Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amount of the Companys financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
F-6
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related-party nature.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.
Related parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the Related parties include: a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 8251015, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
F-7
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Companys financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows.
Subsequently, on October 29, 2014, the Company has entered into a perpetual license for certain intellectual property known as SPACE technology in exchange for a one time fee of $2,000,000 and a fee of $100 for each unit of Space Computer produced and sold by the Company.
Revenue Recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its revenues from sales contracts with its customers, with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13 addresses the determination of whether tax benefits claimed, or expected to be claimed, on a tax return should be recorded in the financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
F-8
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In managements opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no unrecognized tax liabilities or benefits in accordance with the provisions of Section 740-10-25 at September 30, 2014 and December 31, 2013.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
There were no potentially dilutive debt or equity instruments issued or outstanding during the three- and nine-month periods ended September 30, 2014 and 2013.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and
provides definitions of each category, and uses the indirect or reconciliation method (Indirect method) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Advertising costs
Advertising costs are expensed as incurred. The Company recorded no advertising costs for the three and nine-month periods ending September 30, 2014 and 2013.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
F-9
Recently issued accounting pronouncements
The Company is in the development stage as defined under the then current Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 915-205 Development-Stage Entities, and among the additional disclosures required as a development stage company are that our financial statements were identified as those of a development stage company, and that the statements of operations, stockholders deficit and cash flows disclosed activity since the date of our inception (October 22, 2010) as a development stage company. Effective June 10, 2014 FASB changed its regulations with respect to Development Stage Entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2014 with the option for entities to early adopt these new provisions. The Company has not elected to early adopt these provisions and consequently these additional disclosures are included in these financial statements.
The Company does not believe that other than disclosed above, recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
Note 3 Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company had a deficit accumulated during the development stage at September 30, 2014 and December 31, 2013 and a net loss for the period from October 22, 2010 (Inception) through September 30, 2014. These factors raise substantial doubt about the Companys ability to continue as a going concern.
While the Company is attempting to generate sufficient revenues, the Companys cash position may not be sufficient enough to support the Companys daily operations. Management intends to raise additional funds by way of a public or private offering.
Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
F-10
Note 4 related party transactions
Consulting services from President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer
Consulting services provided by the President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the three and nine-month periods ended September 30, 2014 and 2013 were as follows:
During the three months ended September 30, 2014 and 2013 $2,400 of these related party consulting services was recognized in officers compensation within operating expenses.
During the nine months ended September 30, 2014, $1,920 of these related party consulting services was recognized in cost of revenues and $5,280 in officers compensation within operating expenses. During the nine months ended September 30, 2013 $5,000 of these related party consulting services was recognized in cost of revenues and $6,400 in officers compensation within operating expenses.
Accounts Payable Related Parties
As at September 30, 2014 and December 31, 2013 the Company owed its directors and officers $16,800 and $9,600 respectively. These amounts represent unpaid consulting fees as at the end of the reporting period.
Forgiveness of Advances and Accrued Compensation from Former Officer
On December 1, 2013 the former President forgave advances of $680 and accrued compensation of $11,400, respectively or $12,080 in aggregate. This amount was recorded as a contribution to additional paid in capital.
Subsequent to September 30, 2014, the Company settled amounts due to directors and officers of the Company whereby the President and stockholders, forgave advances of $16,048 and accrued compensation of $16,800 or $32,848 in aggregate. This amount was recorded as contributions to additional paid in capital.
Note 5 commitments and contingencies
As described in Note 7 subsequent events below, effective October 29, 2014, the Company entered into a licensing agreement and a real estate lease with certain related parties that contractual commitment the Company to make as yet undetermined future payments to these related parties.
F-11
Note 6 stockholders deficit
Shares authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $0.001 per share.
Common stock
On December 28, 2012, the Company sold 2,000,000 shares of its common stock at par to one of the directors for $2,000 in cash.
On September 30, 2013, the Company sold 2,000,000 shares of its common stock at par to the other director for $2,000 in cash.
During the nine months ended September 30, 2014, the Company sold 3,220,000 common shares at $0.01 per share for total proceeds of $32,200 pursuant to the Companys Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission and declared effective January 28, 2014.
Note 7 subsequent events
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued on November __, 2014 to determine if they must be reported. The Management of the Company determined that there were the following reportable subsequent events to be disclosed:
Change in control
On October 29, 2014, pursuant to the terms of the Stock Purchase Agreements (Stock Purchase Agreements) between Mrs. Elena Shmarihina, Mr. Alexander Averchenko and World Assurance Group Inc., World Assurance Group, Inc. (WDAS) purchased a combined total of 4,000,000 shares of the Companys common stock from Mrs. Elena Shmarihina and Mr. Alexander Averchenko, former stockholders and officers of the Company, for cash consideration of $60,000. Additionally, WDAS entered into and closed on various other stock purchase agreements with certain other of the Companys shareholders to purchase a total of 3,095,000 shares of common stock of the Company in exchange for $318,000. As a result of the transactions, WDAS became the Companys largest stockholder with approximately 99% of the total issued and outstanding shares of the Companys common stock. All of the Companys shares purchased by WDAS are and will be "restricted securities" as such term is defined the Securities Act of 1933, as amended (the "Securities Act").
Simultaneously with the stock purchase, WDAS and two of its wholly owned subsidiaries, World Global Group, Inc. (WGG) and World Global Assets, ("WGA"), entered into a Purchase And Intercompany License Agreement with the Company whereby (i) WGA is licensing certain intellectual property related to WGAs SPACE technology and brand to the Company pursuant to a License Agreement, (ii) WGG is subleasing certain real estate to the Company, and (iii) WGA is transferring $2,000,000 to the Company in exchange for 8,000,000 shares of the Companys restricted common stock.
WDAS is currently listed on the pink sheets operated by OTC Markets, Inc. and is a holding company that operates through four wholly owned subsidiaries: Cellad Inc., a digital media company based in Ireland operating in the global mobile advertising industry, World Global Group Inc. (WGG), an intellectual property licensing company based in Miami, Florida, World Global Assets Pte. Ltd. (WGA), based in Singapore and which owns the Wor(l)d Global Network Pte Ltd brands, trademarks, technology and Intellectual Property, and now Halton Universal Brands, Inc., which is licensing the SPACE technology and other intellectual property from WGA and intending to commercialize and sell the SPACE technology.
F-12
SPACE is a wearable technology; it is a wearable computer that connects to Lumina Glasses, which are binocular display glasses. SPACE is wearable because it has micro dimensions of only 3. SPACE is also a brand used for a Cloud Based Media and Communication platform built to provide communication services, such as VideoConference, Webinar, VoiP (Ip Telephony) and Media Distribution Content Platform. The SPACE technology has been perpetually licensed to HNVB in exchange for a one time fee of $2,000,000 and a fee of $100 for each unit of Space Computer produced and sold by HNVB.
The Company will share office facilities with WGG and under its real estate sublease with WGG will be recharged rent and a cost allocation for the property based on the amount of space that it uses. Details of the duration of the lease, the amount of space to be occupied and the amount of the lease payment has yet to be finalized
Effective October 29, 2014, Mrs. Elena Shmarihina resigned as President and Chief Executive Officer of the Company and Mr. Alexander Averchenko resigned as Treasurer and Chief Financial Officer of the Company. The following persons were appointed As Directors and officers of the Company to the offices set forth opposite their names, to serve until the next annual meeting of the Board of Directors or until their successor(s) is(are) duly elected and qualified, or until their earlier death, resignation or removal:
-
Fabio Galdi:
President, Chief Executive Officer, Secretary and Chairman of the Board of Directors;
-
Alfonso Galdi:
Chief Financial Officer, Treasurer and a member of the Board of Directors;
-
Alessandro Senatore:
Chief Operating Officer and a member of the Board of Directors.
As a result of the foregoing, there was a change in control of the Company on October 29, 2014.
Forgiveness of Advances and Accrued Compensation from Former Officers
On October 29, 2014, the Company settled amounts due to directors and officers of the Company whereby the President and stockholders, forgave advances of $16,048 and accrued compensation of $16,800 or $32,848 in aggregate. This amount was recorded as contributions to additional paid in capital.
F-13
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements and Associated Risks.
The following discussion should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q.
Our Business
Halton Universal Brands Inc. is a brokerage, consulting and marketing firm specializing in brand consulting and new product strategy consulting for emerging brands. We focus on natural food products, specialty food products, and mass market grocery items that are manufactured in North America and seek new market penetration in Eastern Europe. We offer services that fall into three major categories: strategic management consulting, sales brokerage, and marketing. Our main areas of focus have been serving manufacturers and distributors in the grocery, specialty food, and health supplement channels. By providing a comprehensive range of services for our manufacturer clients, we can maximize the efficiency of new product launches, line expansions and promotional efforts for products already on the market.
Our current services include:
Brand Consultancy
We perform a comprehensive evaluation of the brand in question and present a brand plan report to the client, outlining strategic steps that need to be taken when introducing the product into the target market. For products already on the market, we can evaluate brand recognition, current marketing efforts, as well as gauge reception of the product by distributors, brokers and buyers that we are in contact with. The brand audit is essential to our process of successful introduction of new products into the market. We charge an hourly rate for the brand audit report preparation, or a flat-rate fee negotiated in advance with the client. As well as a standalone one-off service, we also offer brand consultancy on an on-going basis, as part of our marketing services to clients.
Marketing Services
We provide ongoing marketing services to our customers, which include both strategy and execution elements. We work closely within set brand positioning targets for each product, including messaging, price point and overall impression. Our marketing services include: point-of-sale display design, printing, assembling and delivery on site; sell sheet design, printing and distribution; trade show and consumer show research, booth design consulting, assistance with staffing and trade show coordination; short-term and long-term promotion planning with profit targets and distributor targets in mind; labeling requirement research and consulting; market research and consulting on price point, and new product introduction strategy. Our marketing services are charged on an hourly basis.
Sales Brokerage Services
If the client chooses to retain us as their sales broker of record for the target market, we provide a full-range sales brokerage service package. We represent the clients' products in the target market, calling on distributor and store buyer contacts, advising on promotions, conducting store checks, representing the products at sales road shows and trade shows. Brokerage services are usually charged based on a negotiated monthly fee until sales reach a certain quarterly target, after which, we charge a fee based on percentage of total sales conducted by us.
6
Consulting Services
We provide consulting services in two areas: new product development and distribution strategy. New product development services are offered to manufacturers whose products are still in the development stages, or who are developing new products for a particular target market, whether geographical or socioeconomic. We consult on product strategy, package design, sourcing of suppliers and raw materials, assistance with regulatory compliance and product launch strategy. We also consult for clients who require help with their distribution strategy, advising on streamlining the supply chain, effective inventory management, product promotions and selection of promotional materials, carton design and labeling and maintaining relationships with buyers through efficient reporting.
Subsequently, on October 29, 2014, there was a change of control of the Company and a change in the Companys business plan. See the Note 7 - subsequent events in the above financial statements for more details.
As of October 29, 2014, we intend to discontinue our existing consulting business and begin licensing the SPACE technology and other intellectual property and intend to commercialize and sell the SPACE technology. SPACE is a wearable technology; it is a wearable computer that connects to Lumina Glasses, which are binocular display glasses. SPACE is wearable because it has micro dimensions of only 3. SPACE is also a brand used for a Cloud Based Media and Communication platform built to provide communication services, such as VideoConference, Webinar, VoiP (Ip Telephony) and Media Distribution Content Platform. The SPACE technology is perpetually licensed to us in exchange for a one time fee of $2,000,000 and a fee of $100 for each unit of Space Computer produced and sold by us.
Results of operations for the three months ended September 30, 2014 compared to the three months ended September 30, 2013.
Revenue, cost of sales and gross profit
We did not generate revenues during three months ended September 30, 2014 and 2013.
Operating Costs and Expenses
The major components of our operating expenses for the three months ended September 30, 2014 and 2013 are outlined in the table below:
| | | | |
| For the
Three Months
Ended
September 30,
2014
| | For the
Three Months
Ended
September 30,
2013
|
Increase
(Decrease)
$
|
| | | | |
Officer compensation
| $ 2,400
| | $ 2,400
| -
|
General and administrative
| 7,425
|
| 8,304
| (879)
|
Professional fees
| 1,600
|
| 1,000
| 600
|
| $ 11,425
|
| $ 10,927
| |
The increase in our operating costs for the three months ended September 30, 2014, compared to the same period in our fiscal 2013, was due to an increase in our corporate activities, an increase in expenses related to implementation of our business plan and fees associated with our application to have our securities designated as trading on the OTCQB marketplace and subscription to certain OTC Markets Groups corporate services. General and administrative expenses of $7,425 incurred during the three months ended September 30, 2014 consisted of filing fees of $1,990, accounting fees of $1,500, transfer agent fees of $803, office rent of $620, OTC Markets fees of $1,666, travel expenses of $780 and bank charges of $66. General and administrative expenses of $8,304 incurred during the three months ended September 30, 2013 consisted of filing fees of $125, office rent of $447, office expenses of $200, bank charges of $32 and consulting fees of $7,500.
7
Consulting services provided by the President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the three-month period ended September 30, 2014 and 2013 were as follows:
| | | | | | |
| | For the Three Months
Ended
September 30,
2014
| | | For the Three Months
Ended
September 30,
2013
|
| | | | | | |
President, Chief Executive Officer
| $
| 1,200
| | | $
| 1,200
|
Chief Financial Officer, Secretary and Treasurer
| | 1,200
| | | | 1,200
|
| $
| 2,400
| | | $
| 2,400
|
| | | |
|
|
During the three months ended September 30, 2014 and 2013 $2,400 of these related party consulting services was recognized in officers compensation within operating expenses.
17
As at September 30, 2014 and December 31, 2013 the Company owed its directors and officers $16,800 and $9,600 respectively. These amounts represent unpaid consulting fees as at the end of the reporting period.
Results of operations for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013.
Revenue, cost of sales and gross profit
We generate revenue from consulting services. Our gross revenue from consulting services related to marketing strategy for new products pricing point consultation and brand positioning on the market for the nine months ended September 30, 2014, was $17,300, compared to $7,800 for the nine months ended September 30, 2013. Our cost of revenues for the nine months ended September 30, 2014, was $1,920 (September 30, 2013: $6,000) resulting in a gross profit of $15,380 (September 30, 2013: $1,800).
Operating Costs and Expenses
The major components of our operating expenses for the nine months ended September 30, 2014 and 2013 are outlined in the table below:
| | | | | |
| For the
Nine Months
Ended
September 30,
2014
| | For the
Nine Months
Ended
September 30,
2013
| |
Increase
(Decrease)
$
|
| | | | | |
Officer compensation
| $
5,280
| | $
6,400
| | (1,120)
|
General and administrative
| 29,979
|
| 21,210
| | 8,769
|
Professional fees
| 13,900
|
| 1,000
| | 12,900
|
| $ 37,734
|
| $ 16,906
| | |
8
The increase in our operating costs for the nine months ended September 30, 2014, compared to the same period in our fiscal 2013, was due to an increase in our corporate activities, an increase in expenses related to implementation of our business plan and an increase in professional fees associated with preparation and filing of our Registration Statement, applying for DTC eligibility of our common stock and upgrading our securities for trading on the OTCQB marketplace. General and administrative expenses of $29,979 incurred during the nine months ended September 30, 2014 consisted of filing fees of $7,250, transfer agent fees of $12,840, office rent of $1,682, accounting fees of $3,000, office expenses of $4,320, travel expenses of $780 and bank charges of $107. General and administrative expenses of $21,210 incurred during the nine months ended September 30, 2013 consisted of filing fees of $125, office rent of $1,531, travel expenses of $2,718, office expenses of $288, bank charges of $48 and consulting fees of $16,500.
Consulting services provided by the President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the nine-month period ended September 30, 2014 and 2013 were as follows:
| | | | | | |
| | For the Nine Months
Ended
September 30,
2014
| | | For the Six Months
Ended
June 30,
2013
|
| | | | | | |
President, Chief Executive Officer
| $
| 3,600
| | | $
| 2,800
|
Former President, Chief Executive Officer
| | -
| | | | 5,000
|
Chief Financial Officer, Secretary and Treasurer
| | 3,600
| | | | 3,600
|
| | | |
| |
| $
| 7,200
| | | $
| 11,400
|
| | | | | | |
| | | |
|
|
During the nine months ended September 30, 2014, $1,920 of these related party consulting services was recognized in cost of revenues and $5,280 in officers compensation within operating expenses. During the nine months ended September 30, 2013 $5,000 of these related party consulting services was recognized in cost of revenues and $6,400 in officers compensation within operating expenses.
On December 1, 2013 the former President forgave advances of $680 and accrued compensation of $11,400, respectively or $12,080 in aggregate. This amount was recorded as a contribution to additional paid in capital.
OTCBB and OTCQB quotation
Our common stock has been quoted on the OTC Bulletin Board since May 12, 2014 under the symbol HNVB. During the quarter ended June 30, 2014 the Company filed an application with the OTC Markets Group, Inc. to be quoted on the OTCQB quotation medium. Our application was approved on July 31, 2014 and our common stock has been quoted on the OTCQB under the symbol HNVB effective August 1, 2014. We paid a one-time $2,500 application fee and $10,000 annual fees that covers a period from August 1, 2014 to July 31, 2015.
To be eligible for trading on the OTCQB marketplace, starting May 1, 2014, companies are required to:
-
Meet a minimum bid price test of $0.01 and not be subject to bankruptcy or reorganization proceedings. Securities that do not meet the minimum bid price test or that are in bankruptcy will be downgraded to OTC Pink;
-
Submit an application to OTCQB and pay an application and annual fee;
-
Submit an OTCQB Annual Certification confirming the Company Profile displayed on otcmarkets.com is current
and complete and providing additional information on officers, directors, and controlling shareholders.
9
Liquidity and Capital Resources
| | | | |
Working Capital
| | September 30, 2014
| |
December 31, 2013
|
Current Assets
| $
| 8,435
| $
| 4,718
|
Current Liabilities
| $
| (32,848)
| $
| (27,552)
|
Working Capital Deficiency
| $
| (24,413)
| $
| (22,834)
|
Cash Flows
The table below, for the periods indicated, provides selected cash flow information:
| | | | |
| | Nine Months
Ended
September 30,
2014
| |
Nine Months
Ended
September 30,
2013
|
Cash provided by (used in) operating activities
| $
| (35,304)
| $
| (13,233)
|
Cash provided by (used in) investing activities
| $
| -
| $
| -
|
Cash provided by financing activities
| $
| 32,200
| $
| 2,000
|
Net increase (decrease) in cash
| $
| (3,104)
| $
| (11,233)
|
We have generated revenues of $17,300 during the nine months ended September 30, 2014 and $7,800 during the same period in our fiscal 2013. In addition to cash received from consulting services, during the nine months ended September 30, 2014 we received proceeds of $32,200 from sale of our common stock at $0.01 per share. During the nine months ended September 30, 2013 the Company sold 2,000,000 shares of its common stock at par to our director for $2,000 in cash. We had no other sources of cash inflow during the reporting periods.
Cash Flows from Operating Activities
The major uses of our operating cash include funding general operating expenses (regulatory filing, legal and professional expenses, and office rent) and cost of revenues. Our cash provided by operating activities generally follows the trend in our net revenues and operating results.
Our net cash used in operating activities of $35,304 for the nine months ended September 30, 2014 was primarily the result of our net loss and changes in our operating assets and liabilities. These changes include an increase in prepaid expenses of $6,821 and in amounts due to related party of $7,200. In addition, we incurred a decrease in accounts payable and accrued liabilities of $1,904. The increase in prepaid expenses was due to the payment of annual fee of $10,000 to OTC Markets Group Inc. in July of 2014.
During the quarter ended September 30, 2014 the company paid a current portion of accounts payable outstanding as of June 30, 2014 resulting in the decrease in accounts payable and accrued liabilities as at the end of the current quarter. The increase in amounts due to related party was due to consulting services incurred by the Company with our officers and directors that remain unpaid as of September 30, 2014.
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Our net cash used by operating activities of $13,233 for the nine months ended September 30, 2013 was primarily the result of our net loss and changes in our operating assets and liabilities. These changes include an increase in prepaid expenses of $3,522, in accounts payable and accrued liabilities of $5,699 and in amounts due to related party of $11,400. The increase in accounts payable and accrued liabilities reflected the increase in our general operating expenses incurred during the nine months ended September 30, 2013 that remained unpaid at the end of the reporting period. The increase in amounts due to related party was due to consulting services incurred by the Company with our officers and directors that remain unpaid as of September 30, 2013. The increase in prepaid expenses was a net result of changes in prepaid filing fees and office rent.
We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors including fluctuations in our net revenues and operating results, utilization of new revenue streams, collection of accounts receivable, and timing of billings and payments.
Cash Flows from Investing Activities
We did not use or generate any cash from investing activities during the nine months ended September 30, 2014 and 2013.
Cash Flows from Financing Activities
During the nine months ended September 30, 2014, the Companys Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission was declared effective. During the nine months ended September 30, 2014 the Company sold 3,220,000 common shares at $0.01 per share for total proceeds of $32,200 pursuant to this Registration Statement.
During the nine months ended September 30, 2013 the Company sold 2,000,000 shares of its common stock at par to our director for $2,000 in cash.
Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek, in addition to equity financing, other sources of financing (e.g. bank loan, line of credit, shareholder loan) on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. If we are unable to generate profits sufficient to cover our operating costs or unable to obtain additional funds for our working capital needs, we may need to cease or curtail operations.
Recent Accounting Pronouncements
See Note 2 to the Financial Statements.
Off Balance Sheet Arrangements
As of September 30, 2014, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We were not subject to any legal proceedings during the three and nine months ended September 30, 2014 and 2013 and currently we are not involved in any pending litigation or legal proceeding.
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
All shares sold during the nine months ended September 30, 2014 were sold pursuant to the Companys Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission and declared effective January 28, 2014.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No senior securities were issued and outstanding during the three and nine months ended September 30, 2014 or 2013.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Our common stock has been quoted on the OTC Bulletin Board since May 12, 2014, and on the OTCQB since July 31, 2014 under the symbol HNVB. It is DTC eligible effective June 9, 2014.
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ITEM 6. EXHIBITS
The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:
EXHIBIT
NUMBER DESCRIPTION
| | |
3.1
|
| Articles of Incorporation. Incorporated by reference to the Companys Registration Statement on Form S-1 filed with the SEC on November 7, 2013.
|
3.2
|
| Bylaws. Incorporated by reference to the Companys Registration Statement on Form S-1 filed with the SEC on November 7, 2013.
|
4.0
|
| Subscription Agreement. Incorporated by reference to the Companys Registration Statement on Form S-1 filed with the SEC on November 7, 2013.
|
31.1
|
| Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
31.2
|
| Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
32.1
|
| Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
32.2
|
| Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
101.INS
|
| XBRL Instance Document **
|
101.SCH
|
| XBRL Taxonomy Extension Schema Document **
|
101.CAL
|
| XBRL Taxonomy Extension Calculation Linkbase Document **
|
101.DEF
|
| XBRL Taxonomy Extension Definition Linkbase Document **
|
101.LAB
|
| XBRL Taxonomy Extension Label Linkbase Document **
|
101.PRE
|
| XBRL Taxonomy Extension Presentation Linkbase Document **
|
* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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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.
Date: November 12, 2014
| | | |
|
| HALTON UNIVERSAL BRANDS INC.
|
|
|
|
| By:
| /s/ Fabio Galdi
|
|
| Fabio Galdi
|
|
| President, Chief Executive Officer (Principal Executive Officer) and Director
|
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of Halton Universal Brands Inc. and in the capacities and on the dates indicated.
| | | | |
SIGNATURES
|
| TITLE
|
| DATE
|
|
|
|
|
|
/s/ Fabio Galdi
|
| President, C.E.O., Principal Executive Officer, Secretary and Director
|
| November 12, 2014
|
Fabio Galdi
|
|
|
|
|
/s/ Alfonso Galdi
|
| Treasurer, C.F.O., Principal Accounting Officer, Principal Financial Officer and Director
|
|
November 12, 2014
|
Alfonso Galdi
|
|
|
|
|
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