| Note 1 - Basis of Presentation | A
summary of significant accounting policies of Southcorp Capital, Inc. (the Company) is presented to assist in understanding
the Companys financial statements. The accounting policies presented in these footnotes conform to accounting principles
generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial
statements. These financial statements and notes are representations of the Companys management who are responsible for
their integrity and objectivity. Organization,
Nature of Business and Trade Name Southcorp
Capital, Inc. (Southcorp, we, us, our, the "Company" or the "Registrant")
was originally incorporated in the State of Delaware on June 12, 2006. On April 7, 2014, the Company executed a reverse merger
with Skyline Holdings, Inc. On April 7, 2014, the Company entered into an Agreement whereby the Company acquired 100% of Skyline
Holdings, Inc, incorporated in the State of Indiana on March 26, 2014. Skyline was the surviving Company and became a wholly owned
subsidiary of SouthCorp Capital. SouthCorp Capital previously had no operations, assets or liabilities. On April 8, 2014, the
acquisition closed and under the terms of the agreement Skyline Holdings was the surviving entity. The Company selected April
30 as its fiscal year end. The
Company focus is on the acquisition and renovation of single-family and mutli-family properties in the U.S with the intent of
reselling the property after renovations have occurred. Our real estate investments are expected to focus properties undervalued
and/or in need of some repairs. We
intend to seek potential property acquisitions meeting the above criteria and which are located throughout the United States.
We believe the most important criteria for evaluating the markets in which we intend to purchase properties include:
· historic and projected population growth;
· historically high levels of tenant
demand and lower historic investment volatility for the type of property being acquired;
· markets with historic and growing numbers
of a qualified and affordable workforce;
· high historic and projected employment
growth;
· markets with high levels of insured
populations;
· stable household income and general economic stability; and
· sound real estate fundamentals, such
as high occupancy rates and strong rent rate potential. Cash
and Cash Equivalents For
purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three
months or less to be cash equivalents. Revenue
Recognition The
company pursues opportunities to realize revenues from two principal activities: sale of houses it renovates. It is the companys
policy that revenues and gains will be recognized in accordance with ASC Topic 605-10-25, Revenue Recognition. Under
ASC Topic 605-10-25, revenue earning activities are recognized upon sale of its properties and the company has substantially accomplished
all it must do to be entitled to the benefits represented by the revenue. Gains or losses from the sale of the houses are recognized
when the house is sold or otherwise disposed of, the cost and associated accumulated depreciation are removed from the accounts
and the resulting gain or loss is recognized in the statement of operations. Sale
of the Companys real estate property will occur through the use of a sales contract where revenues from renovated real estate
property sales will be recognized upon closing of the sale. In accordance with FASB ASC 360-20, the Company will use the accrual
method and recognize revenue on the sale of its properties when the earnings process is complete and the collectability of the
sales price and additional proceeds is reasonably assured, which is typically when the sale of the property closes. At the time
of sale the Company will determine it the transaction will be recognized under the full accrual method, installment method, cost
recovery method, deposit method or reduced profit method. Rental Income is recognized at the time the Company deposits the monies. Property
and Equipment Property
and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments
that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the
period. Depreciation
is computed for financial statement purposes on a straight-line basis over estimated useful lives of the related assets. The estimated
useful lives of depreciable assets are:
Estimated
Useful
Lives
Equipment 5-10 years
Residential Real Estate 27.5 years
Non-residential Real Estate 30 years For
federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For financial statements
purposes, depreciation is computed under the straight-line method. During
the Fiscal Year ended April 30, 2015, the Company acquired food-processing equipment for $177,712. The equipment has a useful
life of 10 years. The equipment was installed and began being used in May 2015. As such, the Company will begin to deprecate it
starting May 2015. Goodwill
and Indefinite-Lived Intangible Assets Goodwill
and other intangible assets are tested for impairment annually and more frequently if facts and circumstances indicate goodwill
carrying values exceed estimated reporting unit fair values and if indefinite useful lives are no longer appropriate for the Companys
trademarks. Based on the impairment tests performed, there was no impairment of goodwill or other intangible assets in fiscal
2015. Definite-lived intangibles are amortized over their estimated useful lives. Impairment
of long-lived assets The
Company reviews long-lived assets to be held and used for impairment annually or whenever events or changes in circumstances indicate
that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset
by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value
exceeds the undiscounted future net cash flows of the assets, an impairment loss is measured and recognized. An impairment loss
is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based
upon either discounted cash flow analysis or estimated salvage value. There was no impairment recorded in the year April 30, 2015. Use
of Estimates The
preparation of financial statements in accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. A change in managements estimates or assumptions could have a material impact on Southcorp Capital Inc.s financial
condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates.
Southcorp Capital Inc.s financial statements reflect all adjustments that management believes are necessary for the fair
presentation of their financial condition and results of operations for the periods presented. Income
Taxes The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, Accounting for
Income Taxes. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for
the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized
in an entitys financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period
that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the
weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. ASC
740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position
taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected
to be taken may be recognized only if it is more likely than not that the position is sustainable upon examination,
based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax
benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge
of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a
current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain
tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable. Basic
Earning (Loss) Per Share The
Company computes net income (loss) per share in accordance with Accounting Standards Codification (ASC) 260, " Earnings
per Share Principles
of Consolidation The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and have been prepared in
accordance with United States generally accepted accounting principles ("U.S. GAAP"). All intercompany accounts and
transactions have been eliminated in consolidation. This
is the current corporate organization: SouthCorp
Capital, Inc. (Delaware
Corporation) | | | Skyline
Holdings, Inc. (Indiana
Corporation) Fair
Value Measurements As
defined in ASC 820 Fair Value Measurements, 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
utilizes market data 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. 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 defined by ASC 820 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 2 includes those financial instruments that are valued using models or other valuation
methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward
prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments,
as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout
the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions
are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity
swaps, interest rate swaps, options and collars. 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 managements best estimate of fair value. The
following table sets forth by level with the fair value hierarchy the Companys financial assets and liabilities measured
at fair value on April 30, 2015:
Level
1 Level
2 Level
3 Total
Liabilities
Derivative
financial instruments $ - $ - $ 39,951 $ 39,951
Recently
Issued Accounting Pronouncements Development
Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company
to remove the inception to date information and all references to development stage. We
do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations,
financial position or cash flow. |
