UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the quarterly period ended May 31, 2019 |
or
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the transition period from ________ to ________ |
Commission File Number 000-55667
WARI, INC. |
(Exact name of registrant as specified in its charter) |
Nevada | | 37-1763227 |
(State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
1717 Pennsylvania Ave NW, Washington DC | | 20006 |
(Address of principal executive offices) | | (Zip Code) |
212-559-9196
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x YES ¨ NO
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x YES ¨ NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | x | Smaller reporting company | x |
| | Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) x YES ¨ NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨ YES ¨ NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
20,691,050 common shares issued and outstanding as of July 12, 2019. |
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MAY 31, 2019
(UNAUDITED)
WARI, INC.
Condensed Balance Sheets
(Unaudited)
| | May 31, | | | November 30, | |
| | 2019 | | | 2018 | |
ASSETS |
Current Assets | | | | | | |
Cash | | $ | - | | | $ | - | |
Total Current Assets | | | - | | | | - | |
| | | | | | | | |
TOTAL ASSETS | | $ | - | | | $ | - | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
Current Liabilities | | | | | | | | |
Accounts payable | | $ | 16,500 | | | $ | - | |
Due to a related party | | | 173,308 | | | | 94,889 | |
Total Current Liabilities | | | 189,808 | | | | 94,889 | |
| | | | | | | | |
Stockholders' Deficit | | | | | | | | |
Preferred stock: 100,000,000 authorized; $0.001 par value No shares issued and outstanding | | | - | | | | - | |
Common stock: 900,000,000 authorized; $0.001 par value 20,691,050 shares issued and outstanding at May 31, 2019 and November 2018, respectively | | | 20,691 | | | | 20,691 | |
Additional paid in capital | | | 147,805 | | | | 147,805 | |
Accumulated deficit | | | (358,304 | ) | | | (263,385 | ) |
Total Stockholders' Deficit | | | (189,808 | ) | | | (94,889 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | - | | | $ | - | |
See notes to the condensed unaudited financial statements.
WARI, INC.
Condensed Statements of Operations
(Unaudited)
| | Three Months Ended | | | Six Months Ended | |
| | May 31, | | | May 31, | |
| | 2019 | | | 2018 | | | 2019 | | | 2018 | |
Operating Expenses | | | | | | | | | | | | |
General and administrative | | $ | 21,379 | | | $ | 6 | | | $ | 21,379 | | | $ | 11 | |
Professional fees | | | 48,590 | | | | 12,250 | | | | 73,540 | | | | 25,575 | |
Total Operating Expenses | | | 69,969 | | | | 12,256 | | | | 94,919 | | | | 25,586 | |
| | | | | | | | | | | | | | | | |
Net loss | | $ | (69,969 | ) | | $ | (12,256 | ) | | $ | (94,919 | ) | | $ | (25,586 | ) |
| | | | | | | | | | | | | | | | |
Basic and dilutive loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of common shares outstanding | | | 20,691,050 | | | | 20,691,050 | | | | 20,691,050 | | | | 20,638,165 | |
See notes to the condensed unaudited financial statements.
WARI, INC.
Condensed Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
| | | | | | | | | | | | | | | |
| | Common Stock | | | Additional | | | | | | Total | |
| | Number of Shares | | | Amount | | | Paid in Capital | | | Accumulated Deficit | | | Stockholders' Deficit | |
| | | | | | | | | | | | | | | |
Balance - November 30, 2018 | | | 20,691,050 | | | $ | 20,691 | | | $ | 147,805 | | | $ | (263,385 | ) | | $ | (94,889 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net loss | | | - | | | | - | | | | - | | | | (24,950 | ) | | | (24,950 | ) |
Balance - February 28, 2019 | | | 20,691,050 | | | $ | 20,691 | | | $ | 147,805 | | | $ | (288,335 | ) | | $ | (119,839 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net loss | | | - | | | | - | | | | - | | | | (69,969 | ) | | | (69,969 | ) |
Balance - May 31, 2019 | | | 20,691,050 | | | $ | 20,691 | | | $ | 147,805 | | | $ | (358,304 | ) | | $ | (189,808 | ) |
| | | | | | | | | | | | | | | |
| | Common Stock | | | Additional | | | | | | Total | |
| | Number of Shares | | | Amount | | | Paid in Capital | | | Accumulated Deficit | | | Stockholders' Equity (Deficit) | |
| | | | | | | | | | | | | | | |
Balance - November 30, 2017 | | | 20,566,050 | | | $ | 20,566 | | | $ | 122,910 | | | $ | (143,900 | ) | | $ | (424 | ) |
| | | | | | | | | | | | | | | | | | | | |
Common shares issued for cash | | | 125,000 | | | | 125 | | | | 24,895 | | | | - | | | | 25,020 | |
Net loss | | | - | | | | - | | | | - | | | | (13,330 | ) | | | (13,330 | ) |
Balance - February 28, 2018 | | | 20,691,050 | | | $ | 20,691 | | | $ | 147,805 | | | $ | (157,230 | ) | | $ | 11,266 | |
| | | | | | | | | | | | | | | | | | | | |
Net loss | | | - | | | | - | | | | - | | | | (12,256 | ) | | | (12,256 | ) |
Balance - May 31, 2018 | | | 20,691,050 | | | $ | 20,691 | | | $ | 147,805 | | | $ | (169,486 | ) | | $ | (990 | ) |
See notes to the condensed unaudited financial statements.
WARI, INC.
Condensed Statements of Cash Flows
(Unaudited)
| | Six Months Ended | |
| | May 31, | |
| | 2019 | | | 2018 | |
| | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
Net loss | | $ | (94,919 | ) | | $ | (25,586 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts payable | | | 16,500 | | | | 1,057 | |
Net Cash used in Operating Activities | | | (78,419 | ) | | | (24,529 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from loan from related party | | | 78,419 | | | | - | |
Proceeds from issuance of common stock | | | - | | | | 25,020 | |
Net Cash provided by Financing Activities | | | 78,419 | | | | 25,020 | |
| | | | | | | | |
Net change in cash | | | - | | | | 491 | |
Cash, beginning of period | | | - | | | | 1,673 | |
Cash, end of period | | $ | - | | | $ | 2,164 | |
See notes to the condensed unaudited financial statements.
WARI, INC.
Notes to the Financial Statements
May 31, 2019
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Wari, Inc., (the “Company”, “we”, “us”, “our”) is a Nevada corporation incorporated on June 27, 2014. Its office is based in Washington, D.C. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”), and the Company’s fiscal year end is November 30.
We are currently seeking new business opportunities with established business entities for merger with or acquisition of a target business. We are currently a shell company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with GAAP in the United States of America for interim financial information and Article 8 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. This report on Form 10-Q should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, for the fiscal year ended November 30, 2018, as filed with the Securities and Exchange Commission (“SEC”) on May 14, 2019.
In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months May 31, 2019 may not be indicative of results for the full year.
Emerging Growth Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 as amended (the “Securities Act”) for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
Use of Estimates
The preparation of the unaudited condensed financial statements in conformity with GAAP 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. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Net Loss Per Share
Basic net loss per share excludes the effect of dilution and is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding.
Diluted net loss per share is computed by giving effect to all potential shares of common stock. For the three and six months ended May 31, 2019 and 2018, there were no common stock equivalents outstanding. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 3 - GOING CONCERN
The accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of May 31, 2019, the Company has a loss from operations of $94,919, and an accumulated deficit of $358,304. The Company is seeking a new business opportunity at this time. If and when it acquires such an opportunity, it might be required to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the period of 12 months from the issuance of those financial statements.
The ability of the Company to emerge from a shell is dependent upon, among other things, securing assets and/or a business, by merger or acquisition, as to which there can be no assurance.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 - EQUITY
During the six months ended May 31, 2018, the Company issued 125,000 shares of common stock for $25,000.
NOTE 5 - RELATED PARTY TRANSACTIONS
We currently have no written or oral agreement from our majority shareholder to continue to provide financial contributions.
The officer and director of the Company may be involved in other business activities and may, in the future, become involved in other business opportunities that become available. He may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
During the six months ended May 31, 2019, the Company borrowed $78,419 from the CEO of the Company. The advance was non-interest bearing and due on demand. As of May 31, 2019, and November 30, 2018, the Company had due to a related party of $173,308 and $94,889, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.
As used in this quarterly report, the terms “we”, “us”, “our company”, “the Company” mean Wari, Inc. a Nevada corporation, unless otherwise indicated.
Corporate Overview
We were incorporated under the laws of the State of Nevada on June 27, 2014. From inception until the change of control which took place on June 6, 2018 described below, we were in the business of providing quality used vehicles at a reasonable cost to customers in Costa Rica, through our wholly-owned Costa Rican subsidiary, Cheetah Autos S.A.
On May 25, 2017, and pursuant to a purchase agreement dated May 24, 2017, Shane Drdul, a majority stockholder of our company, sold to Ed Mulhern 16,700,000 shares of our common stock for total consideration of $34,000. Mr. Mulhern paid the $34,000 purchase price for these shares using cash on hand. The shares sold by Mr. Drdul constituted all of all of the shares of common stock of our company owned by him.
Immediately after the completion of this purchase, Mr. Mulhern held approximately 82% of our issued and outstanding common stock.
In connection with this purchase, on May 25, 2017, Mr. Mulhern was appointed as President, Secretary, Treasurer, Chief Executive Officer and a director of our company.
In addition, in connection with this purchase, on May 25, 2017, Juan Bordallo, a director of the Company until that date, resigned as a director of our company.
On February 8, 2018, our board of directors accepted the resignation of Shane Drdul as a director.
As of October 31, 2017, our then wholly-owned subsidiary, Cheetah Autos S.A. discontinued its operations, we are therefore, no longer in the business of auto sales in Costa Rica.
On May 17, 2018 Mr. Mulhern sold his 16,995,000 common shares of the Company to Wari, LLC which constituted approximately 82.1% of the Company’s 20,691,050 issued and outstanding common shares. The sale of the shares completed a change of control of the Company, and was accompanied by a change of management, effective on June 6, 2018.
On June 28, 2018, after receiving approval of the Company's Board of Directors and a majority shareholder, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State changing the name of the Company from Cheetah Enterprises, Inc. to Wari, Inc., increasing the authorized common shares from 125,000,000 to 900,000,000, par value $.001 per share and increasing the preferred shares from 10,000,000 to 100,000,000, par value $.001 per share.
Our address is 1717 Pennsylvania Avenue NW, Washington DC 20006. We do not have a corporate website.
We have not ever declared bankruptcy, been in receivership, or involved in any kind of legal proceeding. We have no revenues and no cash on hand. We have sustained losses since inception and have relied solely on loans from our shareholder.
Business of the Company
We are currently a “shell,” as that term is defined in Rule 12b-2 under the Securities Exchange Act of 1934. We are seeking new business opportunities with established business entities for merger with or acquisition of a target business. In certain instances, a target business may wish to become our subsidiary or may wish to contribute assets to us rather than merge. We have not yet entered into any definitive agreements for potential new business opportunities, and there can be no assurance that we will be able to enter into any definitive agreements.
Any new acquisition or business opportunities that we may acquire might require additional financing. If so, there can be no assurance that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our Company requires additional financing and we are unable to acquire such funds, our business may fail.
Management of our company believes that there are benefits to being a reporting company with a class of securities quoted on OTC Markets, such as: (i) the ability to use registered securities to acquire assets or businesses; (ii) increased visibility in the financial community; (iii) the facilitation of borrowing from financial institutions; (iv) potentially improved trading efficiency; (v) potential stockholder liquidity; (vi) potentially greater ease in raising capital subsequent to an acquisition; (vii) potential compensation of key employees through stock awards or options; (viii) potentially enhanced corporate image; and (ix) a presence in the United States’ capital market.
We may seek a business opportunity with entities that have recently commenced operations, or entities that wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is anticipated that our current officer and directors will continue to manage our company.
As of the date hereof, we have not entered into any formal written agreements for a business combination or opportunity. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K.
We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce, or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate and complete the acquisition of a compatible business opportunity.
Currently, we do not have a source of revenue. We are not able to fund our cash requirements through our current operations. We have been reliant on loans by affiliated parties to provide financial contributions and services to keep our company operating. Further, we believe that our company may have difficulties raising capital from other sources until we locate a prospective merger candidate through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail. We currently have no written or oral agreement from our majority shareholder to continue to provide financial contributions.
The ability of the Company to emerge shell status is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these challenges, management intends to raise additional funds through public or private placement offerings and through loans from officers and directors.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Three-month and six-month periods ended May 31, 2019 and 2018
The following summary of our results of operations, for the three and six months ended May 31, 2019 and 2018, should be read in conjunction with our unaudited condensed financial statements, as included in this Form 10-Q.
| | Three Months Ended | | | | | | | |
| | May 31, | | | | | | | |
| | 2019 | | | 2018 | | | Change | | | % | |
General and administrative expenses | | $ | 21,379 | | | $ | 6 | | | $ | 21,373 | | | | 356,217 | % |
Professional fees | | | 48,590 | | | | 12,250 | | | | 36,340 | | | | 297 | % |
Net loss | | $ | 69,969 | | | $ | 12,256 | | | $ | 57,713 | | | | 471 | % |
| | Six Months Ended | | | | | | | |
| | May 31, | | | | | | | |
| | 2019 | | | 2018 | | | Change | | | % | |
General and administrative expenses | | $ | 21,379 | | | $ | 11 | | | $ | 21,368 | | | | 194,255 | % |
Professional fees | | | 73,540 | | | | 25,575 | | | | 47,965 | | | | 188 | % |
Net loss | | $ | 94,919 | | | $ | 25,586 | | | $ | 69,333 | | | | 271 | % |
For the three months ended May 31, 2019, we incurred $21,379 in general and administrative expenses and $48,590 in professional fees, resulting in an operating and net loss of $69,969. For the three months ended May 31, 2018, we incurred $6 in general and administrative expenses and $12,250 in professional fees, resulting in an operating and net loss of $12,256. The professional fees were primarily related to our ongoing regulatory requirements. The increase in professional fees in 2019 as compared to 2018, is primarily due to an increase in legal fees. General and administrative expense consisted of travel expense and office and miscellaneous expense. The increase in general and administrative expense in 2019 as compared to 2018, is primarily due to an increase in travel and office and miscellaneous expense in association with the change in control in May 2018.
For the six months ended May 31, 2019, we incurred $21,379 in general and administrative expenses and $73,540 in professional fees, resulting in an operating and net loss of $94,919. For the six months ended May 31, 2018, we incurred $11 in general and administrative expenses and $25,575 in professional fees, resulting in an operating and net loss of $25,586. The professional fees were primarily related to our ongoing regulatory requirements. The increase in professional fees in 2019 as compared to 2018, is primarily due to an increase in legal fees. General and administrative expense consisted of travel expense and office and miscellaneous expense. The increase in general and administrative expense in 2019 as compared to 2018, is primarily due to an increase in travel and office and miscellaneous expense in association with the change in control in May 2018.
Liquidity and Capital Resources
Working Capital
| | May 31, | | | November 30, | | | | | | | |
| | 2019 | | | 2018 | | | Change | | | % | |
Current assets | | $ | - | | | $ | - | | | $ | - | | | | - | |
Current liabilities | | | 189,808 | | | | 94,889 | | | | 94,919 | | | | 100 | % |
Working capital deficiency | | $ | 189,808 | | | $ | 94,889 | | | $ | 94,919 | | | | 100 | % |
Our working capital deficiency increased as of May 31, 2019, as compared to November 30, 2018, primarily due to an increase in accounts payable and due to a related party from continued operating costs of being a public company.
Cash Flows
| | Six Months Ended | | | | |
| | May 31, | | | | |
| | 2019 | | | 2018 | | | Change | |
Cash used in operating activities | | $ | (78,419 | ) | | $ | (24,529 | ) | | $ | (53,890 | ) |
Cash provided by financing activities | | $ | 78,419 | | | $ | 25,020 | | | $ | 53,399 | |
Cash and cash equivalents on hand | | $ | - | | | $ | 2,164 | | | $ | (2,164 | ) |
Operating Activities
During the six months ended May 31, 2019, our company used $78,419 in cash from operating activities, compared to $24,529 cash used in operating activities during the six months ended May 31, 2018. The cash used from operating activities for the six months ended May 31, 2019 was attributed to net loss of $94,919 and offset by an increase in accounts payable. The cash used from operating activities for the six months ended May 31, 2018 was attributed to net loss of $25,586 and offset by an increase in accounts payable of $1,057.
Cash Flow from Financing Activities
Net cash from financing activities was $78,419 for proceeds from loan from related party for the six months ended May 31, 2019 compared to $25,020 for issuance of common stock for the six months ended May 31, 2018.
Liquidity
As of May 31, 2019, we had $0 in total assets, $189,808 in liabilities and ($189,808) in working capital deficiency. We currently do not engage, nor do we intend to engage, in any business activities that provide cash flow until we enter into a successful business combination. The Company does not have sufficient cash for the next 12 months as of the date of this filing.
In its November 30, 2018 report, our independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We intend that our management and the Company, through its various contacts and affiliations with other entities, will locate a business combination target. We expect that additional funds will be required in order for the Company to satisfy its Exchange Act reporting requirements during the next 12 months, in addition to any other funds that will be required in order to complete a business combination. Such funds can only be estimated upon identifying a business combination target. Our management and stockholders have indicated an intent to advance funds on behalf of the Company as needed in order to accomplish its business plan and comply with its Exchange Act reporting requirements, however, there are no agreements in effect between the Company and our management or stockholders specifically requiring they provide any funds to the Company. Therefore, there are no assurances that the Company will be able to obtain the required financing as needed in order to consummate a business combination transaction.
Critical Accounting Policies
We prepare our unaudited condensed financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our unaudited condensed financial statements.
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 condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure 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 was 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 May 31, 2019. 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 as a result of the following material weaknesses:
The specific material weaknesses identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis.
We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended May 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
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* Filed herewith
** Furnished herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | WARI, INC. | |
| | (Registrant) | |
Dated: July 18, 2019 | | /s/ Amadou Diop | |
| | Amadou Diop | |
| | President, Chief Financial Officer and Director | |
| | (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | |
