for the fiscal year
ended October 31, 2015 filed with the Securities Exchange
Commission on February 10, 2016.
Note 5. Subsequent Event
Subsequent
to July 31, 2016 the Company repaid shareholder advances in the
amount of $11,750.