Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The Company has no assets or liabilities valued at fair value on a recurring basis.
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line method after taking into account their respective estimated residual values over the estimated useful lives of the assets as follows:
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized.
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include (a) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.
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The Company’s video-editing services are considered to be one performance obligation; therefore, revenue is recognized when services have been provided as each performance obligation is satisfied.
Net Income (Loss)per Common Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants.
There were no potentially dilutive common shares outstanding for the period ended JuneSeptember 30, 2018.
Income Taxes
Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Earnings per Share
The Company has adopted ASC No. 260, “Earnings Per Share” which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Issued Accounting Pronouncements
There were no recently issued accounting pronouncements published by FASB applicable to Company’s operations and reporting.
Note 3 – Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had retained loss of ($22,997)27,312) since inception with limited operations with reported loss of ($24,371)28,685) for the sixnine months ended JuneSeptember 30, 2018. These factors raise doubt about the Company’s ability to continue as a going concern.
Although the Company has recognized some nominal amount of revenues since inception, the Company is devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4– Property, Plant and Equipment
Property, Plant and Equipment as follows:
| | | June 30, 2018 | | | December 31 2017 | | | September 30, 2018 | | | December 31 2017 | |
| | | | | | | | | | | | | |
| Tools and Equipment | | $ | 3,240 | | | $ | 3,240 | | | $ | 3,240 | | | $ | 3,240 | |
| Less: Accumulated Depreciation | | | (1,190 | ) | | | (380 | ) | | | (1,595 | ) | | | (380 | ) |
| Net | | $ | 2,050 | | | $ | 2,860 | | | $ | 1,645 | | | $ | 2,860 | |
Depreciation expense were $810$1,215 and $0$181 for the sixnine months ended JuneSeptember 30 2018 and 2017, respectivelyrespectively.
Note 5– Stockholders’ Equity
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy-Five Million (75,000,000) shares of which Seventy-Five Million (75,000,000) shares shall be Common Stock, par value $0.001 per share.
Common Stock
As of JuneSeptember 30, 2018, there were 7,315,000 total shares issued and outstanding.
On December 8, 2016, the Company has issued 5,000,000 shares of common stock to Oleg Jitov, President of the Company at $0.001 per share for aggregate proceeds of $5,000.
During the year ended December 31, 2017, the Company has issued 2,315,000 shares to 29 investors at a price of $0.01 per share for aggregate proceeds of $23,150.
Note 6– Related Party Transactions
Free Office Space
The Company has been provided office space by its President at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement.
Advances from Stockholder
From time to time, the President of the Company advances funds to the Company for working capital purposes. These advances are unsecured, non-interest bearing and due on demand. The outstanding balance was $3,224 as of JuneSeptember 30, 2018.
Issued Shares to Related Parties
On December 8, 2016, the Company sold 5,000,000 shares of common stock to Oleg Jitov, President of the Company at $0.001 per share, or $5,000 in cash.
Note 7– Income Taxes
The reconciliation of income tax benefit (expenses) at the U.S. statutory rate of 21% and 34% for the period ended as follows:
| | | June 30, 2018 | | | December 31 2017 | | | September 30, 2018 | | | December 31 2017 | |
| | | | | | | | | | | | | |
| Tax benefit (expenses) at U.S. statutory rate | | $ | 5,111 | | | $ | (974 | ) | | $ | 5,954 | | | $ | (974 | ) |
| Change in valuation allowance | | | (5,111 | ) | | | | | | | (5,954 | ) | | | | |
| Tax benefit (expenses), net | | $ | - | | | $ | (974 | ) | | $ | - | | | $ | (974 | ) |
The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets are as follows:
| | | June 30, 2018 | | | December 31 2017 | | | September 30, 2018 | | | December 31 2017 | |
| | | | | | | | | | | | | |
| Net operating loss | | $ | 5,111 | | | $ | - | | | $ | 5,954 | | | $ | - | |
| Valuation allowance | | | (5,111 | ) | | | | | | | (5,954 | ) | | | | |
| Deferred tax assets, net | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets are as follows:
| | | June 30, 2018 | | | December 31 2017 | | | September 30, 2018 | | | December 31 2017 | |
| | | | | | | | | | | | | |
| Balance-Beginning | | $ | - | | | $ | 1,020 | | | $ | - | | | $ | 1,020 | |
| Increase/(Decrease) in Valuation allowance | | | 5,111 | | | | (1,020 | ) | | | 5,954 | | | | (1,020 | ) |
| Balance-Ending | | $ | 5,111 | | | $ | - | | | $ | 5,954 | | | $ | - | |
The Company has accumulated $24,337$28,354 of net operating losses (“NOL”) carried forward to offset future taxable income.
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changes U.S. tax law by, among other things, lowering corporate income uptax rates, implementing a territorial tax system and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to 20 years, if any,a flat 21% rate, effective January 1, 2018. As a result of the reduction in future years which beginthe U.S. corporate income tax rate from 34% to expire in21% under the Tax Reform Act, the Company revalued its ending net deferred tax assets. In addition, net operating losses (NOL) arising after December 31, 2017 can be carryforward indefinitely while limiting the NOL deduction for a given year 2038. to 80% of taxable income.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
Note 8 – Subsequent Events
The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Alfacourse Inc. (the “Company”) was incorporated on February 29, 2016 under the laws of the State of Nevada. The Company provides video editing services.
Description of Products and Services
Alfacourse Inc. is a new company specializing in providing video editing services to professional video production companies and end consumers.
The company is using the latest technology to achieve a level of quality previously reserved for only the most expensive video production companies and private consumers. Our President has extensive industry experience and technical and creative expertise.
Our plans are to provide video-editing services using new UHD (Ultra-High Definition) 4K and 8K technologies as the market demand for UHD video continues to grow. This will improve our position in the video production and editing market. To secure a market segment, the company is working to determine trends in the industry, the needs of the customer, and come up with new creative ways to address those needs. Our services geared towards several work streams, including television stations, animation and multimedia companies.
Our primary business is video editing services. Every video project divided into three parts: pre-production, production, and post-production. During pre-production, customer describes the business need and the purpose. We plan, design, and develop the process of video editing. Production is the part of the project in which we collect and create all of the raw material that we will need to produce your multi-media project. This might include videotaping material in a one, two, or three camera shoot, producing 2-D or 3-D motion graphics. Post-production is where everything is pulled together into a rough-cut of the product. We make changes to accommodate customer preferences and desires during the post-production stage of the project.
Below is a list of services the company will provide:
| 1. | Postproduction video editing |
| 6. | Promotional Video Production and Video Marketing |
| 7. | Full range of post-production services |
Target Market and Clients
Alfacourse Inc. will provide video editing and full range of post-production services to its target markets.
The target markets have been identified as:
| 1. | Media & Entertainment companies |
| 2. | Video production companies |
| 3. | Animation and Multimedia companies |
| 5. | YouTube commercial publishers |
Sources of Revenue
We have identified three main marketing client groups associated with the various streams of revenue:
Source #1 – The End Client
Our main source of revenue is the end client.
The end client is the company or individual that requires direct services of Alfacourse.
The End Client scenario expected to make up 75% of our total revenue.
Source #2 – Creative Agencies
In this scenario, the End Client hires the agency who in turn hires us to provide video services for a larger project.
The money flows from the End Client to the Creative Agency and then to Alfacourse.
In the corporate video arena, there are marketing, PR, advertising, interactive and website design agencies that develop projects for End Clients that will need to outsource professional video services.
In the wedding video arena, an agency might be a chapel or large wedding coordination company that provides turn-key services to brides and their families.
Creative agencies should make up about 18% of the revenues we generate for your video business.
Source #3 – Other Videographers and/or Producers
The Company plans to form strategic alliances with clients who require a freelancer to cover various events for them. We will also develop strategic alliances with video production companies and work with them as a sub-contractor.
The other videographers and producers segment is expected to generate 7% of the total revenue.
Competition and Competitive Strategy
There are many video production and editing companies in the market.
We expect to compete as a freelance video production company in the Media & Entertainment industry.
Currently, our competitive position within the industry is negligible in light of the fact that we have just recently started our operations.
Out competitive advantages are:
Results of Operations for the Three Months Ended JuneSeptember 30, 2018
For the three months ended JuneSeptember 30, 2018, our operating expenses of $4,018 were comprised of DTC Agentprofessional fees (Processing of low-volume tender) of $10,000, general$3,278 and General and administrative expenses of $772 and professional fees of $5,171$740 as compared to $1,712$4,054 total expenses for the three months ended JuneSeptember 30, 2017. The increase in operating expenses of $14,231 primarily due to DTC agent fees $10,000 and higher professional fee paid (primarily audit).changes were immaterial for the two periods.
Results of Operations for the SixNine Months Ended JuneSeptember 30, 2018
For the sixnine months ended JuneSeptember 30, 2018, our operating expenses of $28,354 were comprised of DTC agent fees of $10,000,$10,215, general and administrative expenses of $2,023$2,547 and professional fees of $12,314$15,592 as compared to total expense of $3,010$7,064 for the sixnine months ended JuneSeptember 30, 2017. The increase of $21,327$21,290 in operating expenses was primarily due to registration fee and higher professional services fees (primarily audit).which includes auditor fees, transfer agent fees and legal fees..
We anticipate that our legal and accounting fees will be $12,000 over the next 12 months as a result of being a reporting company with the SEC.
Activities To-date
A substantial portion of our activities to-date has been focused on developing a sound business plan. We have established the company's office.
Continue to work on Company website and presentation materials for prospective clients.
We sold 5,000,000 shares of common stock to our President for $5,000.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Liquidity and Capital Resources
As of JuneSeptember 30, 2018, the Company reported the cash/cash equivalent balance of $8,566$4,417 and liabilities of $5,463.$5,224. Our working capital deficit was $(807) at September 30, 2018 as compared to working capital of $26,663 at December 31, 2017. The available capital of the Company is not sufficient for the Company to remain operational for the next twelve months.
For the nine months ended September 30, 2018, we have cash flows used in operating activities of $(26,976) as compared to $(2,564) for the same period in 2017 as we have incurred and paid more expenses.
We used cash in financing activities of $250 to repay our related party for the nine months ended September 30, 2018, while we generated cash flow from financing activities of $17,610 which includes proceeds from common shares issuance of $18,350 and repayment of related party debt of $740 for the same period in 2017.
We had no cash flows from investing activities for the nine months ended September 30, 2018 and 2017.
Since inception, we have sold 5,000,000 shares of common stock to our President at a price of $0.001 per share, for aggregate proceeds of $5,000 and 2,315,000 shares to 29 investors at a price of $0.01 per share for aggregate proceeds of $23,150.Our President will provide additional capital via long-term note in order to complete the Offering and registration process if required.
We are attempting to raise funds to proceed with our plan of operation. Our current cash balance will be used to pay the fees and expenses of this Offering. We will have to obtain additional funding from our President. However, he has no formal commitment, arrangement or legal obligation to loan funds to the Company. To proceed with our operations for the next twelve months, we need a minimum of $25,000. Based on this estimate and on current cash and accounts receivable we can sustain operations until November 2018 [$4,417/$25,000X12= 2 months]. We cannot guarantee that we will be able to sell all the shares required to satisfy our 12 months financial requirement. If we are successful, all funds raised will be applied to the items set forth in the Use of Proceeds section of this Prospectus. In the long term we may need additional financing. We do not currently have any arrangements for obtaining such additional financing. Such additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms and conditions of additional financing available. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us.
For the six months ended June 30, 2018, we have cash flows used in operating activities of $(22,827) as compared to $(6,010) for the same period in 2017 as we have incurred and paid more expenses.
For the six months ended June 30, 2018, we have cash flows used in financing activities of $(250) as compared to $nil for the same period in 2017. We repaid $250 to our director for advances made to the Company.
Going Concern Consideration
Our auditors intend to issue a “going concern” opinion, meaning that there is substantial doubt for the company to continue as an on-going business for the next twelve12 months unless we obtain additional capital. No substantial revenues are anticipated until we have completed the financing from this Offering and implemented our plan of operations. Our only source for cash at this time is investments by others in this Offering. We must raise cash to implement our strategy and stay in business. If we sell at least 25% of the shares in the Offering we will have the resources to operate for the next 12 months, including for the costs of becoming a publicly reporting company. The Company anticipates to incur approximately $15,000 in legal and registration cost over the next twelve12 months.
Limited operating history and need for additional capital
We have no historical financial information upon which to base an evaluation of our performance. We are in a start-up operation stages and have generated revenues of $14,620 from four clients (inception to-date). We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishing a new business enterprise, including limited capital resources and possible overruns due to price and cost increases in services and products.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
No report required.
Item 4. Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation has been conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of JuneSeptember 30, 2018. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the sixnine months ended JuneSeptember 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceeding
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
No report required.
Item 3. Default Upon Senior Securities
No report required.
Item 4. Mine Safety Disclosures
No report required.
Item 5. Other Information
No report required.
Item 6. Exhibits
Exhibit Number | | Description of Exhibit |
| | | |
| 31.1 | | Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley act of 2002 |
| | | |
| 31.2 | | Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350 as Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act Of 2002 |
| | | |
| 32.1 | | Certification of Chief Executive Officer and Chief Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act |
| | | |
| 101 | | Interactve data files pursuant to Rule 405 of Regulation S-T |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Stepaside, Dublin 18, Ireland on August 9,November 13, 2018.
| | Alfacourse Inc. |
| | |
| | |
| | By: | /s/ Oleg Jitov | |
| | | Name: Oleg Jitov |
| | | Title: President, Secretary and Director |
| | | (Principal Executive, Financial and Accounting Officer) |
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