NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared on substantially the same basis as the audited financial statements included in the Intelligent Buying Inc. Annual Report on Form 10-K for the year ended December 31, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission (SEC) rules and regulations regarding interim financial statements. All amounts included herein related to the condensed financial statements as of March 31, 2018 and for the three months ended March 31,
2018 and 2017 are unaudited and should be read in conjunction with the audited financial statements and the notes there to included in the Companys Annual Report on Form 10-K for the year ended December 31, 2017.
In the opinion of management, the accompanying financial statements include all necessary adjustments for the fair presentation of the Companys financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the full fiscal year ending December 31, 2018 or any other period.
Business description
The financial statements presented are those of Intelligent Buying, Inc. (the Company). The Company was incorporated under the laws of the State of California on March 22, 2004 and until October, 2016 was in the business of media advertising and acquiring high-end computer and networking equipment from resellers and end-users and then reselling this equipment at discounted prices.
On January 28, 2015, we filed a Report with the Securities and Exchange Commission on Form 8-K, which announced that (a) our principal shareholders had sold their shares of common stock to AMS Encino Investments, Inc., a California corporation controlled by Hector Guerrero, and (b) our principal shareholders were resigning as our officers and directors, and were appointing Mr. Guerrero and Jonathan Herzog as our new officers and directors. That change of control was completed on February 9, 2015.
As of May 31, 2018, AMS Encino Investments, Inc. (AMS) entered into a Common Stock Purchase Agreement (the Stock Purchase Agreement) pursuant to which AMS agreed to sell to Bagel Hole, Inc. (the Purchaser), the 5,753,333 shares of common stock (the Shares) of the Company owned by AMS, constituting approximately 79.3% of the Companys 7,256,600 issued and outstanding common shares, for $90,000. The transaction was consummated on June 15, 2018; and as a result of the sale there was a change of control of the Company. The Purchaser transferred 100,000 of those shares to unaffiliated persons. There is no family relationship or other relationship between AMS and the Purchaser.
As a result of the sale under the Stock Purchase Agreement, Hector Guerrero, who was CEO of AMS and was the Companys sole officer and director, resigned as the Companys sole officer and director, and appointed Philip Romanzi, who is the owner of the Purchaser, as the sole director of the Company. Mr. Romanzi is now the Companys sole officer and director.
Uses of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted accounting principles accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.
4
INTELLIGENT BUYING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Net loss per share
Authoritative guidance on
Earnings per Share
requires dual presentation of basic and diluted earnings or loss per share (EPS) for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution; diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share.
Stock-based compensation
The Company has adopted the FASB standard on
Share-Based Payment,
which addresses the accounting for share-based payment transactions. The standard eliminates the ability to account for share-based compensation transactions using old standards, and generally requires instead that such transactions be accounted and recognized in the statement of operations based on their fair value. The standard is effective for public companies that file as small business issuers as of the first interim or annual reporting period that begins after December 15, 2005. Depending upon the number of and terms for options that may be granted in future periods, the implementation of this standard could have a significant non-cash impact on results of operations in future periods.
New Accounting Pronouncements
From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Companys accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
2. INCOME TAXES
The Companys income tax benefit differs from the expected income tax benefit by applying the U.S. Federal statutory rate of 21% to net income (loss) as follows:
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Three Months Ended March 31,
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2018
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2017
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|
Income tax benefit at statutory rate of 21%
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|
$
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$
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Change in valuation allowance
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$
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$
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5
INTELLIGENT BUYING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The tax effects of temporary differences that give rise to the Companys net deferred tax liability as of March 31, 2018 and December 31, 2017 are as follows:
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March 31,
2018
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December 31,
2017
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Deferred Tax Assets
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Net Operating Losses
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$
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166,000
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$
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166,000
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Less: Valuation Allowance
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(166,000
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)
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(166,000
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)
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Deferred Tax Assets Net
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$
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$
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As of March 31, 2018, the Company had approximately $791,000 of federal and state net operating loss carryovers (NOLs), which begin to expire in 2038. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the Tax Act) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 34% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing but have kept the full valuation allowance. As a result the Company has recorded no income tax expense during the three months ended March 31, 2018.
The Companys deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 34% to 21%, resulting in a deferred tax expense of approximately $103,000 in 2017 that is still fully valued against as of March 31, 2018. This expense is attributable to the Company being in a net deferred tax asset position at the time of remeasurement. The company maintains a full valuation allowance.
On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The deferred tax expense recorded in connection with the remeasurement of deferred tax assets is a provisional amount and a reasonable estimate at December 31, 2017 based upon the best information currently available. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed.
3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception and has an accumulated deficit of $792,519 as of March 31, 2018. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These factors among others, raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties. The Company will require additional financing moving forward and is pursuing various strategies to accomplish this, including seeking equity funding and/or debt funding from private placement sources. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.
6
INTELLIGENT BUYING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. There are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
4. LOAN PAYABLE- RELATED PARTY
As of March 31, 2018 and December 31, 2017 management had advanced the Company amounts aggregating $36,090 for operating purposes. Advances are all due on demand with no interest payable.
5. STOCKHOLDERS (DEFICIENCY)
Preferred stock
At March 31, 2018 and December 31, 2017, the Company had no shares of its preferred stock issued and outstanding.
Common stock
At March 31, 2018 and December 31, 2017, the Company had 7,256,600 shares of its common stock issued and outstanding.
6. SUBSEQUENT EVENTS
As of May 31, 2018, AMS Encino Investments, Inc. (AMS) entered into a Common Stock Purchase Agreement (the Stock Purchase Agreement) pursuant to which AMS agreed to sell to Bagel Hole, Inc. (the Purchaser), the 5,753,333 shares of common stock (the Shares) of the Company owned by AMS, constituting approximately 79.3% of the Companys 7,256,600 issued and outstanding common shares, for $90,000. The transaction was consummated on June 15, 2018; and as a result of the sale there was a change of control of the Company. The Purchaser transferred 100,000 of those shares to unaffiliated persons. There is no family relationship or other relationship between AMS and the Purchaser.
As a result of the sale under the Stock Purchase Agreement, Hector Guerrero, who was CEO of AMS and was the Companys sole officer and director, resigned as the Companys sole officer and director, and appointed Philip Romanzi, who is the owner of the Purchaser, as the sole director of the Company. Mr. Romanzi is now the Companys sole officer and director.
The Company has evaluated subsequent events through the date these financial statements were issued. There have been no other events that would require adjustments to or disclosures in the financial statements.
7