UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
or
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________
Commission File Number 333-212268
CARO HOLDINGS INC. |
(Exact name of registrant as specified in its charter) |
Nevada |
| 93-2109546 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
|
|
|
7 Castle Street, Sheffield, UK |
| S3 8LT |
(Address of principal executive offices) |
| (Zip Code) |
(786) 755-3210
(Registrant’s telephone number, including area code)
(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. ☒ Yes ☐ NO
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). ☒ Yes ☐ NO
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 | ☐ |
Non-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) ☐ YES ☒ NO
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.
36,505,000 shares of common stock issued and outstanding as of February 23, 2024
TABLE OF CONTENTS
| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
CARO HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| December 31, |
|
| March 31, |
| ||
|
| 2023 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| $ | 2,503 |
|
| $ | 2,279 |
|
Other receivable |
|
| 401 |
|
|
| - |
|
Promissory note receivable |
|
| 47,054 |
|
|
| 6,000 |
|
Interest receivable |
|
| 1,232 |
|
|
| 13 |
|
Deferred business acquisition cost |
|
| 161,895 |
|
|
| - |
|
Total Current Assets |
|
| 213,085 |
|
|
| 8,292 |
|
|
|
|
|
|
|
|
|
|
Software |
|
| 258,000 |
|
|
| 258,000 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 471,085 |
|
| $ | 266,292 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ | 72,611 |
|
| $ | 40,476 |
|
Accrued interest payable |
|
| 27,547 |
|
|
| 5,290 |
|
Due to related parties |
|
| 62,634 |
|
|
| 53,622 |
|
Promissory notes payable |
|
| 28,900 |
|
|
| 25,000 |
|
Convertible notes payable |
|
| 651,166 |
|
|
| 266,666 |
|
Total Current Liabilities |
|
| 842,858 |
|
|
| 391,054 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| 842,858 |
|
|
| 391,054 |
|
|
|
|
|
|
|
|
|
|
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. 36,505,000 shares and 60,000,000 shares issued and outstanding, respectively |
|
| 365 |
|
|
| 600 |
|
Additional paid in capital |
|
| 645,958 |
|
|
| 442,828 |
|
Accumulated deficit |
|
| (1,007,430 | ) |
|
| (563,910 | ) |
Accumulated other comprehensive loss |
|
| (10,666 | ) |
|
| (4,280 | ) |
Total Stockholders' Deficit |
|
| (371,773 | ) |
|
| (124,762 | ) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | 471,085 |
|
| $ | 266,292 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
CARO HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| December 31, |
|
| December 31, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 521 |
|
| $ | - |
|
| $ | 521 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administration |
| $ | 6,184 |
|
| $ | 4,394 |
|
| $ | 14,411 |
|
| $ | 4,394 |
|
Professional fees |
|
| 45,311 |
|
|
| 49,109 |
|
|
| 94,213 |
|
|
| 85,556 |
|
Management consulting fees - related party |
|
| 7,495 |
|
|
| 49,453 |
|
|
| 17,487 |
|
|
| 49,453 |
|
Software and website development |
|
| 18,879 |
|
|
| - |
|
|
| 129,740 |
|
|
| - |
|
Total operating expenses |
|
| 77,869 |
|
|
| 102,956 |
|
|
| 255,851 |
|
|
| 139,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| (77,348 | ) |
|
| (102,956 | ) |
|
| (255,330 | ) |
|
| (139,403 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (47,450 | ) |
|
| (75,218 | ) |
|
| (192,455 | ) |
|
| (75,218 | ) |
Interest income |
|
| 701 |
|
|
| - |
|
|
| 1,219 |
|
|
| - |
|
Foreign exchange gain |
|
| 8,209 |
|
|
| 1,607 |
|
|
| 3,046 |
|
|
| 1,607 |
|
Total other income (expense) |
|
| (38,540 | ) |
|
| (73,611 | ) |
|
| (188,190 | ) |
|
| (73,611 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before taxes |
|
| (115,888 | ) |
|
| (176,567 | ) |
|
| (443,520 | ) |
|
| (213,014 | ) |
Provision for income taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Net loss |
| $ | (115,888 | ) |
|
| (176,567 | ) |
| $ | (443,520 | ) |
| $ | (213,014 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
| (12,007 | ) |
|
| (1,707 | ) |
|
| (6,386 | ) |
|
| (1,707 | ) |
Comprehensive Loss |
|
| (127,895 | ) |
|
| (178,274 | ) |
|
| (449,906 | ) |
|
| (214,721 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share – Basic and Diluted |
| $ | (0.00 | ) |
|
| (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
| 30,019,674 |
|
|
| 40,000,000 |
|
|
| 42,394,348 |
|
|
| 40,000,000 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 4 |
| Table of Contents |
CARO HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022
(Unaudited)
Nine Months Ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| ||||||
|
| Common Stock |
|
| Additional |
|
|
|
|
| Other |
|
| Total |
| |||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| Comprehensive Loss |
|
| Stockholder's Deficit |
| ||||||
Balance - March 31, 2023 |
|
| 60,000,000 |
|
| $ | 600 |
|
| $ | 442,828 |
|
| $ | (563,910 | ) |
| $ | (4,280 | ) |
| $ | (124,762 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,650 | ) |
|
| (4,650 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (146,246 | ) |
|
| - |
|
|
| (146,246 | ) |
Balance - June 30, 2023 |
|
| 60,000,000 |
|
| $ | 600 |
|
| $ | 442,828 |
|
| $ | (710,156 | ) |
| $ | (8,930 | ) |
| $ | (275,658 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common stock from related party |
|
| (36,865,000 | ) |
|
| (369 | ) |
|
| 369 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Issuance of common stock for conversion of convertible note |
|
| 600,000 |
|
|
| 6 |
|
|
| 29,994 |
|
|
| - |
|
|
| - |
|
|
| 30,000 |
|
Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,271 |
|
|
| 10,271 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (181,386 | ) |
|
| - |
|
|
| (181,386 | ) |
Balance - September 30, 2023 |
|
| 23,735,000 |
|
| $ | 237 |
|
| $ | 473,191 |
|
| $ | (891,542 | ) |
| $ | 1,341 |
|
| $ | (416,773 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for conversion of convertible note |
|
| 220,000 |
|
|
| 2 |
|
|
| 10,998 |
|
|
| - |
|
|
| - |
|
|
| 11,000 |
|
Issuance of common stock for deferred business acquisition cost |
|
| 12,550,000 |
|
|
| 126 |
|
|
| 161,769 |
|
|
| - |
|
|
| - |
|
|
| 161,895 |
|
Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (12,007 | ) |
|
| (12,007 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (115,888 | ) |
|
| - |
|
|
| (115,888 | ) |
Balance - December 31, 2023 |
|
| 36,505,000 |
|
| $ | 365 |
|
| $ | 645,958 |
|
| $ | (1,007,430 | ) |
| $ | (10,666 | ) |
| $ | (371,773 | ) |
Nine Months Ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||||
|
| Common Stock |
|
| Additional |
|
|
|
| Other |
|
| Total |
| ||||||||||
|
| Number of Shares |
|
| Amount |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| Comprehensive Loss |
|
| Stockholder's Deficit |
| ||||||
Balance - March 31, 2022 |
|
| 40,000,000 |
|
| $ | 400 |
|
| $ | 185,028 |
|
| $ | (207,431 | ) |
| $ | - |
|
| $ | (22,003 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (10,572 | ) |
|
| - |
|
|
| (10,572 | ) |
Balance - June 30, 2022 |
|
| 40,000,000 |
|
| $ | 400 |
|
| $ | 185,028 |
|
| $ | (218,003 | ) |
| $ | - |
|
| $ | (32,575 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (25,875 | ) |
|
| - |
|
|
| (25,875 | ) |
Balance - September 30, 2022 |
|
| 40,000,000 |
|
| $ | 400 |
|
| $ | 185,028 |
|
| $ | (243,878 | ) |
| $ | - |
|
| $ | (58,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,707 | ) |
|
| (1,707 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (176,567 | ) |
|
| - |
|
|
| (176,567 | ) |
Balance - December 31, 2022 |
|
| 40,000,000 |
|
| $ | 400 |
|
| $ | 185,028 |
|
| $ | (420,445 | ) |
| $ | (1,707 | ) |
| $ | (236,724 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
CARO HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Nine Months Ended |
| |||||
|
| December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Operating Activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (443,520 | ) |
| $ | (213,014 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Loss on convertible notes |
|
| 170,200 |
|
|
| 73,333 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Interest receivable |
|
| (1,219 | ) |
|
| - |
|
Other receivable |
|
| (315 | ) |
|
| - |
|
Accounts payable and accrued liabilities |
|
| 30,352 |
|
|
| 48,896 |
|
Accrued interest payable |
|
| 22,257 |
|
|
| 1,885 |
|
Management salary payable |
|
| 10,045 |
|
|
| - |
|
Net Cash Used in Operating Activities |
|
| (212,200 | ) |
|
| (88,900 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Advancement on loan receivable |
|
| (41,054 | ) |
|
| - |
|
Net Cash Used in Investing Activities |
|
| (41,054 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of promissory note |
|
| 3,900 |
|
|
| 25,000 |
|
Proceeds from issuance of convertible notes |
|
| 255,300 |
|
|
| 110,000 |
|
Advancement from related party |
|
| - |
|
|
| 1,976 |
|
Net Cash Provided by Financing Activities |
|
| 259,200 |
|
|
| 136,976 |
|
|
|
|
|
|
|
|
|
|
Effects on changes in foreign exchange rate |
|
| (5,722 | ) |
|
| (1,707 | ) |
|
|
|
|
|
|
|
|
|
Net Changes in Cash |
|
| 224 |
|
|
| 46,369 |
|
Cash, beginning of period |
|
| 2,279 |
|
|
| - |
|
Cash, end of period |
| $ | 2,503 |
|
| $ | 46,369 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure Information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | - |
|
| $ | - |
|
Cash paid for taxes |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Operating expenses paid by related parties |
| $ | - |
|
| $ | 50,345 |
|
Cancellation of common stock from related party |
| $ | 369 |
|
| $ | - |
|
Issuance of common stock for conversion of convertible note |
| $ | 41,000 |
|
| $ | - |
|
Issuance of common stock for deferred business acquisition cost |
| $ | 161,895 |
|
| $ | - |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
CARO HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Caro Holdings Inc. (the “Company”) was incorporated on March 29, 2016 in the State of Nevada. Initially the Company engaged in the subscription box business with a focus on offering sock subscriptions to our customers. Our subscription box was a package of a pair of socks sent directly to a customer on a recurring basis. The Company was controlled and operated by Rozh Caroro from inception till April of 2022.
Effective April 28, 2022, Rozh Caroro, the previous sole director, CEO and majority shareholder of the Company, entered into a stock purchase agreement and sold controlling interest of the Company to Christopher McEachnie. Rozh Caroro resigned her positions with the Company and Christopher McEachnie was appointed as Chief Executive Officer, Treasurer and Secretary, and sole Director of the Company. His job was to increase shareholder value by looking for opportunities in the digital space.
Mr. McEachnie began to seek experienced operators to assist in the development of the company. On September 21, 2022, the Company incorporated a subsidiary Caro Holdings International Ltd. and appointed Meriesha Rennalls to streamline operations, hire employees, consultants and contractors including the development of a software and ecommerce platform. Between September 2022 and December 2023, the Company produced a platform that can be used for a variety of businesses including B2B, B2C and D2C. The core product is now complete and the company is soliciting clients in multiple industries. The subsidiary will continue to modify and enhance the ecommerce software for its chosen vertical markets and will allow those community to sell, market and distribute their products. The Company intends to create subsidiaries in markets where it perceives a significant sales opportunity.
Effective December 31, 2022, the Company issued 20,000,000 shares to Noise Comms Limited and subsequently the 36,795,000 shares were returned to Treasury and were cancelled, such that indirectly Meriesha Rennalls now holds approximately 53% of the issued and outstanding shares of Common Stock of the Company, and as such she is able to control the election of our board of directors, approve all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
Prior to September 2022, we were an early-stage company and our activities had been limited to the to the formation of our business strategy and the raising of funds to support our mission.
The Company is now engaged in the deployment of our B2B, B2C and Direct to Consumer (D2C) systems and methodologies where we target specific vertical markets. We look for small to mid-size brands that have a strong brick-and-mortar presence and have a desire to increase their digital presence.
NOTE 2 – GOING CONCERN UNCERTAINTY
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $1,007,430, and a net loss of $443,520 for the nine months ended December 31, 2023. The Company started to generate revenues of $521 during the three months ended December 31, 2023. These factors among others raise substantial doubt about our ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 consolidated 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, 2023 included in the Company’s Annual Report on Form 10-K as filed with the SEC on July 14, 2023.
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Basis of Consolidation
These unaudited interim consolidated financial statements include the accounts of the Company and the wholly-owned subsidiary Caro Holdings International, Ltd. All material intercompany balances and transactions have been eliminated.
Foreign Currency Translations
The Company’s functional and reporting currency is the U.S. dollar. Caro Holdings International, Ltd.’s functional currency is the Great British Pounds (GBP). All transactions initiated in GBP are translated into U.S. dollars in accordance with ASC 830-30, ”Translation of Financial Statements,” as follows:
| 1) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. |
| 2) | Equity at historical rates. |
| 3) | Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss). Gains and losses from foreign currency transactions are included in earnings in the period of settlement.
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| Nine Months Ended |
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| Nine Months Ended |
| ||
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Spot GBP: USD exchange rate |
|
| 1.2730 |
|
|
| 1.2051 |
|
Average GBP: USD exchange rate |
|
| 1.2534 |
|
|
| 1.1749 |
|
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Company’s revenue derives from monthly fee from online ecommerce service where users can sign up and setup their own online shops.
Intangible Assets
The Company accounts for intangible assets (including trademarks and formula) in accordance with ASC 350 “Intangibles-Goodwill and Other.”
ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted. (Note 5)
Related Parties
We follow ASC 850, “Related Party Disclosures”, for the identification of related parties and disclosure of related party transactions. (Note 9)
Fair Value of Financial Instruments
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including accounts payable and accrued liabilities. are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - | quoted prices in active markets for identical assets or liabilities |
Level 2 - | quoted prices for similar assets and liabilities in active markets or inputs that are observable |
Level 3 - | inputs that are unobservable (for example cash flow modeling inputs based on assumptions) |
Convertible Note
The Company follows ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”) in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives. The Company records each convertible note as a liability at the fixed monetary amount by measuring and recording a premium, as applicable, on the note issuance date with a charge to interest expense in the accompanying consolidated statements of operations and comprehensive loss.
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Software Development
The Company accounts for all software purchased and software development costs in accordance with FASB ASC 985-20 “Software”. Accordingly, all costs incurred prior to establishing technological feasibility are expensed and software purchased or developed with established technological feasibility are capitalized. Software purchased is recorded at cost and depreciated using the straight-line method upon implementation with an estimated useful life of seven years.
As of December 31, 2023, purchased software of $258,000 was capitalized and none of the costs associated with software development met the criteria for capitalization. During the nine months ended December 31, 2023 and 2022, the Company incurred $128,242 and $0 software development cost, respectively.
Web Development Cost
In accordance with FASB ASC 350-50 “Web Development Costs”, all costs incurred during the website planning stage are incurred. During the website application and infrastructure development stage, software tool costs and internet domain costs are capitalized, and website hosting costs are expensed. Cost incurred in the graphics development, content development and operating stage are generally expensed unless the costs are software related and should then be capitalized. During the nine months ended December 31, 2023 and 2022, the Company incurred $1,498 and $6,463 web development cost, respectively.
Net Income (Loss) per Share
The Company computes basic and diluted net loss per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted loss per share reflects the potential dilution that could occur if convertible notes to issue common stock were converted resulting in the issuance of common stock that could share in the loss of the Company.
For the nine ended December 31, 2023 and 2022, convertible notes were dilutive instruments and were not included in the calculation of diluted loss per share as their effect would be antidilutive.
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| December 31, |
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| December 31, |
| ||
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| 2023 |
|
| 2022 |
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|
| (Shares) |
|
| (Shares) |
| ||
Convertible notes payable |
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| 651,166 |
|
|
| 183,333 |
|
|
|
| 651,166 |
|
|
| 183,333 |
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Recently Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
NOTE 4 – DEFERRED BUSINESS ACQUISITION COST
On November 14, 2023, the Company agreed to acquire a marketplace provider in the spirits industry, a non-affiliated corporation based in Wyoming, under which the Company will issue, on a pro-rata basis, up to 12,550,000 shares of common stock based on the acquiree’s reaching future milestones in exchange for 100% of the issued and outstanding shares of the acquiree making it a wholly owned subsidiary of the Company. The shares will remain in escrow with the Company until those milestones.
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On November 17, 2023, the Company issued 12,550,000 shares of common stock at $0.0129 deemed share price (based on the latest arm-length share transaction price in April 2022) valued at $161,895 into an escrow account. The future release of the common stock will depend on the acquiree’s reaching the following milestones:
| · | Upon acquiree’s achieving $250,000 in net revenue, 25% (3,137,500 shares) of the common stock held in escrow will be released to the acquiree’s shareholders. |
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|
|
| · | Upon acquiree’s achieving $500,000 in net revenue, 25% (3,137,500 shares) of common stock held in escrow will be released to the acquiree’s shareholders. |
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|
|
| · | Upon acquiree’s achieving $1,000,000 in net revenue, 50% (6,275,000 shares) of common stock held in escrow will be released to the acquiree’s shareholders. |
As of December 31, 2023, the business acquisition has not been completed. The acquisition is expected to be completed during the 4th quarter of fiscal year 2023 (three months ended March 31, 2024).
NOTE 5 – INTANGIBLE ASSETS PURCHASE
On December 29, 2022, the Company entered into a software purchase agreement with Noise Comms Ltd. for the acquisition of software for a Unified Communications Platform which enables multi-party communications between brands and consumers in consideration of 20,000,000 shares of common stock. For the last six years, the director and COO of the Company has been operating Noise Comms Ltd and is the sole shareholder, COO and director. On January 9, 2023, the Company issued 20,000,000 shares of common stock at $0.0129 deemed share price (based on the latest arm-length share transaction price in April 2022) to Noise Comms Ltd. for the acquisition of the software valued at $258,000.
The software will be amortized over estimated useful life of seven years following launch of the service planned during the 4th quarter of fiscal year 2023 (three months ended March 31, 2024). As of December 31, 2023 and March 31, 2023, the intangible asset was $258,000. Based on the carrying value of finite-lived intangible assets as of December 31, 2023, the amortization expense for the next seven years will be as follows:
|
| Amortization |
| |
Year Ended March 31, |
| Expense |
| |
2024 |
| $ | 18,429 |
|
2025 |
|
| 36,857 |
|
2026 |
|
| 36,857 |
|
2027 |
|
| 36,857 |
|
2028 |
|
| 36,857 |
|
Thereafter |
|
| 92,143 |
|
|
| $ | 258,000 |
|
NOTE 6 – PROMISSORY NOTE RECEIVABLE
On March 20, 2023, the Company signed an agreement with an unaffiliated company for a loan receivable amount of up to $15,000. The loan bears interest at 8% per annum and has a six month term. During the nine months ended December 31, 2023, the Company issued $5,000 in loan receivable to the unaffiliate. As of December 31 2023 and March 31, 2023, the loan receivable was $11,000 and $6,000, respectively. As of December 31, 2023 and March 31, 2023, the loan interest receivable was $627 and $13, respectively.
On June 1, 2023, the Company signed an agreement with an unaffiliated company for a loan receivable amount of up to $5,000. The loan bears interest at 8% per annum and has a six month term. During the nine months ended December 31, 2023, the Company issued $6,554 in loan receivable to the unaffiliate. As of December 31, 2023 and March 31, 2023, the loan receivable was $6,554 and $0, respectively. As of December 31, 2023 and March 31, 2023, the loan interest receivable was $132 and $0, respectively.
On September 14, 2023, the Company signed an agreement with an unaffiliated company for a loan receivable amount of up to $20,000. The loan bears interest at 8% per annum and has a six month term. During the nine months ended December 31, 2023, the Company issued $20,000 in loan receivable to the unaffiliate. As of December 31, 2023 and March 31, 2023, the loan receivable was $20,000 and $0, respectively. As of December 31, 2023 and March 31, 2023, the loan interest receivable was $473and $0, respectively.
On November 30, 2023, the Company signed an agreement with an unaffiliated company for a loan receivable amount of up to $9,500. The loan is non-interest bearing and has a six month term. During the nine months ended December 31, 2023, the Company issued $9,500 in loan receivable to the unaffiliate. As of December 31, 2023 and March 31, 2023, the loan receivable was $9,500 and $0, respectively.
As of December 31, 2023 and March 31, 2023, the total loan receivable was $47,054 and $6,000, respectively. As of December 31, 2023 and March 31, 2023, total loan interest receivable was $1,232 and $13, respectively.
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NOTE 7 – PROMISSORY NOTES PAYABLE
On October 9, 2022, the Company issued a $25,000 promissory note to an unaffiliated party. The note bears interest at 8% per annum and matures in six months from the issuance date.
On April 3, 2023, the Company issued a $3,900 promissory note to an unaffiliated party. The note bears interest at 8% per annum and matures in six months from the issuance date.
As of December 31, 2023 and March 31, 2023, the promissory note payable was $28,900 and $25,000, respectively. As of December 31, 2023 and March 31, 2023, the accrued interest payable was $2,675 and 948, respectively.
NOTE 8 – CONVERTIBLE NOTES PAYABLE
As of December 31, 2023 and March 31, 2023, the total principal balance of the convertible notes payable was $651,166 and $266,666, respectively.
On October 13, 2022, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $20,000. The convertible promissory note bears interest at 10% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s’ stock during the previous 15 trading days prior to conversion. Debt premium of $13,333 was recognized as a loss on convertible note and charged to interest expense. During the nine months ended December 31, 2023, principal amount of $1,000 was converted to 20,000 shares of common stock. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $32,333.
On November 8, 2022, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $70,000. The convertible promissory note bears interest at 8% per annum and matures one year from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $46,667 was recognized as a loss on convertible note and charged to interest expense. During the nine months ended December 31, 2023, principal amount of $30,000 was converted to 600,000 shares of common stock. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $86,667 and $116,667, respectively.
On November 19, 2022, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $20,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $13,333 was recognized as a loss on convertible note and charged to interest expense. During the nine months ended December 31, 2023, principal amount of $10,000 was converted to 200,000 shares of common stock. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $23,333.
On February 22, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $50,000. The convertible promissory note bears interest at 8% per annum and matures one year from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $33,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $83,333.
On April 19, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $30,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $20,000 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $50,000 and $0, respectively.
On May 22, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $20,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $13,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $33,333 and $0, respectively.
On July 10, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $50,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $33,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $83,333 and $0, respectively.
On July 14, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $25,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $16,667 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $41,667 and $0, respectively.
On August 15, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $23,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $15,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $38,333 and $0, respectively.
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On September 6, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $50,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $33,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $83,333 and $0, respectively.
On November 10, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $17,300. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $11,533 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $28,833 and $0, respectively.
On November 22, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $20,000 The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $13,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31,2023, the balance of the convertible note was $33,333 and $0, respectively.
On December 8, 2023, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $20,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion. Debt premium of $13,333 was recognized as a loss on convertible note and charged to interest expense. As of December 31, 2023 and March 31, 2023, the balance of the convertible note was $33,333 and $0, respectively.
Accrued interest on convertible notes
During the nine months ended December 31, 2023 and 2022, interest expense of $190,728 (including $170,200 loss on convertible notes charged to interest expense as described above) and $0 was incurred on convertible notes, respectively. As of December 31, 2023 and March 31, 2023, accrued interest payable on convertible notes was $24,872 and $4,342, respectively.
NOTE 9 – RELATED PARTY TRANSACTIONS
On January 9, 2023, the Company issued 20,000,000 shares of common stock to Noise Comms Ltd., a corporation controlled by the director and COO of the Company, for the acquisition of software valued at $258,000. (Note 4)
During the nine months ended December 31, 2023 and 2022, the director and Chief Executive Officer (“CEO”) of the Company paid $0 and $50,345 on behalf of the Company for business operation purposes, respectively. On August 4, 2023, the Company cancelled 36,865,000 shares of common stock previously held by the director and CEO of the Company.
During the nine months ended December 31, 2023, the Company incurred $17,487 management consulting fees to the director and Chief Operating Officer (“COO”) of the Company. As of December 31, 2023 and March 31, 2023, the management consulting fee payable to the director and COO of the Company was $10,201 and $1,250, respectively.
As of December 31, 2023 and March 31, 2023, there was $62,634 and $53,622 due to the current directors of the Company, respectively.
NOTE 10 – EQUITY
Authorized Stock
The Company’s authorized common stock consists of 75,000,000 shares at $0.00001 par value.
Common Stock
On January 9, 2023, the Company issued 20,000,000 shares of common stock to Noise Comms Ltd., a corporation controlled by the director and COO of the Company, for the acquisition of software valued at $258,000. (Note 4 & 7)
On July 31, 2023, the Company issued 600,000 shares of common stock for the partial repayment on a convertible note of $30,000.
On August 4, 2023, the Company cancelled 36,865,000 shares of common stock previously held by the former director and CEO of the Company.
On October 31, 2023, the Company issued 20,000 shares of common stock for the partial repayment on a convertible note of $1,000.
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On November 1, 2023, the Company issued 200,000 shares of common stock for the partial repayment on a convertible note of $10,000.
On November 17, 2023, the Company issued into escrow 12,550,000 shares of common stock for acquisition of a non-affiliated corporation in which the acquiree will become wholly owned subsidiary of the Company. (Note 4)
As of December 31, 2023 and March 31, 2023, the issued and outstanding common stock was 36,505,000 and 60,000,000 shares, respectively.
NOTE 11 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to the December 31, 2023 to the date these financial statements were issued and has determined that it has the following material subsequent events:
On February 5, 2024, the Company entered into an agreement to issue a convertible promissory note to an unaffiliate for an amount of $24,000. The convertible promissory note bears interest at 8% per annum and matures six months from the issuance date. The conversion price is 60% of the average VWAP of the Company’s stock during the previous 15 trading days prior to conversion.
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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 History
Our company was incorporated on March 29, 2016 in the State of Nevada. Initially we engaged in the subscription box business with a focus on offering sock subscriptions to our customers. Our subscription box was a package of a pair of socks sent directly to a customer on a recurring basis. The Company was controlled and operated by Rozh Caroro from inception till April of 2022.
Effective April 28, 2022, Rozh Caroro, the previous sole director, CEO and majority shareholder of the Company, entered into a stock purchase agreement and sold controlling interest of the Company to Christopher McEachnie. Rozh Caroro resigned her positions with the Company and Christopher McEachnie was appointed as Chief Executive Officer, Treasurer and Secretary, and sole Director of the Company. His job was to increase shareholder value by looking for opportunities in the digital space.
Mr. McEachnie began to seek experienced operators to assist in the development of the Company. On September 21, 2022, the Company incorporated a subsidiary Caro Holdings International Ltd. and appointed Meriesha Rennalls to streamline operations, hire employees, consultants and contractors including the development of a software and ecommerce platform. Between September 2022 and December 2023, the Company produced a platform that can be used for a variety of businesses including B2B, B2C and D2C. The core product is now complete and the Company is soliciting clients in multiple industries. The subsidiary will continue to modify and enhance the ecommerce software for its chosen vertical markets and will allow those community to sell, market and distribute their products. The Company intends to create subsidiaries in markets where it perceives a significant sales opportunity.
Effective December 31, 2022, the Company issued 20,000,000 shares to Noise Comms Limited and subsequently the 36,795,000 shares were returned to Treasury and were cancelled, such that indirectly Meriesha Rennalls now holds approximately 53% of the issued and outstanding shares of Common Stock of the Company, and as such she is able to control the election of our board of directors, approve all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
Prior to September 2022, we were an early-stage company and our activities had been limited to the to the formation of our business strategy and the raising of funds to support our mission.
Our Current Business
We are now engaged in the deployment of our B2B, B2C and Direct to Consumer (D2C) systems and methodologies where we target specific vertical markets. We look for small to mid-size brands that have a strong brick-and-mortar presence and have a desire to increase their digital presence.
Our D2C system is a fully integrated 360° platform that allows marketing, analytics and e-commerce functionality wrapped around an industry-specific directory listing platform. The analytical data provides insight from multiple channels to facilitate successful marketing decisions based on a client’s entire business performance.
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Based on these analytics, the system can immediately deploy personalization and optimization independently, and enhance understanding of how customer interactions vary across different regions. Furthermore, our infrastructure is designed to take advantage of growth opportunities with minimal additional costs.
Since September 2022, the Company has been actively engaged in soliciting and identifying clients in across a broad spectrum of industries. It has also been engaged in several marketing activities to attract partners, clients and beta testers who are providing valuable feedback in order for us to ensure our system meets their needs and expectations.
The Company is also looking to provide its marketplace platform to the pet care and spirit industries in the United States and the United Kingdom. The Company is also engaging in a full array of marketing activities including social media, attending trade shows and fairs, online conferences, and utilizing identified experts in affiliate marketing, pay-per-click, organic, search, engine, optimization, and social media marketing to promote D2C commerce.
On December 29, 2022, the Company entered into a software license agreement with Noise Comms Ltd. for the acquisition of a Unified Communications Platform which enables multi-party communications between brands and consumers in consideration of 20,000,000 shares of common stock valued at $258,000.
On November 14, 2023, the Company agreed to acquire a marketplace provider in the spirits industry, a non-affiliated corporation based in Wyoming, under which the Company will issue, on a pro-rata basis, up to 12,550,000 shares of common stock based on the acquiree’s reaching future milestones in exchange for 100% of the issued and outstanding shares of the acquiree making it a wholly owned subsidiary of the Company. The shares will remain in escrow with the Company until those milestones.
We are still a small early-stage development company with minimal revenues and 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 been involved in any kind of legal proceeding.
Marketing, Advertising, and Promotion
We believe that our systems will become one of our most important assets. Our ability to successfully create brand awareness is dependent upon our ability to address the changing needs and priorities of each brand’s target customers. To that end, we plan to focus much of our marketing efforts to recruit partners. We will then apply our methodologies to better understand their customers and their needs and ensure we align our brand messages in the marketing, and the channels through which we deliver these messages, to the target customers.
Results of Operations
Three Months Ended December 31, 2023 Compared to Three Months Ended December 31, 2022
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| Three Months Ended |
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| December 31, |
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| Change |
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| 2023 |
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| 2022 |
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| Amount |
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| Percentage |
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Revenue |
| $ | 521 |
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| $ | - |
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| $ | 521 |
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| 100 | % |
Operating expenses |
| $ | 77,869 |
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| $ | 102,956 |
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| $ | (25,087 | ) |
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| -24 | % |
Loss from operations |
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| (77,348 | ) |
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| (102,956 | ) |
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| 25,608 |
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| -25 | % |
Other expenses |
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| (38,540 | ) |
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| (73,611 | ) |
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| 35,071 |
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|
| -100 | % |
Net Loss |
| $ | (115,888 | ) |
| $ | (176,567 | ) |
| $ | 60,679 |
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| -34 | % |
Net loss decreased from $176,567 for the three months ended December 31, 2022 to $115,888 for the three months ended December 31, 2023 due to the decrease in operating expenses and other expenses.
We started to recognize revenue beginning from the three months ended December 31, 2023. During the three months ended December 31, 2023, we recognized revenue of $521 from online ecommerce service.
Operating expenses for the three months ended December 31, 2023 and 2022 consisted of audit and accounting fees, software development expense, legal fees, transfer agent fees and consulting fees. The decrease in operating expenses were primarily a result of a decrease in development activities.
During the three months ended December 31, 2023, the Company incurred other expenses of $38,540, primarily consisting of debt issuance cost of $38,199.
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Nine Months Ended December 31, 2023 Compared to Nine Months Ended December 31, 2022
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| Nine Months Ended |
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| December 31, |
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| Change |
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| 2023 |
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| 2022 |
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| Amount |
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| Percentage |
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Revenue |
| $ | 521 |
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| $ | - |
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| $ | 521 |
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| 100 | % |
Operating expenses |
| $ | 255,851 |
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| $ | 139,403 |
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| 116,448 |
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| 84 | % |
Loss from operations |
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| (255,330 | ) |
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| (139,403 | ) |
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| (115,927 | ) |
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| 83 | % |
Other expenses |
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| (188,190 | ) |
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| (73,611 | ) |
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| (114,579 | ) |
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| 100 | % |
Net Loss |
| $ | (443,520 | ) |
| $ | (213,014 | ) |
| $ | (230,506 | ) |
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| 108 | % |
Net loss increased from $213,014 for the nine months ended December 31, 2022 to $443,520 for the nine months ended December 31, 2023 due to the increase in operating expenses and other expenses.
We started to recognize revenue beginning from the three months ended December 31, 2023. During the three months ended December 31, 2023, we recognized revenue of $521 from online ecommerce service.
Operating expenses for the nine months ended December 31, 2023 and 2022 consisted of audit and accounting fees, software development expense, legal fees and consulting fees. The increase in operating expenses was primarily a result of an increase in development activities, audit fees, legal fees and consulting fees.
During the nine months ended December 31, 2023, the Company incurred other expenses of $188,190 primarily consisting of debt issuance cost of $170,200.
Liquidity and Financial Condition
Working Capital (Deficiency) |
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| December 31, 2023 |
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| March 31, 2023 |
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Current Assets |
| $ | 213,085 |
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| $ | 8,292 |
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Current Liabilities |
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| 842,858 |
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| 391,054 |
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Working Capital (Deficiency) |
| $ | (629,773 | ) |
| $ | (382,762 | ) |
Our total current assets as of December 31, 2023 were as $213,085 compared to total current assets of $8,292 as of March 31, 2023. The increase is primarily due to the deferred business acquisition cost.
Our total current liabilities as of December 31, 2023 were $842,858 as compared to total current liabilities of $391,054 as of March 31, 2023. The increase was attributed by the increase in convertible notes, promissory notes and due to related parties.
Working capital deficiency increased from $382,762 as of March 31, 2023 to $629,773 as of December 31, 2023 mainly due to the increase in convertible notes, accounts payable and accrued liabilities and accrued interest payable.
The report of our auditors on our audited financial statements for the fiscal year ended March 31, 2023, 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.
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| Nine Months Ended |
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| December 31, |
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| 2023 |
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| 2022 |
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Cash used in Operating Activities |
| $ | (212,200 | ) |
| $ | (88,900 | ) |
Cash used in Investing Activities |
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| (41,054 | ) |
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| - |
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Cash provided by Financing Activities |
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| 259,200 |
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| 136,976 |
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Effects on changes in foreign exchange rate |
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| (5,722 | ) |
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| (1,707 | ) |
Net changes in cash during period |
| $ | 224 |
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| $ | 46,369 |
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Operating Activities
For the nine months ended December 31, 2023, net cash used in operating activities was $212,200, related to our net loss of $443,520, decreased by debt issuance costs of $170,200 And net changes in operating assets and liabilities of $61,120.
For the nine months ended December 31, 2022, net cash used in operating activities was $88,900, related to our net loss of $213,014, decreased by debt issuance costs of $73,333 and net changes in operating assets and liabilities of $50,781.
Investing Activities
For the nine months ended December 31, 2023, net cash used by financing activities was $41,054 for advancement on loan receivable.
We did not use any funds for investing activities for the nine months ended December 31, 2022.
Financing Activities
For the nine months ending December 31, 2023, net cash used by financing activities was $259,200 from issuance of a promissory note of $3,900 and issuance of convertible notes of $255,300.
For the nine months ending December 31, 2022, net cash used by financing activities was $136,976 from issuance of a promissory note of $25,000, issuance of convertible notes of $110,000 and advancement from related party of $1,976.
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.
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.
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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 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.
Recently Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the 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, Meriesha Rennalls, our President, Chief Operating Officer, Secretary 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 three months ended December 31, 2023, 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, 2023, 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.
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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.
Item 6. Exhibits
Exhibit Number |
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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.
| CARO HOLDINGS INC. |
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| (Registrant) |
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Dated: February 26, 2024 | /s/ Christopher McEachnie |
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| Christopher McEachnie |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher McEachnie, certify that:
| 1. | I have reviewed this annual report on Form 10-Q of Caro Holdings Inc.; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
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| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 26, 2024 |
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| /s/ Christopher McEachnie |
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| Christopher McEachnie |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Christopher McEachnie, Chief Executive Officer of Caro Holdings Inc., hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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| (1) | the annual report on Form 10-Q of Caro Holdings Inc. for the period ended December 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Caro Holdings Inc. |
| Date: February 26, 2024 |
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| /s/ Christopher McEachnie |
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| Christopher McEachnie |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Caro Holdings Inc. and will be retained by Caro Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.