Exhibit 99.1
Pure Guar India Private Limited
(A Development Stage Company)
May 31, 2013
Index to the Financial Statements
Contents
Page(s)
-------
Report of Independent Registered Public Accounting Firm................. F-2
Balance Sheet at May 31, 2013........................................... F-3
Statement of Operations for the Period from February 19, 2013 (Inception)
through May 31, 2013 ................................................... F-4
Statement of Stockholders' Equity (Deficit) for the Period from
February 19, 2013 (Inception) through May 31, 2013 ..................... F-5
Statement of Cash Flows for the Period from February 19, 2013 (Inception)
through May 31, 2013.................................................... F-6
Notes to the Financial Statements....................................... F-7
F-1
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Pure Guar India Private Limited
(A Development Stage Company)
New Delhi, India
We have audited the accompanying balance sheet of Pure Guar India Private
Limited, a development stage company, (the "Company") as of May 31, 2013 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the period from February 19, 2013 (inception) through May 31, 2013. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of May 31, 2013
and the results of its operations and its cash flows for the period from
February 19, 2013 (inception) through May 31, 2013 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company had a deficit accumulated during the
development stage at May 31, 2013, a net loss and net cash used in operating
activities for the period from February 19, 2013 (inception) through May 31,
2013. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regards to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Li and Company, PC
-----------------------------------
Li and Company, PC
Skillman, New Jersey
July 17, 2013
F-2
<PAGE>
Pure Guar India Private Limited
(A Development Stage Company)
Balance Sheet
May 31, 2013
------------
ASSETS
Current assets
Cash $ 1,915
Prepaid agricultural costs 11,453
Prepaid harvest 32,030
Prepaid land lease 68,634
Cultivation 1,125
----------
Total current assets 115,157
----------
TOTAL ASSETS $ 115,157
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued expenses $ 1,125
Advances payable 132,675
----------
Total current liabilities 133,800
----------
Total Liabilities 133,800
----------
Stockholders' deficit
Common stock: par value $0.1826: 50,000 shares authorized;
10,000 shares issued and outstanding 1,826
Deficit accumulated during the development stage (20,469)
----------
Total stockholders' deficit (18,643)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 115,157
==========
See accompanying notes to the financial statements.
F-3
<PAGE>
Pure Guar India Private Limited
(A Development Stage Company)
Statement of Operations
For the Period from
February 19, 2013
(inception) through
May 31, 2013
------------
Revenues $ --
----------
Operating expenses
Salaries 4,718
Land lease expense 13,727
General and administrative 2,024
----------
Total operating expenses 20,469
----------
Loss before income tax provision (20,469)
Income tax provision --
----------
Net loss $ (20,469)
==========
Net loss per common share:
- Basic and diluted $ (2.05)
==========
Weighted average common shares outstanding
- basic and diluted 10,000
==========
See accompanying notes to the financial statements.
F-4
<PAGE>
Pure Guar India Private Limited
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
For the Period from February 19, 2013 (Inception) through May 31, 2013
Common Stock, Deficit
Par Value $0.1826 Accumulated Total
---------------------- during the Stockholders'
Number of Development Equity
Shares Amount Stage (Deficit)
------ ------ ----- ---------
Balance, February 19, 2013 (inception) -- $ -- $ -- $ --
Shares issued for cash at par on February 19, 2013 10,000 1,826 -- 1,826
Net loss (20,469) (20,469)
-------- -------- -------- --------
Balance, May 31, 2013 10,000 $ 1,826 $(20,469) $(18,643)
======== ======== ======== ========
See accompanying notes to the financial statements.
F-5
<PAGE>
Pure Guar India Private Limited
(A Development Stage Company)
Statement of Cash Flows
For the Period from
February 19, 2013
(inception) through
May 31, 2013
------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (20,469)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities:
Prepaid agricultural costs (11,453)
Prepaid harvest (32,030)
Prepaid land lease (68,634)
Cultivation (1,125)
Accounts payable 1,125
----------
Net cash used in operating activities (132,586)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances 132,675
Proceeds from sale of common stock 1,826
----------
Net cash provided by financing activities 134,501
----------
Net change in cash 1,915
Cash, beginning of period --
----------
Cash, end of period $ 1,915
==========
Supplemental disclosure of cash flows information:
Interest paid $ --
==========
Income tax paid $ --
==========
See accompanying notes to the financial statements.
F-6
<PAGE>
Pure Guar India Private Limited
(A Development Stage Company)
May 31, 2013
Notes to the Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
PURE GUAR INDIA PRIVATE LIMITED
Pure Guar India Private Limited ("Pure"), a development stage company, was
incorporated on February 19, 2013 under the laws of India to engage in any
lawful business or activity for which corporations may be organized under the
laws of India. Pure intends to engage in the cultivation and sale of the guar
bean in India.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 915-10-20 of
the FASB Accounting Standards Codification. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS
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 financial statements and the reporting amounts of revenues and
expenses during the reporting period.
The Company's significant estimates and assumptions include the fair value of
financial instruments; income tax rate, income tax provision, deferred tax
assets and valuation allowance of deferred tax assets; the carrying value and
recoverability of long-lived assets, including the values assigned to an
estimated useful lives of website development costs and the assumption that the
Company will be a going concern. Those significant accounting estimates or
assumptions bear the risk of change due to the fact that there are uncertainties
attached to those estimates or assumptions, and certain estimates or assumptions
are difficult to measure or value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification
("Paragraph 820-10-35-37") to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards
Codification establishes a framework for measuring fair value in generally
F-7
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accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, paragraph 820-10-35-37 of the FASB
Accounting Standards Codification establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest priority to
quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. The three (3) levels of fair
value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting
Standards Codification are described below:
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities, such as
cash, prepaid expenses, accounts payable and accrued expenses, approximate their
fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
It is not, however, practical to determine the fair value of advances from
stockholders, if any, due to their related party nature.
FISCAL YEAR-END
The Company elected May 31 as its fiscal year ending date.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
LEASES
Lease agreements are evaluated to determine whether they are capital leases or
operating leases in accordance with paragraph 840-10-25-1 of the FASB Accounting
Standards Codification ("Paragraph 840-10-25-1"). When substantially all of the
risks and benefits of property ownership have been transferred to the Company,
as determined by the test criteria in Paragraph 840-10-25-1, the lease then
qualifies as a capital lease. Capital lease assets are depreciated on a straight
line method, over the capital lease assets estimated useful lives consistent
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with the Company's normal depreciation policy for tangible fixed assets.
Interest charges are expensed over the period of the lease in relation to the
carrying value of the capital lease obligation.
Rent expense for operating leases, which may include free rent or fixed
escalation amounts in addition to minimum lease payments, is recognized on a
straight-line basis over the duration of each lease term.
RELATED PARTIES
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; 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.
COMMITMENTS AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the consolidated financial statements are issued, which may
result in a loss to the Company but which will only be resolved when one or more
future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are pending
against the Company or unasserted claims that may result in such proceedings,
the Company evaluates the perceived merits of any legal proceedings or
unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's consolidated financial
statements. If the assessment indicates that a potentially material loss
F-9
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contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, and an
estimate of the range of possible losses, if determinable and material, would be
disclosed.
Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these
matters will have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows. However, there is no
assurance that such matters will not materially and adversely affect the
Company's business, financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
INCOME TAX PROVISION
The Company adopted the provisions of paragraph 740-10-25-13 of the FASB
Accounting Standards Codification. Paragraph 740-10-25-13.addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under paragraph
740-10-25-13, the Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than fifty percent (50%) likelihood of being realized upon ultimate
settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures. The Company had no material
adjustments to its liabilities for unrecognized income tax benefits according to
the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying consolidated balance
sheets, as well as tax credit carry-backs and carry-forwards. The Company
periodically reviews the recoverability of deferred tax assets recorded on its
consolidated balance sheets and provides valuation allowances as management
deems necessary.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did not take any uncertain tax positions and had no adjustments to
unrecognized income tax liabilities or benefits pursuant to the provisions of
Section 740-10-25 for the period from February 19, 2013 (inception) through May
31, 2013.
F-10
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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 outstanding
shares of common stock during the period to reflect the potential dilution that
could occur from common shares issuable through contingent shares issuance
arrangement, stock options or warrants.
There were no potentially outstanding dilutive shares for the period from
February 19, 2013 (inception) through May 31, 2013.
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
In January 2013, the FASB issued ASU No. 2013-01, "BALANCE SHEET (TOPIC 210):
CLARIFYING THE SCOPE OF DISCLOSURES ABOUT OFFSETTING ASSETS AND LIABILITIES".
This ASU clarifies that the scope of ASU No. 2011-11, "BALANCE SHEET (TOPIC
210): DISCLOSURES ABOUT OFFSETTING ASSETS AND LIABILITIES." applies only to
derivatives, repurchase agreements and reverse purchase agreements, and
securities borrowing and securities lending transactions that are either offset
in accordance with specific criteria contained in FASB Accounting Standards
Codification or subject to a master netting arrangement or similar agreement.
The amendments in this ASU are effective for fiscal years, and interim periods
within those years, beginning on or after January 1, 2013.
In February 2013, the FASB issued ASU No. 2013-02, "COMPREHENSIVE INCOME (TOPIC
220): REPORTING OF AMOUNTS RECLASSIFIED OUT OF ACCUMULATED OTHER COMPREHENSIVE
INCOME." The ASU adds new disclosure requirements for items reclassified out of
accumulated other comprehensive income by component and their corresponding
effect on net income. The ASU is effective for public entities for fiscal years
beginning after December 15, 2013.
F-11
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In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU
No. 2013-04, "LIABILITIES (TOPIC 405): OBLIGATIONS RESULTING FROM JOINT AND
SEVERAL LIABILITY ARRANGEMENTS FOR WHICH THE TOTAL AMOUNT OF THE OBLIGATION IS
FIXED AT THE REPORTING DATE." This ASU addresses the recognition, measurement,
and disclosure of certain obligations resulting from joint and several
arrangements including debt arrangements, other contractual obligations, and
settled litigation and judicial rulings. The ASU is effective for public
entities for fiscal years, and interim periods within those years, beginning
after December 15, 2013.
In March 2013, the FASB issued ASU No. 2013-05, "FOREIGN CURRENCY MATTERS (TOPIC
830): PARENT'S ACCOUNTING FOR THE CUMULATIVE TRANSLATION ADJUSTMENT UPON
DERECOGNITION OF CERTAIN SUBSIDIARIES OR GROUPS OF ASSETS WITHIN A FOREIGN
ENTITY OR OF AN INVESTMENT IN A FOREIGN ENTITY." This ASU addresses the
accounting for the cumulative translation adjustment when a parent either sells
a part or all of its investment in a foreign entity or no longer holds a
controlling financial interest in a subsidiary or group of assets that is a
nonprofit activity or a business within a foreign entity. The guidance outlines
the events when cumulative translation adjustments should be released into net
income and is intended by FASB to eliminate some disparity in current accounting
practice. This ASU is effective prospectively for fiscal years, and interim
periods within those years, beginning after December 15, 2013.
In March 2013, the FASB issued ASU 2013-07, "PRESENTATION OF FINANCIAL
STATEMENTS (TOPIC 205): LIQUIDATION BASIS OF ACCOUNTING." The amendments require
an entity to prepare its financial statements using the liquidation basis of
accounting when liquidation is imminent. Liquidation is imminent when the
likelihood is remote that the entity will return from liquidation and either (a)
a plan for liquidation is approved by the person or persons with the authority
to make such a plan effective and the likelihood is remote that the execution of
the plan will be blocked by other parties or (b) a plan for liquidation is being
imposed by other forces (for example, involuntary bankruptcy). If a plan for
liquidation was specified in the entity's governing documents from the entity's
inception (for example, limited-life entities), the entity should apply the
liquidation basis of accounting only if the approved plan for liquidation
differs from the plan for liquidation that was specified at the entity's
inception. The amendments require financial statements prepared using the
liquidation basis of accounting to present relevant information about an
entity's expected resources in liquidation by measuring and presenting assets at
the amount of the expected cash proceeds from liquidation. The entity should
include in its presentation of assets any items it had not previously recognized
under U.S. GAAP but that it expects to either sell in liquidation or use in
settling liabilities (for example, trademarks). The amendments are effective for
entities that determine liquidation is imminent during annual reporting periods
beginning after December 15, 2013, and interim reporting periods therein.
Entities should apply the requirements prospectively from the day that
liquidation becomes imminent. 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.
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 a deficit accumulated
during the development stage at May 31, 2013, a net loss and net cash used in
operating activities for the period from February 19, 2013 (inception) through
May 31, 2013. These factors raise substantial doubt about the Company's ability
to continue as a going concern.
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While the Company is attempting to commence operations and generate revenues,
the Company's cash position may not be significant enough to support the
Company's daily operations. Management intends to raise additional funds by way
of a public or private offering. Management believes that the actions presently
being taken to further implement its business plan and generate revenues provide
the opportunity for the Company to continue as a going concern. While the
Company believes in the viability of its strategy to increase revenues 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 the Company's ability to further implement its business plan and generate
revenues.
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 - PREPAID EXPENSES
Prepaid expenses consisted of the following:
May 31, 2013
------------
Prepaid agricultural costs $ 11,453
Prepaid harvest (a) 32,030
Prepaid land lease (b) 68,634
----------
$ 168,874
==========
(a) The Company has paid in advance the seller's estimated portion of the
harvest revenue. The harvest will occur in October or November 2013 at
which time an exact amount will be determined.
(b) The Company has prepaid a land lease that commenced April 13, 2013 and ends
on April 12, 2014. The Company is amortizing this amount over the term of
the lease. Land lease expense was $13,727 for the period from February 19,
2013 (inception) through May 31, 2013.
NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT)
SHARES AUTHORIZED
Upon formation the total number of shares of common stock which the Company is
authorized to issue is Fifty Thousand (50,000) shares, par value $0.1826 per
share.
COMMON STOCK
Upon formation, the Company issued 10,000 shares of its common stock to two
directors for cash proceeds of $1,826.
NOTE 6 - ADVANCES PAYABLE
For the period from February 19, 2013 (inception) to May 31, 2013, an unrelated
third party advanced funds to the Company and paid certain bills for the company
for an aggregate advance of $132,675. These advances are unsecured, non-interest
bearing and due on demand.
NOTE 7 - INCOME TAX PROVISION
DEFERRED TAX ASSETS
At May 31, 2013, the Company had net operating loss ("NOL") carry-forwards for
Indian income tax purposes of $20,469 that may be offset against future taxable
income. No tax benefit has been reported with respect to these net operating
loss carry-forwards in the accompanying financial statements because the Company
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believes that the realization of the Company's net deferred tax assets of
approximately $6,642 was not considered more likely than not and accordingly,
the potential tax benefits of the net loss carry-forwards are fully offset by a
full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.
The Company has provided a full valuation allowance on the deferred tax assets
because of the uncertainty regarding its realizability. The valuation allowance
increased approximately $6,642 for the period from February 19, 2013 (inception)
through May 31, 2013.
Components of deferred tax assets are as follows:
May 31, 2013
------------
Net deferred tax assets - Non-current:
Expected income tax benefit from NOL carry-forwards $ 6,642
Less: Valuation allowance (6,642)
----------
Deferred tax assets, net of valuation allowance $ --
==========
INCOME TAX PROVISION IN THE STATEMENTS OF OPERATIONS
A reconciliation of the Indian statutory income tax rate and the effective
income tax rate as a percentage of income before income taxes is as follows:
For the Period from
February 19, 2013
(inception) through
May 31, 2013
------------
Indian statutory income tax rate 32.45%
Change in valuation allowance on net operating
loss carry-forwards (32.45)
--------
Effective income tax rate 0.0%
========
NOTE 8 - FOREIGN OPERATIONS
FOREIGN CURRENCY EXCHANGE RATE RISK
The exchange rate between the Indian Rupee and the U.S. dollar has fluctuated
substantially both historically and in recent years, and could continue to
fluctuate substantially in the future. The operations of the Company are
recorded in US Dollars for reporting purposes at rates of exchange in effect at
the date of the transaction published by the Reserve Bank of India.
Any significant revaluation of Indian Rupee may materially and adversely affect
the cash flows, revenues, earnings and financial position reported in U.S.
Dollar.
The Company had no foreign currency hedges in place for the period from February
19, 2013 (inception) through May 31, 2013 to reduce such exposure.
NOTE 9 - SUBSEQUENT EVENTS
The Company has evaluated all events that occurred 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.
F-14
