NOTE 2- GOING CONCERN
ANALYSIS AND MANAGEMENT PLANS
The Company’s unaudited interim financial statements are prepared using accounting principles generally
accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit and no cash flows from
operating activities at September 30, 2018. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt
about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital
resources. Management’s plans focus is on a variety of strategic acquisitions in service, agriculture and industrial companies to compliment and grow Astika Holdings, Inc.’s business. The Company is positioning to capture the next wave of growth
companies from Asia. As the centerpieces for Astika Holdings in Asia, the focus is on rapid economic growth and increased foreign investment sector companies which management believes is poised for accelerated economic growth with national
modernization. Astika’s planned focus is also on adding value through successful project development, efficient operations, and opportunistic acquisitions while maintaining a low risk profile through project diversification, astute financial
management and operating in secure jurisdictions. Management’s plan to obtain such resources for the Company include (i) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses; (ii)
obtaining funding from outside sources through the sale of its debt and/or equity securities; and (iii) completing a merger with or acquisition of an existing operating company. However, management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited interim financial statements have been prepared in accordance with the rules
and regulations of the Securities and Exchange Commission for the presentation of interim financial information, but do not include all the information and footnotes required by generally accepted accounting principles for complete financial
statements. The accompanying financial statements should be read in conjunction with the December 31, 2017 financial statements that were filed in our annual report on Form 10-K. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. The operating results for interim periods are not necessarily indicative of results that may be expected for the year ended December 31, 2018.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Stock-Based Compensation
We recognize compensation cost for stock-based awards to employees in accordance with ASC Topic 718, over
the requisite service period for each separately vesting tranche, as if multiple awards were granted. Compensation cost is based on grant-date fair value using quoted market prices for our common stock. We recognize compensation cost for
stock-based awards to nonemployees in accordance with ASC Topic 505.
Basic and diluted loss per share
The Company computes earnings per share in accordance with ASC 260, “Earnings Per Share” (ASC 260). Under
the provisions of ASC 260, basic earnings per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive shares of common stock outstanding during the period. The Company had net losses as of September 30, 2018 and 2017, as such, the diluted
earnings per share excludes all dilutive potential shares because their effect is anti-dilutive.
Recent accounting pronouncements
In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to
share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic
606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning
January 1, 2019. The adoption of ASU 2018-07 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy,
modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring
Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for
annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating this guidance and the impact of this update on its consolidated financial statements.
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 financial statements.
NOTE 4 - FAIR VALUE OF
FINANCIAL INSTRUMENTS
ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825)
,
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes
a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 -
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 -
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by,
observable market data.
Level 3
-
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The carrying values of cash, accounts payable, and accrued liabilities approximate fair value. Pursuant to
ASC 820 and 825, the fair value of cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values
because of their nature and respective maturity dates or durations.
NOTE 5 - CONVERTIBLE NOTE
PAYABLE
In October 2014, the Company issued an 8.0% convertible debenture for $31,500 in cash. The convertible
debenture accrued interest at 8.0% per annum, was unsecured, due in one year from the date of issuance and was convertible into shares of the Company’s common stock after 180 days at the option of the holder at a rate equal to 55% of the lowest
trading price of the Company’s common stock out of the last 20 trading trades including the date of conversion.
On March 21, 2017, the Company issued 572,476
shares of common stock in the
conversion of $2,000 principal and $834 in interest due to LG Capital Funding. LLC at $0.00495 per share, as calculated per the loan agreement.
On June 8, 2017, the Company issued 603,038 shares of common stock in the conversion of $700 principal and
$328 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On June 13, 2017, the Company issued 638,926 shares of common stock in the conversion of $740 principal
and $350 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On June 27, 2017, the Company issued 670,334 shares of common stock in the conversion of $1,245 principal
and $598 in interest due to LG Capital Funding, LLC at $0.00275 per share, as calculated per the loan agreement.
On July 18, 2017, the Company issued 701,519 shares of common stock in the conversion of $800 principal
and $396 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On July 24, 2017, the Company issued 735,903 shares of common stock in the conversion of $810 principal
and $404 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 3, 2017, the Company issued 775,636 shares of common stock in the conversion of $850 principal
and $430 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 18, 2017, the Company issued 812,860 shares of common stock in the conversion of $885 principal
and $456 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 25, 2017, the Company issued 852,841 shares of common stock in the conversion of $1,080
principal and $562 in interest due to LG Capital Funding, LLC at $0.00193 per share, as calculated per the loan agreement.
On August 31, 2017, the Company issued 897,810 shares of common stock in the conversion of $810 principal
and $424 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On September 13, 2017, the Company issued 941,854 shares of common stock in the conversion of $845
principal and $450 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On September 20, 2017, the Company issued 989,403 shares of common stock in the conversion of $885
principal and $475 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On October 3, 2017, the Company issued 1,038,870 shares of common stock in the conversion of $1,035
principal and $565 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On October 16, 2017, the Company issued 1,090,032 shares of common stock in the conversion of $1,080
principal and $599 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On October 19, 2017, the Company issued 1,141,941 shares of common stock in the conversion of $1,130
principal and $629 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On November 6, 2017, the Company issued 1,201,538 shares of common stock in the conversion of $1,180
principal and $670 in interest due to LG Capital Funding. LLC at $0.00154 per share, as calculated per the loan agreement.
On November 28, 2017, the Company issued 1,262,260 shares of common stock in the conversion of $2,325
principal and $1,354 in interest due to LG Capital Funding. LLC at $0.00292 per share, as calculated per the loan agreement.
On December 6, 2017, the Company issued 1,326,373 shares of common stock in the conversion of $2,435
principal and $1,431 in interest due to LG Capital Funding. LLC at $0.00292 per share, as calculated per the loan agreement.
On December 22, 2017, the Company issued 2,009,595 shares of common stock in the conversion of the
remaining $3,665 in principal and $2,193 in interest due to LG Capital Funding. LLC at $0.00292 per share, as calculated per the loan agreement.
As of December 31, 2017, the convertible debenture was fully converted to shares of the Company’s common
stock and the balance of the convertible debenture was reduced to $0.
NOTE 6 - DERIVATIVE
LIABILITY
The Company analyzed the conversion option embedded in the convertible debenture for derivative accounting
consideration under ASC 815 and determined that the embedded instrument should be classified as a liability and recorded at fair value due to the variable conversion prices. The fair value of the conversion options was determined to be $52,267 as
of the issuance date using a Black-Scholes option-pricing model. Upon the date of issuance of the convertible debenture, $31,500 was recorded as debt discount and $20,767 was recorded as day one loss on derivative liability.
During March 2017, the holder of the convertible debenture elected to convert $2,000 in principal and $834
in interest due of the convertible debenture into 572,476 shares of the Company’s common stock. As a result, $4,278 of derivative liability was extinguished through a charge to paid-in capital.
During the nine months ended
September 30, 2018 and 2017, $0 and $
57,889 was recorded as a
loss on mark-to-market of the conversion options, respectively.
As the convertible debt with the conversion option requiring derivative accounting was fully converted
during the year ended December 31, 2017, the Company recorded the retirement of the derivative liability of $9,526 to additional paid-in capital. As a result, the balance of the convertible debt was reduced to $0 at December 31, 2017.
The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing
model and the following key assumptions during the nine months ended September 30, 2017:
|
Expected dividends
|
|
-%
|
|
Expected term (years)
|
|
0.12
|
|
Volatility
|
|
273 - 617%
|
|
Risk-free rate
|
|
0.74% - 0.89%
|
NOTE 7 - LOAN TRANSACTION
The Company purchased a recorded music compilation from EuGene Gant for a purchase price of $5,000
pursuant to a Bill of Sale and Assignment dated June 15, 2012, an Exclusive Songwriter Agreement dated June 15, 2012, and a Promissory Note that the Company concurrently executed and delivered to him on the same date. The Company made a payment to
Mr. Gant in the amount of $1,000 on June 15, 2012 and $2,000 on October 1, 2012, and $1,000 on June 15, 2013, and the remaining $1,000 principal amount under Promissory Note bears interest at five percent (5%) per annum, and there is one remaining
principal installment payment in the amount of $1,162 due. Accrued and unpaid interest on the Promissory Note is also due in the amount of $53 for the nine-months ended September 30, 2018, and $51 for the nine-months ended September 30, 2017. As
of September 30, 2018 and December 31, 2017, total outstanding short-term debt was $1,471 and $1,418, respectively. The note matured on June 15, 2013 and the loan is currently in default.
On October 22, 2015, Artfield Investment paid $2,100 in expenses on behalf of the Company. This loan is
unsecured, due on demand, and carries no interest. As of September 30, 2018 and December 31, 2017, the total amount owed was $2,100 and $2,100, respectively.
NOTE 8 - RELATED PARTY
TRANSACTIONS
The Company has entered into transactions with the related party, IQ Acquisition (NY), Ltd, owned by Mr.
Richards, the CEO of the Company. IQ Acquisition (NY), Ltd, the major shareholder of the Company, has paid expenses on behalf of the Company in the amount of $10,408 and $97,515 during the nine months ended
September 30,
2018 and 2017, respectively. The Company reimbursed IQ acquisition (NY) in the amount of $42,101 and $0 during the nine months ended September 30, 2018 and 2017, respectively. The balance due to related party as of September 30, 2018 and December
31, 2017 was $5,807 and $142,779, respectively. The advances are unsecured, payable on demand, and carry no interest.
NOTE 9 - MATERIAL CONTRACTS
On June 15, 2012, the Company entered into a songwriter agreement with Eugene Gant, a songwriter, which
provides for Mr. Gant’s employment as a staff writer on an exclusive basis to write musical compositions as works for hire for a period of two years from the date of the agreement. This agreement expired on June 15, 2014. The exclusive songwriter
agreement with Eugene B. Settler dated June 16, 2012, provides for Mr. Settler’s employment as a staff writer on an exclusive basis to write musical compositions as works for hire for a period of five years from the date of the agreement. This
agreement expired on June 16, 2017. During Mr. Gant’s and Mr. Settler’s tenure as songwriters for the Company, the copyrights on their entire work product will belong to the Company, in exchange for our assistance in exploiting and marketing these
compositions and the payment of a writer’s fee to them ranging from 10% to 50% of the net amounts that we collect on these musical compositions. The Company is entitled to the royalties for a period of 50 years from the date of the creation of any
work for hire pursuant to such agreements. After the expiration of such 50-year period, the copyright on a musical composition reverts to the songwriter or his heirs or assigns.
NOTE 10 - EQUITY TRANSACTIONS
The Company has authorized 10,000,000 shares of Preferred Stock and 140,000,000 shares of Common Stock at
par value of $0.001. As of September 30, 2018 and December 31, 2017, the Company had 29,890,066 shares of common stock, and 2,090,000 preferred shares, issued and outstanding, respectively.
On March 21, 2017, the Company issued 572,476 shares of common stock in the conversion of $2,000 principal
and $834 in interest due to LG Capital Funding, LLC at $0.00495 per share, as calculated per the loan agreement.
On June 8, 2017, the Company issued 603,038 shares of common stock in the conversion of $700 principal and
$328 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On June 13, 2017, the Company issued 638,926 shares of common stock in the conversion of $740 principal
and $350 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On June 27, 2017, the Company issued 670,334 shares of common stock in the conversion of $1,245 principal
and $598 in interest due to LG Capital Funding, LLC at $0.00275 per share, as calculated per the loan agreement.
On July 18, 2017, the Company issued 701,519 shares of common stock in the conversion of $800 principal
and $396 in interest due to LG Capital Funding, LLC at $0.00171 per share, as calculated per the loan agreement.
On July 24, 2017, the Company issued 735,903 shares of common stock in the conversion of $810 principal
and $404 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 3, 2017, the Company issued 775,636 shares of common stock in the conversion of $850 principal
and $430 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 18, 2017, the Company issued 812,860 shares of common stock in the conversion of $885 principal
and $456 in interest due to LG Capital Funding, LLC at $0.00165 per share, as calculated per the loan agreement.
On August 25, 2017, the Company issued 852,841 shares of common stock in the conversion of $1,080
principal and $562 in interest due to LG Capital Funding, LLC at $0.00193 per share, as calculated per the loan agreement.
On August 31, 2017, the Company issued 897,810 shares of common stock in the conversion of $810 principal
and $424 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On September 13, 2017, the Company issued 941,854 shares of common stock in the conversion of $845
principal and $450 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On September 20, 2017, the Company issued 989,403 shares of common stock in the conversion of $885
principal and $475 in interest due to LG Capital Funding, LLC at $0.00138 per share, as calculated per the loan agreement.
On October 3, 2017, the Company issued 1,038,870 shares of common stock in the conversion of $1,035
principal and $565 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On October 16, 2017, the Company issued 1,090,032 shares of common stock in the conversion of $1,080
principal and $599 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On October 19, 2017, the Company issued 1,141,941 shares of common stock in the conversion of $1,130
principal and $629 in interest due to LG Capital Funding, LLC at $0.00154 per share, as calculated per the loan agreement.
On November 6, 2017, the Company issued 1,201,538 shares of common stock in the conversion of $1,180
principal and $670 in interest due to LG Capital Funding. LLC at $0.00154 per share, as calculated per the loan agreement.
On November 28, 2017, the Company issued 1,262,260 shares of common stock in the conversion of $2,325
principal and $1,354 in interest due to LG Capital Funding. LLC at $0.00292 per share, as calculated per the loan agreement.
On December 6, 2017, the Company issued 1,326,373 shares of common stock in the conversion of $2,435
principal and $1,431 in interest due to LG Capital Funding. LLC at $0.00292 per share, as calculated per the loan agreement.
On December 14, 2017, in accordance with the Company's share subscription agreements with the Series B
subscribers, the Company issued 2,090,000 shares of Series B preferred stock to twenty-two (22) individual subscribers for a total cash procced of $515,000. Of the total 2,090,000 shares, 1,210,000 shares were issued at $0.30 per share, 380,000
shares were issued at $0.40 per share, and the remaining 500,000 shares were issued for the services provided by an individual subscriber as compensation.
On December 22, 2017, the Company issued 2,009,595 shares of common stock in the conversion of the
remaining $3,665 in principal and $2,193 in interest due to LG Capital Funding. LLC at $0.00291 per share, as calculated per the loan agreement.
NOTE 11 - CONVERTIBLE
PREFERRED STOCK
In December 2017, the Company issued 1,210,000 shares of its Series B convertible preferred stock at a
price per share of $0.30 for gross proceeds of $363,000 and issued 380,000 shares of its Series B convertible preferred stock at a price per share of $0.40 for gross proceeds of $152,000. In December 2017, the Company also issued 500,000 shares of
its Series B convertible preferred stock to a third party as compensation, totally $160,000, for his consulting services. The Series B shareholders are entitled, at their option, at any time after the issuance of the Series B convertible preferred
stock, to convert all or any lesser portion of their shares into the Company’s common stock at a conversion ratio 0.2 and at price of $1.59 per share.
The holders of the Series B convertible preferred stock have the following rights and privileges:
Optional Conversion Rights
Each share of
Series B convertible preferred stock is convertible at the option
of the holder into 0.2 share of common stock and at price of $1.59 per share. The conversion price per share for the convertible preferred stock shall be adjusted for certain recapitalizations, splits, combinations, common stock dividends or as set
forth in the Company’s amended and restated certificate of incorporation. As of September 30, 2018, none of the Series B convertible preferred stock has been converted to common stock.
Voting Rights
Each share of convertible preferred stock has 0.2 votes equal to the number of shares of common stock into
which it is convertible.
Redemption Rights
There are no redemption rights afforded to the holders of convertible preferred stock. Upon certain change
in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, the convertible preferred stock is contingently redeemable.
The holders of the Series B convertible preferred stock are not entitled to receive dividends and have
same liquidation rights that are possessed by the holders of the Company’s common stock.
The Company evaluated whether or not the Series B convertible preferred stock above contained embedded
conversion options, which meet the definition of derivatives under ASC Topic 815. The Company concluded that since the above convertible preferred shares had a fixed conversion rate, the convertible preferred shares were not derivative instruments.
The convertible preferred shares were analyzed to determine if the convertible preferred shares have an
embedded beneficial conversion feature (BCF). Based on this analysis, the Company concluded that the effective conversion price was greater than the fair value of the Company’s common stock on the issuance dates and therefore no BCF was recorded.
The Company recorded its convertible preferred stock at fair value on the dates of issuance, net of
issuance costs. The total fair value of the convertible preferred stock on the date of issuance and as of September 30, 2018 was $201,809. As of September 30, 2018, total 2,090,000 shares of
Series B convertible preferred
stock authorized, issued and outstanding.
NOTE 12 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of
issuance of these financial statements and determined that no subsequent event requires recognition or disclosure to the financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion and analysis should be read in conjunction with our financial statements,
including the notes thereto, appearing in this report and are hereby referenced. 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 report. You should not place undue certainty on these
forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result
of new information, future events or otherwise.
These forward-looking statements are based on our management’s current expectations and beliefs and
involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events
or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”,
“expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements
relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship
with our existing and potential future customers; and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these
forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers;
disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key
personnel and other risks associated with competition.
Overview
Astika Holdings, Inc. was incorporated under the laws of the State of Florida on January 13, 2011. We are
refocusing and preparing to relaunch the Company through a variety of strategic acquisitions in the textile, service, agricultural, and industrial sectors to complement and capture the next wave of growth companies from Asia and New Zealand.
Results of Operations for the Three and Nine Months Ended September 30, 2018 Compared
to the Three and Nine Months Ended September 30, 2017
Revenues
The Company’s revenues were $0 for the three-month and nine-month periods ended September 30, 2018 and
September 30, 2017.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30, 2018 were $7,667 as compared
to $28,865 for the three months ended September 30, 2017, and $26,950 for the nine months ended September 30, 2018 as compared to $91,330 for the nine months ended September 30, 2017. General and administrative expenses decreased due to the lower
consulting fees related to the Company’s acquisition and financing activities.
Liquidity and Capital Resources
The Company has had only nominal operations and does not have any cash generated from business
operations. We funded our operating expenses by issuing notes to related and unrelated parties and borrowing loans from our related parties. During the year ended December 31, 2017, we also issued convertible preferred stock for gross proceeds of
$515,000. Our plan is to obtain financing from various investors and complete our acquisition project.
As of September 30, 2018 and December 31, 2017, we had working capital deficits of $96,203 and $111,301, respectively.
The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs
and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain
adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital
resources. Management’s plans focus is on a variety of strategic acquisitions in service, agriculture and industrial companies to compliment and grow Astika Holdings, Inc.’s business. The Company is positioning to capture the next wave of growth
companies from Asia. As the centerpieces for Astika Holdings in Asia, the focus is on rapid economic growth and increased foreign investment sector companies which management believes is poised for accelerated economic growth with national
modernization. Astika’s planned focus is also on adding value through successful project development, efficient operations, and opportunistic acquisitions while maintaining a low risk profile through project diversification, astute financial
management and operating in secure. to obtain such resources for the Company include (i) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses; (ii) obtaining funding from outside sources
through the sale of its debt and/or equity securities; and (iii) completing a merger with or acquisition of an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any
of its plans. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Net Cash Used in Operating Activities
Net cash provided by operating activities was $31,693 for the
nine months ended
September 30, 2018 due to the decrease in prepaid expense of $42,101. Net cash used in operating activities was $0 for the nine months ended September 30, 2017.
Net Cash Used in Investing Activities
The net cash used in investing activities during the nine months ended September 30, 2018 and 2017 was $0.
Net Cash Provided by Financing Activities
Net cash used in financing activities during the nine months ended September 30, 2018 was $31,693 due to
payback of a related party’s loan in the amount of $42,101. Net cash provided by financing activities during the nine months ended September 30, 2017 was $0.
Availability of Additional Funds
Based on our working capital deficit as of September 30, 2018 and zero revenues, we expect to need
additional equity and/or debt financing to continue our operations during the next 12 months. We expect that our current cash on hand will not fund our operations through December 2018.
Accounting Policies and Estimates
Our unaudited interim 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 unaudited interim financial statements in conformity with United States 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 unaudited interim financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates. Our significant estimates and assumptions include amortization, the fair value of our stock, and the valuation allowance relating to the Company’s deferred tax assets.
Material Commitments
There were no material commitments during the nine months ended September 30, 2018.
Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to
share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic
606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning
January 1, 2019. The adoption of ASU 2018-07 is not expected to have a material impact on the Company’s financial statement presentation or disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy,
modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring
Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for public companies for
annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating this guidance and the impact of this update on its consolidated financial statements.
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 financial statements.
Off Balance Sheet Arrangements
As of September 30, 2018, we had no off-balance sheet arrangements.
Item 3. Quantitative and
Qualitative Disclosures about Market Risk
Disclosure under this section is not required for a smaller reporting company.
Item 4. Controls and
Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information required
to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms, and that such information is accumulated and communicated to our management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of
assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the
participation of our management, including our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our third fiscal quarter covered by this report. Based on the
foregoing, our President and Treasurer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level at September 30, 2017. It should be noted that the design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the period
covered by this report, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.