Forward-Looking Statements
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains
forward-looking statements.
We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
General
The following discussion highlights
As at the date of this filing, the Company does not currently, nor does it intend, in the future to, maintain an ownership interest in any cannabis growing, marijuana dispensaries or production facilities. The Company does not grow, process, own, handle, transport, or sell cannabis or marijuana as the Company is organized and directed to operate strictly in accordance with all applicable state and federal laws.
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Basis of Presentation
The audited financial statements for our fiscal years ended
Overview
On
Following the share sales to
Furthermore, on
The current structure of the Company resulted from a purchase of voting control
of the Company by
After the closing of the transaction,
We used the acquisition of method of accounting for acquisition of subsidiaries
by the Group method to account for the purchase of
Strategy
The acquisition of control by the shareholders of
The Company ("CBDZ and KDCE" or "KDCE" or "CBDZ") will prioritize establishment
of CBD process control, protocols, and formulations standardization. The
Company will step up and pioneer the process to standardize and reorganize this
market, establish process control (benchmarks and protocols), and create
formulation standards for the CBD industry. Through Kid Castle, CBDZ seeks to
control the production and distribution of verities of consumer cannabidiol
(CBD) formulation under private brands in
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Plan of Operations for the Next Twelve Months
Kid Castle will need approximately
We intend to implement the following tasks within the next twelve months:
1. Month 1-3: Phase 1 (1-3 months in duration;$600,000 to$1 million in estimated fund receipt) a. Hire the 2 biologist/scientists, Henry and Leke, hire 1 bookkeepers, business development manager and officer manager to implement our business plan. b. Acquire and consolidate stakes in the operations of at least two select biopharma businesses. 2. Month 3-6 Phase 2 (1-3 months in duration; cost control, process improvements, admin & management.). a. Integrate acquired business into the Company's model - consolidate the operations of the businesses including integration of their accounting and finance systems, synchronization of their operating systems, and harmonization of their human resources functions. b. Complete and file quarterly reports and other required filings for the quarter 3. Month 6-9: Phase 3 (1-3 months in duration;$600,000 to$900,000 in estimated fund receipt) a. Identify and acquire complementary/similar businesses or assets in the target market 4. Month 9-12: Phase 4 (1-3 months duration; use acquired businesses' free cash flow for more acquisitions) a. Run the businesses efficiently, giving employees a conducive and friendly workplace and add value to investors and shareholders by identifying and reducing excesses and also identifying and executing growth strategies b. Acquire more businesses that are below their book-value or undervalued businesses, restructure the businesses, and sell the businesses for profit or hold them for cash flow. 5. Operating expenses during the twelve months would be as follows: a. For the six months throughFebruary 28, 2021 , we anticipate to incur general and other operating expenses of$388,000 . b. For the six months throughAugust 31, 2021 we anticipate to incur additional general and other operating expenses of$378,000 .
The execution of our current plan of operations requires us to raise significant additional capital immediately. If we are successful in raising capital through the sale of shares or borrowing, we believe that the Company will have sufficient cash resources to fund its plan of operations for the next twelve months. If we are unable to do so, our ability to continue as a going concern will be in jeopardy, likely causing us to curtail and possibly cease operations.
We continually evaluate our plan of operations discussed above to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations. The inability to secure additional capital would have a material adverse effect on us, including the possibility that we would have to sell or forego a portion or all of our assets or cease operations. If we discontinue our operations, we will not have sufficient funds to pay any amounts to our stockholders.
Even if we raise additional capital in the near future, if our current business plan is not successfully executed, our ability to fund our biopharmaceutical research and development, or our financial product deployment and services efforts would likely be seriously impaired. The ability of a biopharmaceutical research and development business and continuing operations is conditioned upon moving the development of products and services toward commercialization. If in the future we are not able to demonstrate adequate progress in the development and commercialization of our product, we will not be able to raise the capital we need to continue our business operations and business activities, and we will likely not have sufficient liquidity or cash resources to continue operating.
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Because our working capital requirements depend upon numerous factors there can be no assurance that our current cash resources will be sufficient to fund our operations. At present, we have no committed external sources of capital, and do not expect any significant product revenues for the foreseeable future. Thus, we will require immediate additional financing to fund future operations. There can be no assurance, however, that we will be able to obtain funds on acceptable terms, if at all.
Competition
Our business is highly competitive. We are in direct competition with more established biopharmaceutical companies, private equity firms, private investors and management companies. Many management companies offer similar products and services for business rollups and consolidations. We may be at a substantial disadvantage to our competitors who have more capital than we do to carry out acquisition, operations and restructuring efforts. These competitors may have competitive advantages, such as greater name recognition, larger capital-base, marketing, research and acquisition resources, access to larger customer bases and channel partners, a longer operating history and lower labor and development costs, which may enable them to respond more quickly to new or emerging opportunities and changes in customer requirements or devote greater resources to the development, acquisition and promotion.
Increased competition could result in us failing to attract significant capital or maintaining them. If we are unable to compete successfully against current and future competitors, our business and financial condition may be harmed.
We hope to maintain our competitive advantage by keeping abreast of market dynamism that is face by our industry, and by utilizing the experience, knowledge, and expertise of our management team. Moreover, we believe that we distinguish ourselves in the ways our model envisaged transformation of businesses.
Government Regulation
Our activities currently are subject to no particular regulation by governmental agencies other than that routinely imposed on corporate businesses. However, we may be subject to the rules governing acquisition and disposition of businesses, real estates and personal properties in each of the state where we have our operations. We may also be subject to various state laws designed to protect buyers and sellers of businesses. We cannot predict the impact of future regulations on either us or our business model. Once we commence our biopharmaceutical operations, we would be subject to many regulations that apply to pharmaceutical and medical industry participants.
Intellectual Property
We currently have no patents, trademarks or other registered intellectual property. We do not consider the grant of patents, trademarks or other registered intellectual property essential to the success of our business.
Employees
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We do not have a W-2 employee at the present.
The Company has no written employment contract or agreement with any person. Currently, we are not actively seeking additional employees or engaging any consultants through a formal written agreement or contract. Services are provided on an as-needed basis to date. This may change in the event that we are able to secure financing through equity or loans to the Company. As our company grows, we expect to hire more full-time employees.
Results of Operations
Results of Operations for the Three Months ended
Revenues - The Company recorded
Operating Expenses - Total operating expenses for the three months ended
Net Loss - Net loss for three months ended
Accumulated Deficit - As at
Liquidity and Capital Resources
Cash and Cash Equivalent- As at
Other Current Assets- Receivables - as at
Other Assets- As at
Related parties liabilities- As at
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For the three months period ended
Total Notes Payable for related and unrelated parties increased by
As of
Our principal sources of liquidity in the past has been cash generated from loans to us by our major shareholder. In order to be able to achieve our strategic goals, we need to further expand our business and implement our business plan. To continue to develop our business plan and generate sales, significant capital has been and will continue to be required. Management intends to fund future operations through private or public equity and/or debt offerings. We continue to engage in preliminary discussions with potential investors and broker-dealers, but no terms have been agreed upon. There can be no assurances, however, that additional funding will be available on terms acceptable to us, or at all. Any equity financing may be dilutive to existing shareholders. We do not currently have any contractual restrictions on our ability to incur debt and, accordingly we could incur significant amounts of indebtedness to finance operations. Any such indebtedness could contain covenants which would restrict our operations.
Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. Our ability to continue as a going concern is dependent upon our ability to raise additional debt or equity funding to meet our ongoing operating expenses and ultimately in merging with another entity with experienced management and profitable operations. No assurances can be given that we will be successful in achieving these objectives.
We have not established revenue generating operations and will be dependent upon obtaining financing to pursue any future extensive acquisitions and activities. The revenues, if any, generated from our operations or acquisitions may not be sufficient to fund our operations or planned growth. We will require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means.
We will now be obligated to file annual, quarterly and current reports with the
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Off-Balance Sheet Arrangements
As of
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in
Based on this definition, we have identified the critical accounting policies and judgments addressed which are described in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.
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