CAHO 10-Q
Caro Holdings Inc. (CAHO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For the quarterly period ended
or
For the transition period from __________ to ___________
Commission File Number
(Exact name of registrant as specified in its charter) |
|
|
|
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
|
|
|
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS
|
|
| ||
|
|
|
| |
| 3-7 |
| ||
Management’s Discussion and Analysis of Financial Condition or Plan of Operation |
| 8-12 |
| |
| 13 |
| ||
| 13 |
| ||
|
|
|
| |
|
|
| ||
|
|
|
| |
| 14 |
| ||
| 14 |
| ||
| 14 |
| ||
| 14 |
| ||
| 14 |
| ||
| 14 |
| ||
| 15 |
| ||
| 16 |
| ||
| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited interim financial statements for the nine months ended December 31, 2021 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
CARO HOLDINGS INC.
BALANCE SHEETS
|
| December 31, |
|
| March 31, |
| ||
|
| 2021 |
|
| 2021 |
| ||
|
| (Unaudited) |
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Due to related party |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Stockholders' Deficit |
|
|
|
|
|
|
|
|
Preferred stock: 75,000,000 authorized; $0.00001 par value. No shares issued and outstanding |
|
|
|
|
|
| ||
Common stock: 75,000,000 authorized; $0.00001 par value 7,705,000 shares issued and outstanding |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders' Deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited financial statements.
| 3 |
| Table of Contents |
CARO HOLDINGS INC.
STATEMENTS OF OPERATIONS
(Unaudited)
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| December 31, |
|
| December 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administration |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share – Basic and Diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
| Table of Contents |
CARO HOLDINGS INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
|
| Common Stock |
|
| Additional |
|
|
|
| Total |
| |||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| Stockholder's Deficit |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance - March 31, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - June 30, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - September 30, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - December 31, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
| Common Stock |
|
| Additional |
|
|
|
| Total |
| |||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| Stockholder's Deficit |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance - March 31, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - June 30, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - September 30, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance - December 31, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||
The accompanying notes are an integral part of these unaudited financial statements.
| 5 |
| Table of Contents |
CARO HOLDINGS INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Nine Months Ended |
| |||||
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Operating Activities: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
|
|
| ( | ) | |
Accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Net Cash Used in Operating Activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Advancement from related party |
|
|
|
|
|
| ||
Net Cash Provided by Financing Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net Changes in Cash and Cash Equivalents |
|
|
|
|
| ( | ) | |
Cash and Cash Equivalents, beginning of period |
|
|
|
|
|
| ||
Cash and Cash Equivalents, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Disclosure Information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Operating expenses paid by related party |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited financial statements.
| 6 |
| Table of Contents |
CARO HOLDINGS INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Caro Holdings Inc. (the “Company”) was incorporated in the State of Nevada on March 29, 2016 and is engaged in the subscription box business with its initial focus on offering sock subscriptions to its customers.
NOTE 2 - GOING CONCERN UNCERTAINTY
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $
Management believes that the current actions to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year.
This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended March 31, 2021 included in the Company’s Annual Report on Form 10-K as filed with the SEC on June 23, 2021.
Related Parties
We follow ASC 850, ”Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 4).
NOTE 4 – RELATED PARTY TRANSACTIONS
During the nine months ended December 31, 2021 and 2020, the sole director and Chief Executive Officer (“CEO”) of the Company paid $
During the nine months ended December 31, 2021 and 2020, the sole director and Chief Executive Officer (“CEO”) of the Company advanced $
As of December 31, 2021 and March 31, 2021, there was $
| 7 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. 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 quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Caro Holdings Inc., unless otherwise indicated.
General Overview
Our company was incorporated on March 29, 2016 in the State of Nevada.
We are engaged in the subscription box business with our initial focus on offering sock subscriptions to our customers. Our subscription box will be a package of a pair of socks that will be sent directly to a customer on a recurring basis. For example, a potential subscriber will subscribe to receive a pair of socks once a month for either a period of 6 months or 12 months. Our subscription sock boxes are a marketing strategy and a method of product distribution, allowing us to target a wide range of customers and cater to their variety of specific needs and interests.
We are a small early stage company. To date, our company’s activities have been limited to the sourcing of our advertising channels, initial branding efforts, and in our formation and the raising of equity capital.
We have no revenues for the reporting period and have limited cash on hand. We have sustained losses since inception and have relied upon loans from directors and officers and the sale of our securities for funding. We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.
Our business and corporate address is 28th Floor Cityland Pasong Tamo Tower U2807, 2210 Chino Roces Avenue (Pasong Tamo), Makati City, Philippines 1230. Our telephone number is +632 893-0909 and our registered agent for service of process is Resident Agents of Nevada Inc. 711 S Carson Street, Suite 4, Carson City, NV, 89701. Our corporate website is http://www.caroholdings.com/.
We do not have any subsidiaries.
| 8 |
| Table of Contents |
Our Current Business
We are engaged in the subscription box business with our initial focus on offering sock subscriptions to our customers. Our subscription box will be a package of a pair of socks that will be sent directly to a customer on a recurring basis. For example, a potential subscriber will subscribe to receive a pair of socks once a month for either a period of 6 months or 12 months. Our subscription sock boxes are a marketing strategy and a method of product distribution, allowing us to target a wide range of customers and cater to their variety of specific needs and interests.
A subscription box is a package of retail products sent directly to a customer on a recurring basis. Subscription boxes are a marketing strategy and a method of product distribution. Subscription boxes are used by subscription-based ecommerce businesses, referred to as “subcom” for short, which follow a subscription business model. The subcom aims to target a wide range of customers and cater to a variety of specific needs and interests. The subscription box industry is nascent, so there exists minimal data. It is estimated that there are 400 to 600 different kinds of subscription boxes in the United States alone and more overseas.1 Subscriptions vary in both cost and frequency, making them more accessible to a greater range of customers with different socioeconomic backgrounds. Subscription boxes tend to range from $10 to $100.2 The use of subscription boxes is rising in popularity among both consumers and businesses. Subscription commerce is suitable for a wide range of markets.3 Large scale retailers like Walmart, Amazon.com, CVS Pharmacy, Freshpair, and Lancôme use subscription commerce. Small scale, local groups also utilize subscription boxes. Products are limited only to what can be shipped and downloaded. Despite this, some products, such as smaller and lighter products, are better suited for subscription boxes than others.4
We have developed our preliminary website, www.caroholdings.com, and are in the process of developing a more advanced site where we can provide more detailed information regarding our products and shopping cart. This will cost us around $15,000. We intend to source this work to third party consultants and this project will be spearheaded by our officer and director. We expect our advanced site to be ready by the end of March 2022.
__________
1 Jayakumar, A. (2014, April 7). Little-box retailing: Subscription services offer new possibilities to consumers, major outlets. Retrieved November 30, 2014, from http://www.washingtonpost.com/business/economy/tktktktk/2014/04/07/f68135b6-a92b-11e3-8d62-419db477a0e6_story.html
2 Hutt, K. (2014, April 8). Subscription Boxes Can Feel Like Christmas, But Are They Worth It? Retrieved November 30, 2014, from http://www.bbb.org/blog/2014/04/subscription-boxes-can-feel-like-christmas-but-are-they-worth-it/
3 Hayes, M. (2014, May 16). Subscription Boxes: Are They Worth The Money? Retrieved November 25, 2014, from http://www.forbes.com/sites/learnvest/2014/05/16/subscription-boxes-are-they-worth-the-money
4 Alvo, Greg. “5 Steps to a Successful Convenience Commerce Model”. Multichannel Merchant. Access Intelligence. Retrieved 21 October 2014.
Results of Operations
Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020
|
| Three Months Ended |
|
|
|
|
|
|
| |||||||
|
| December 31, |
|
| Change |
|
| Change |
| |||||||
|
| 2021 |
|
| 2020 |
|
| Amount |
|
| Percentage |
| ||||
Operating expenses |
| $ | 9,133 |
|
| $ | 7,818 |
|
| $ | 1,315 |
|
|
| 17 | % |
Loss from operations |
|
| (9,133 | ) |
|
| (7,818 | ) |
|
| (1,315 | ) |
|
| 17 | % |
Net loss |
| $ | (9,133 | ) |
| $ | (7,818 | ) |
| $ | (1,315 | ) |
|
| 17 | % |
During the three months ended December 31, 2021 and 2020, we did not generate revenues.
Operating expenses for the three months ended December 31, 2021 consisted of consulting fees, audit and accounting fees, transfer agent fees, office rent expense and office general expenses. The increase in operating expenses was primarily as a result of increase in professional fees.
| 9 |
| Table of Contents |
Nine Months Ended December 31, 2021 Compared to Nine Months Ended December 31, 2020
|
| Nine Months Ended |
|
|
|
|
|
|
| |||||||
|
| December 31, |
|
| Change |
|
| Change |
| |||||||
|
| 2021 |
|
| 2020 |
|
| Amount |
|
| Percentage |
| ||||
Operating expenses |
| $ | 43,412 |
|
| $ | 20,357 |
|
|
| 23,055 |
|
|
| 113 | % |
Loss from operations |
|
| (43,412 | ) |
|
| (20,357 | ) |
|
| (23,055 | ) |
|
| 113 | % |
Net loss |
| $ | (43,412 | ) |
| $ | (20,357 | ) |
| $ | (23,055 | ) |
|
| 113 | % |
During the nine months ended December 31, 2021 and 2020, we did not generate revenues.
Operating expenses for the nine months ended December 31, 2021 consisted of consulting fees, audit and accounting fees, transfer agent fees, office rent expense and office general expenses. The increase in operating expenses was primarily as a result of increase in professional fees including DTC application fees of $18,000 incurred during the nine months ended December 31, 2021.
Liquidity and Financial Condition
Working Capital (Deficiency)
|
| December 31, 2021 |
|
| March 31, 2021 |
| ||
Current Assets |
| $ | 1,438 |
|
| $ | 3,929 |
|
Current Liabilities |
|
| 141,132 |
|
|
| 100,211 |
|
Working Capital (Deficiency) |
| $ | (139,694 | ) |
| $ | (96,282 | ) |
Our total current assets as of December 31, 2021 were $1,438 as compared to total current assets of $3,929 as of March 31, 2021.
Our total current liabilities as of December 31, 2021 were $141,132 as compared to total current liabilities of $100,211 as of March 31, 2021. The increase was attributed by an increase in due to related party and accounts payable and accrued liabilities.
Working capital deficiency increased from $96,282 as of March 31, 2021 to $139,694 as of December 31, 2021 mainly due to an increase in due to related party and accounts payable and accrued liabilities.
The report of our auditors on our audited financial statements for the fiscal year ended March 31, 2021, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved limited operating revenues since our inception. We have been dependent on sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.
Cash Flows
|
| Nine Months Ended |
| |||||
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cash used in Operating Activities |
| $ | (491 | ) |
| $ | (472 | ) |
Cash provided by Financing Activities |
| $ | 500 |
|
| $ | 350 |
|
Net changes in cash during period |
| $ | 9 |
|
| $ | (122 | ) |
| 10 |
| Table of Contents |
Operating Activities
For the nine months ended December 31, 2021, net cash used in operating activities was $491, related to our net loss of $40,912, decreased by an increase in accounts payable and accrued liabilities of $40,421.
For the nine months ended December 31, 2020, net cash used in operating activities was $472, related to our net loss of $20,357, decreased by an increase in accounts payable and accrued liabilities of $19,885.
Investing Activities
We did not use any funds for investing activities for the nine months ended December 31, 2021 and 2020.
Financing Activities
For the nine months ended December 31, 2021 and 2020, net cash provided by financing activities was $500 and $350, respectively, derived from director’s advancement.
Cash Requirements
We will require additional cash as we expand our business. Initially, to carry out our business plan, we will need to raise additional capital. There can be no assurance that we will be able to raise additional capital or, if we are able to raise additional capital, the terms we be acceptable to us. Currently we do not have any inventory.
These conditions indicate a material uncertainty that casts significant doubt about our ability to continue as a going concern. We require additional debt or equity financing to have the necessary funding to continue operations and meet our obligations. We have continued to adopt the going concern basis of accounting in preparing our financial statements.
We will require additional financing in order to enable us to proceed with our plan of operations. There is no assurance that any party will advance additional funds to us in order to continue our future plans for operations.
We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
Basis of Presentation
The financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”).
Use of Estimates
In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.
| 11 |
| Table of Contents |
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and highly liquid short-term deposits which are unrestricted as to withdrawal and use, and which have maturities of three months or less when purchased.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.
Our Company’s financial instruments include cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities. It is management’s opinion that the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
Management believes it is not practical to determine the fair value of accounts payable and accrued liabilities, and note payable to related parties and lease and management arrangement with related parties, if any, because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.
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.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed similar to basic net income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. If applicable, diluted net income per share assumes the conversion, exercise or issuance of all common stock instruments, such as convertible notes, unless the effect is to reduce a loss or increase earnings per share.
Income Taxes
Income tax expense is based on reported income before income taxes. Our company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 as income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
| 12 |
| Table of Contents |
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. Our company’s management believes that these recent pronouncements will not have a material effect on our company’s financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also 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. Based on her evaluation as of the end of the period covered by this report, Rozh Caroro, our President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director, has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting.
As disclosed in our Quarterly Report on Form 10-Q for the nine months ended December 31, 2021, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of December 31, 2021, due to inadequate segregation of duties and ineffective risk management, and insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management believes the above weakness constitute material weaknesses in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.
Changes in Internal Control over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
| 13 |
| Table of Contents |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
| 14 |
| Table of Contents |
Item 6. Exhibits
Exhibit Number |
| Description |
(3) |
| Articles of Incorporation and Bylaws |
Bylaws (Incorporated by reference to our Registration Statement on Form S-2 filed on June 27, 2016) | ||
(31) |
| Rule 13a-14 (d)/15d-14d) Certifications |
(32) |
| Section 1350 Certifications |
101* |
| Interactive Data File |
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.
| 15 |
| Table of Contents |
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.
| CARO HOLDINGS INC. |
| |
| (Registrant) |
| |
|
|
|
|
Dated: February 14, 2022 |
| /s/ Rozh Caroro |
|
| Rozh Caroro |
| |
| President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director |
| |
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
|
| 16 |