The accompanying notes are an integral part of these unaudited condensed financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—BACKGROUND AND ORGANIZATION
Organization
Crowd Shares Aftermarket, Inc. (“the Company”) was originally incorporated in the State of Delaware on May 24, 2007, under the name Red Oak Concepts, Inc. to serve as a vehicle for a business combination through a merger, capital stock exchange, asset acquisition or other similar business combination. On December 4, 2007, the Company changed its jurisdiction of domicile by merging with a Nevada corporation titled Red Oak Concepts, Inc. On November 21, 2008, the Company changed its name to Vinyl Products, Inc. in connection with a reverse acquisition transaction with The Vinyl Fence Company, Inc. (“VFC”), a California corporation. On September 26, 2013, the Company formed Crowd Shares Aftermarket, Inc., a wholly owned subsidiary of the Company. On October 8, 2013, the Company merged with its wholly owned subsidiary, Crowd Shares Aftermarket, Inc. and as part of the merger changed its name to Crowd Shares Aftermarket, Inc.
Business Overview-Current Operations
AAA Century Group Transaction
Effective as of May 27, 2016, Doug Brackin and Joy Brackin, husband and wife (the “Sellers”), entered into a Common Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Sellers agreed to sell to AAA Century Group USA Corp., a newly-formed New York corporation (the “Purchaser”), the 20,000,000 shares of Company common stock owned by the Sellers, constituting approximately 88.6% of the Company’s 22,564,000 issued and outstanding common shares (the “Shares”), for $337,000. As part of the AAA Century Group Transaction, all liabilities of the Company were paid in full at the closing of the AAA Century Group Transaction or shortly thereafter.
As a result of the sale there was a change of control of the Company. In connection with the sale pursuant to the Stock Purchase Agreement, the Sellers and the Company’s then directors and officers—Doug Brackin and Keith Moore resigned their positions and appointed Qingxi Meng as the sole director. Mr. Meng was named the Chief Executive Officer of the Company; and in August 2016, Ms. Yingchuan (“Shelley”) Wang was named Chief Financial Officer and Chief Operating Officer, and a director of the Company.
Current management intends to engage in real estate transactions in the New York area. As of the date of the filing of this Report on Form 10-Q, the Company has not entered into any letter of intent or binding agreement to acquire any new assets or business in addition to the Company’s current securities crowdfunding activities, described below.
On September 20, 2016, the holders of 17,690,000 shares of the Company’s common stock, representing approximately 78.4% of the outstanding shares of the Company’s common stock, executed a written consent in lieu of a special meeting of stockholder approving the following matters:
(1) An amendment to the Articles of Incorporation, changing the name of the Company to AAA Century Group USA, Inc.
(2) An amendment to the Articles of Incorporation, increasing the number of the authorized common shares, $.0001 par value, from 100,000,000 to 500,000,000, and our authorized Preferred Shares, $.0001 par value, from 10,000,000 to 50,000,000; and
(3) Authorizing the Board of Directors to effectuate a forward split of the Company’s 22,564,000 currently issued and outstanding common shares of no less than two-for-one and no more than five-for-one, as and when determined by the Company’s Board of Directors.
5
AAA CENTURY GROUP USA, INC.
formerly
CROWD SHARES AFTERMARKET, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Crowdfunding Business
The Company’s business operations support securities crowdfunding (“SCF”) activities. SCF in its simplest terms, is a global movement towards broadening the investor base in small businesses by lowering accreditation standards of investors and changing the rules around the marketing of investment opportunities.
The Company earns revenue by providing outsourced SCF services including due diligence and developing marketing programs for companies looking to utilize technology to reach a broader potential investor base.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and in conformity with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed financial statements included in this document have been prepared on the same basis as the annual financial statements, and in our opinion reflect all adjustments, which include normal recurring adjustments necessary for a fair presentation in accordance with US GAAP and SEC regulations for interim financial statements. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that we will have for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K.
Basis of Presentation
The Company maintains its accounting records on an accrual basis in accordance with U.S. GAAP.
Liquidity
The Company's unaudited condensed financial statements are prepared using the accrual method of accounting in accordance with U.S. GAAP, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company reported net income of $20,416 during the quarter ended September30, 2016, due almost entirely because of the cancellation of debt as part of the change of control in June 2016, but has an accumulated deficit of $339,395 since inception. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
Management’s plans to continue as a going concern include raising additional capital through sales of common stock and/or a debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
6
AAA CENTURY GROUP USA, INC.
formerly
CROWD SHARES AFTERMARKET, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, asset impairments, and contingencies and litigation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.
Cash and Cash Equivalents
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. Deposits with these banks may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk. The Company did not have any cash equivalents at September 30, 2016 or December 31, 2015.
Revenue Recognition
Typically, the Company recognizes revenue from marketing and due diligence services. Such revenue is recognized when the services are performed.
Revenues are recognized when persuasive evidence of an arrangement exists, the fees to be paid by the customer are fixed or determinable, collection of the fees is probable, delivery of the service and or product has occurred, and no other significant obligations on the part of the Company remain.
Income Taxes
The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary 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. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.
No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling approximately $287,951 as of September 30, 2016 that will be offset against future taxable income. The available net operating loss carry forwards of approximately $288,000 will expire in various years through 2036. No tax benefit has been reported in the financial statements because the Company believes there is a 50% or greater chance the carry forwards will expire unused. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 35% to net loss before income taxes for the period ended September 30, 2016 and 2015 and had no uncertain tax positions as of September 30, 2016 and 2015. Certain tax attributes are subject to an annual limitation as a result of the sale of shares from the Brackins to AAA Century Group USA Corp., which constitutes a change of ownership as defined under Internal Revenue Code Section 382.
7
AAA CENTURY GROUP USA, INC.
formerly
CROWD SHARES AFTERMARKET, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Effective October 1, 2008, the Company adopted Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash and cash equivalents, accounts payable and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.
NOTE 3—DEBT AND DUE TO RELATED PARTY
From May, 2016, through July, 2016, as part of the AAA Century Group Transaction, the Company entered into settlement agreements with all debt holders of the Company. As a result of the settlement agreements, the Company recognized a gain on debt settlement in the amount of $164,670. As of September 30, 2016, all previous debt holders have settled with the Company, and there are no liabilities owed to any of these former debt holders.
On April 8, 2011, the Company entered into a Promissory note with Doug Brackin (a related party) for a total of $62,500. From time to time, Doug Brackin advanced to the Company funds to cover operating expenses. On April 25, 2015, the Company entered into a definitive agreement to sell all of the membership interests in Brackin O’Connor, LLC to the original members of Brackin O’Connor, LLC for $25,000 which was used to fully pay the remaining Note Payable principal balance and reduced accrued interest. As of December 31, 2015, Brackin was owed $25,720 in accrued interest. On June 30, 2016, the company wrote off the interest in complete fulfillment of all outstanding obligations.
From time to time, Cardiff Partners, LLC (a related party) had advanced to the Company funds to cover operating expenses. The advance bears interest at a rate of 1% per month. The Company entered into a settlement agreement with Cardiff Partners, LLC for the balance of $11,309 and accrued interest of $16,231 and settled both amounts for a total of $25,648 resulting in gain of $1,893 during the quarter ended September 30, 2016. Interest expense totaled $332 and $2,108 for the nine months ended September 30, 2016 and 2015, respectively.
On September 14, 2013, the Company entered into various promissory notes (“Notes”) for a total of $215,000 due on December 31, 2014. The Notes accrued interest at a rate of 1.0% per month. The Company entered into settlement agreements with the promissory noteholders. The total amount owed for principal was $215,000, of which $190,000 was paid off at the change in ownership. The remaining amount plus accrued interest was extinguished, resulting in a gain of $87,308. Interest expense totaled $5,360 and $16,081 for the nine months ended September 30, 2016 and 2015, respectively.
On February 7, 2015, the Company issued and sold a $12,000 Note due May 7, 2015. The proceeds to the Company were $8,000 and the Company recorded an Original Issue Discount (“OID”) of $4,000 which will be amortized over the life of the note. As noted above, the Company entered into a settlement agreements with the noteholder resulting in the pay off and extinguishment of the note. Interest expense totaled $0 and $4,000 for the nine months ended September 30, 2016 and 2015, respectively. A total gain of $2,000 was recognized as a result of this debt settlement.
NOTE 4- ACCOUNTS PAYABLE SETTLEMENT
The Company entered into settlement agreements with various vendors resulting in the payoff of various accounts payable balances. For the period ended September 30, 2016, the Company recognized a gain on settlement of accounts payable of $82,771. In addition, $14,669 was considered related party gains which were recorded as additional paid in capital.
NOTE 5—STOCKHOLDERS' EQUITY
The Company is authorized to issue 500,000,000 shares of $0.0001 par value common stock, and had 22,564,000 shares outstanding at September 30, 2016 and December 31, 2015, respectively.
8
AAA CENTURY GROUP USA, INC.
formerly
CROWD SHARES AFTERMARKET, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company is authorized to issue 50,000,000 shares of $0.0001 par value preferred stock. The Company has never issued any shares of preferred stock.
As noted above, the Company entered into settlement agreements with various debt holders resulting in the payoff of various notes and accounts payable. During the nine months ended September 30, 2016, the Company recognized a total gain on settlement of debt of $164,670. Company also recorded $290,283 as additional paid in capital during the nine months ended September 30, 2016 from Doug Brackin, a related party.
NOTE 6—COMMITMENTS AND CONTINGENCIES
The Company is not currently a party to any pending or threatened legal proceedings. Based on information currently available, management is not aware of any matters that would have a material adverse effect on the Company's financial condition, results of operations or cash flows.
9