Petro USA, Inc.
Notes to Financial Statements
For the three months ended September 30, 2022 and 2021
1. Organization, Description of Business, and Basis of Accounting
Business Organization
All State Properties Holdings, Inc., a corporation (the "Company") was organized under the state of Nevada on April 24, 2008 to conduct business formerly carried on by its predecessor partnership, All State Properties L.P. (the "Partnership"). The Partnership merged with the Company on May 29, 2008. The Company acquired all of the assets and assumed all of the liabilities and obligations of the Partnership. At May 29, 2008 each unit, par value $0.001 per share of the Partnership was converted into one issued and outstanding share of par value $0.0001 common stock of the Corporation.
The Company's fiscal year end is June 30th.
Accounting Basis
These financial statements have been prepared on the accrual basis of accounting following generally accepted accounting principles of the United States of America (“U.S. GAAP”) consistently applied.
The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed interim financial statements should be read in conjunction with the financial statements of the Company for the year ended June 30, 2022 and notes thereto contained in our 10-K Annual Report
Use of Estimates
The preparation of financial statements in conformity with 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. Actual results could differ from those estimates.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. At September 30, 2022 and June 30, 2022, respectively, the deferred tax asset and deferred tax liability accounts
Petro USA, Inc.
Notes to Financial Statements
For the three months ended September 30, 2022 and 2021
| 1. | Organization, Description of Business, and Basis of Accounting (Continued) |
Income Taxes
as recorded when material to the financial statements, are entirely the result of temporary and permanent differences. Temporary differences represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily share based compensation and loss on settlement of debt.
As of September 30, 2022, the deferred tax asset related to the Company's net operating loss (NOL) carry forward is fully reserved. Due to the provisions of Internal Revenue Code Section 338, the Company may have no net operating loss carryforwards available to offset financial statement or tax return taxable income in future periods as a result of a change in control involving 50 percentage points or more of the issued and outstanding securities of the Company.
Dividends
The Company and has not yet adopted a policy regarding the payment of dividends.
Fair Value of Financial Instruments
The carrying value of cash, accounts payable and amounts due to related party approximates its fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
The Company accounts for financial instruments in accordance with the Financial Accounting Standard Board's Accounting Standards Codification Topic 820 – Fair Value Measurements and Disclosures ("ASC 820"), which establishes a framework for measuring fair value and expands disclosure of fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, this policy established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The following table presents assets that are measured and recognized at fair value on a non-recurring basis:
Petro USA, Inc.
Notes to Financial Statements
For the three months ended September 30, 2022 and 2021
| 1. | Organization, Description of Business, and Basis of Accounting (Continued) |
Level 1: None
Level 2: None
Level 3: None
Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
Common stock equivalents represent the dilutive effect of the assumed exercise of outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date.
As of September 30, 2022, and June 30, 2022, the Company has no issued and outstanding warrants or options.
2. Going Concern
The accompanying financial statements have been prepared assuming 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. However, the Company has incurred significant losses and is dependent on obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain the necessary funding it could cease operations as a new enterprise. This raises substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. These financial statements do not include any adjustments that might result from this uncertainty.
3. Capital Stock
The Company has 10,000,000 shares of Preferred Stock authorized at a par value of $0.0001 and none has been issued at September 30, 2022 and June 30, 2022.
At September 30, 2022 and June 30, 2022, the company had 200,030,920 common shares issued and outstanding.
The Company has no other classes of shares authorized for issuance. At September 30, 2022, and June 30, 2022, there were no outstanding stock options or warrants.
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Petro USA, Inc.
Notes to Financial Statements
For the three months ended September 30, 2022 and 2021
4. Related Party Transactions
The Amounts due to related parties are advances from a company controlled by the Company's Chief Executive Officer in order to pay operating expenses of the Company. These advances are non-interest bearing and payable upon demand.
5. Subsequent Events
None.
F-9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
This section and other parts of this Form 10-Q quarterly report includes "forward-looking statements", that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.
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. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.
Overview
All State Properties Holdings, Inc. (the "Company", "we", or "us") was incorporated under the laws of the State of Nevada on April 24, 2008. All State Properties Holdings, Inc. is to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition, or other business combination with a domestic or foreign private business. The company not commenced planned principal operations. The Company has a June 30 year end. As of September 30, 2022, the issued and outstanding shares of common stock totaled 200,033,920.
Certain statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
Our auditors have issued a going concern opinion in the financial statements for the year ended June 30, 2022.
RESULTS OF OPERATIOMS
Working Capital
| September 30, | | June 30, | |
| 2022 | | 2022 | |
| | | | |
Current Assets | | | $ - | | | | $ - | |
Current Liabilities | | | 106,371 | | | | 104,543 | |
Working Capital (Deficit) | | $ | (106,371 | ) | | $ | (104,543 | ) |
Cash Flows
| September 30, | | September 30, | |
| 2022 | | 2022 | |
| | | | |
Cash Flows from (used in) Operating Activities | | $ | - | | | $ | - | |
Cash Flows from (used in) Financing Activities | | | - | | | | - | |
Net Increase (decrease) in Cash During Period | | $ | - | | | $ | - | |
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Operating Revenues
We have generated no revenues for the three months ended September 30, 2022 and September 30, 2021.
Operating Expenses and Net Loss
Operating expenses for the three months ended September 30, 2022 were $1,758 compared with $6,030 for the three months ended September 30, 2021. The decrease in operating expenses were attributable to a decrease in other general and administrative expenses from $6,030 for the three months ended September 30, 2021 to $1,758 for the three months ended September 30, 2022.
During the three months ended September 30, 2022, the Company recorded a net loss of $1,828. compared with net loss of $6,100 for the three months ended September 30, 2021.
Liquidity and Capital Resources
As of September 30, 2022, the Company's cash balance was $0 compared to cash balance of $0 as of June 30, 2022. As of September 30, 2022, the Company's total assets were $0 compared to total assets of $0 as of June 30, 2022.
As of September 30, 2022, the Company had total liabilities of $106,371 compared with total liabilities of $104,543 as of June 30, 2022. The increase in total liabilities is attributed to an increase in account payable and accrued liabilities from $21,089 for the year ended June 30, 2022 to $21,924 for the three months ended September 30, 2022, an increase in promissory note and accrued interest to related party from $3,795 for the year ended June 30, 2022 to $3,865 for the three months ended September 30, 2022 and an increase in account payable related from $79,659 for the year ended June 30, 2022 to $80.582 for the three months ended September 30, 2022.
As of September 30, 2022, the Company has a working capital deficit of $106,371 compared with working capital deficit of $104,543 as of June 30, 2022.
Cashflow from Operating Activities
During the three months ended September 30, 2022 the Company used $0 cash for operating activities compared to the use of $0 cash for operating activities during the three months ended September 30, 2021.
Cashflow from Financing Activities
During the three months ended September 30, 2022 and September 30, 2021, the Company did not receive any cash from financing activities.
Subsequent Developments
None.
Going Concern
We have not attained profitable operations and are dependent upon the continued financial support from our shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from our future business. These factors raise substantial doubt regarding our ability to continue as a going concern.
Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Future Financing
The Company will consider selling securities in the future to fund operations. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
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Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have.
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures.
The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO/CFO does not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company's lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.
Changes in Internal Control over Financial Reporting
Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
None
Not Applicable
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None
ITEM 4. | MINE SAFETY DISCLOSURE. |
Not Applicable
None
Item 6. EXHIBITS
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 15, 2022 | | Petro USA, Inc. |
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| | By: /s/Joseph C. Passalaqua |
| | Joseph C Passalaqua, Chief Executive Officer, Chief Financial Officer & President |
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