Notes
to Condensed Consolidated Financial Statements
September
30, 2018
(Unaudited)
NOTE
1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN
As
used herein and except as otherwise noted, the term “Company”, “it(s)”, “our”, “us”,
“we”, and “ANVIA” shall mean Anvia Holdings Corporation, a Delaware corporation.
Anvia
Holdings Corporation (formerly Dove Street Acquisition Corporation) was incorporated on July 22, 2016 under the laws of the state
of Delaware. The Company is engaged in the development and commercialization of web-based technology, the “Anvia Loyalty”
and “Anvia Learning” mobile applications, and other intellectual property (collectively the “Anvia Technology”),
as evidenced by the introduction of the Anvia Technology into the stream of commerce, and the Company’s commercial relationships
with third parties.
On
January 10, 2017, the Company effected a change of control by cancelling an aggregate of 19,500,000 shares of common stock of
existing shareholders, issuing 5,000,000 shares of common stock to its sole officer and director; electing new officer and director
and accepting the resignations of its then existing officers and directors. In connection with the change of control, the sole
shareholder of the Company and its board of directors unanimously approved the change of the Company’s name from Dove Street
Acquisition Corporation to Anvia Holdings Corporation.
On
January 2, 2018, the Company entered into a stock-for-stock acquisition agreement (the “Acquisition”) with Anvia (Australia)
Pty Ltd. (“Anvia Australia”), an entity organized and incorporated under the laws of Australia. Pursuant to the terms
of the Acquisition, the Company agreed to issue to the owner of Anvia Australia 5,000 shares of its common stock, valued at $0.60
per share as the fair value of the common stock, in exchange for all of the issued and outstanding stock of Anvia Australia to
complete the share exchange and restructuring of entities under common control. Mr. Ali Kasa, who is the officer, director and
majority shareholder of the Company, is the spouse of Ms. Lindita Kasa, the sole shareholder of Anvia Australia, prior to the
acquisition. The Company issued the shares to Ms. Lindita Kasa on May 10, 2018.
Anvia
Australia specializes in designing and implementing a complete eco-system for tradesmen in Australia by sourcing, training and
placing employees for its clients for agreed compensation. Pursuant to the Acquisition, the Company has acquired the business
plan, operations and contracts of its wholly-owned subsidiary, Anvia Australia.
On
June 11, 2018, Anvia Australia completed its acquisition of all assets and liabilities of Global Institute of Vocational Education
Pty Ltd. (“Global Institute”) for a cash consideration of $62,375 paid to its former shareholder, an unrelated-party
to the Company. As a result, Global Institute became a wholly-owned subsidiary of Anvia Australia. Global Institute of Vocational
Education Pty Ltd, located in Melbourne, Australia, is a Registered Training Organization under Australian Qualification Framework
by Australian Skills Quality Authority. The current scope includes Diploma of Business, Safety Training. Global Institute is in
the process of applying to add to qualification scope, all the relevant qualifications within construction sector.
Basis
of Presentation
The
accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of management of the Company,
contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at September
30, 2018, and the results of operations and cash flows for the three months and nine months ended September 30, 2018. The consolidated
balance sheets as of December 31, 2017 are derived from the Company’s audited financial statements.
Since
the Company and Anvia Australia were under Mr. Ali Kasa’s common control prior to the Acquisition on January 2, 2018, the
Acquisition is accounted for as a restructuring transaction in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The Company has recast prior period consolidated financial statements to reflect
the conveyance of Anvia Australia to the Company as if the restructuring transaction had occurred as of the earliest date of the
consolidated financial statements.
The
acquisition of Global Institute by Anvia Australia on June 21, 2018 was accounted for as an asset acquisition in accordance with
GAAP (see Note 4).
Certain
information and footnote disclosures normally included in financial statements that have been prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange
Commission, although management of the Company believes that the disclosures contained in these interim condensed consolidated
financial statements are adequate to make the information presented therein not misleading. For further information, refer to
the financial statements and the notes thereto contained in the Company’s 2017 Annual Report filed with the Securities and
Exchange Commission on Form 10-K on April 17, 2018.
Going
Concern
The Company’s consolidated financial
statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company
has generated minimal revenue and has sustained operating losses since inception to date and allow it to continue as a going concern.
The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the
ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The
Company incurred a net loss of $498,780 for the nine months ended September 30, 2018, had a working capital deficit of
$445,132, and an accumulated deficit of $582,230 as of September 30, 2018 and $83,449 as of December 31, 2017. These
factors, among others, raise a substantial doubt regarding the Company’s ability to continue as a going concern. If the
Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial
statements do not include any adjustments to reflect 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.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
following summary of significant accounting policies of the Company is presented to assist in the understanding of the Company’s
financial statements. The financial statements and notes are the representation of the Company’s management who is responsible
for their integrity and objectivity. These accounting policies conform to GAAP in all material respects and have been consistently
applied in preparing the accompanying financial statements.
Principles
of Consolidation
The
condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Anvia Australia
and Global Institute of Vocational Education. The consolidated balance sheets at September 30, 2018 include the balance sheets
of the Company, Anvia Australia and Global Institute of Vocational Education as of September 30, 2018. The consolidated statements
of operations and statements of cash flows for the three months ended September 30, 2018 include the operations of the Company,
Anvia Australia and for Global Institute of Vocational Education. The consolidated statements of operations and cash flows for
the nine months ended September 30, 2018 include the operations of the Company, Anvia Australia and for Global Institute, from
June 11, 2018 (Acquisition Date) to September 30, 2018. All intercompany transactions and balances are eliminated in consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates
and assumptions related to the valuation of accounts receivable, accounts payable, accrued liabilities, payable to related party,
valuation of beneficial conversion features in convertible debt, valuation of derivatives, and deferred income tax asset valuation
allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash
and Cash Equivalents
The
Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
The Company had cash balances of $23,090 and $468 as of September 30, 2018 and December 31, 2017, respectively.
Accounts
Receivable
Accounts
receivable represent income earned from vocational training, education programs and consultation services related with the assets
provided for its customers for which the Company has not yet received payment. Accounts receivable are recorded at the invoiced
amount and stated at the amount management expect to collect from balances outstanding at period-end. The Company estimates the
allowance for doubtful accounts based on an analysis of specific accounts and an assessment of the customer’s ability to
pay. The Company has recorded accounts receivable of $ 43,581 and $81,000 as of September 30, 2018 and December 31, 2017,
respectively.
Concentration
of Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable
and prepaid expenses. The Company places its cash with high quality banking institutions. The Company does not have the cash balances
in excess of Federal Deposit Insurance Corporation limit at September 30, 2018 and December 31, 2017, respectively.
Revenue
Recognition
The
Company provides vocational training, consulting services for assets and education for construction tradesman that need qualifications
for roofing, plumbing, home renovation, electrical and carpentry. The Company’s training packages vary in price according
to the different types of vocational training and education programs purchased by the customers. The Company recognizes revenue
upon the completion of the vocational training courses and education programs offered to its customers. The Company recognizes
as revenue any deposits previously received, as they are non-refundable upon commencement of the vocational training courses.
The
Company’s revenue recognition policy is based on the revenue recognition criteria established in accordance with Accounting
Standards Codification (ASC) 605. The criteria and how the Company satisfies each element are as follows: (1) persuasive evidence
of an arrangement - the Company and the customer enters into a signed contract; (2) delivery has occurred - as noted above, upon
the commencement of the training course, the deposit is non-refundable per the terms of the signed contract and upon completion
of the course, the Company has provided all services to be delivered to the customer under the contract; (3) the price is fixed
and determinable - the signed contract indicates a fixed dollar amount for the training for the courses enrolled by the customer;
(4) collectability is reasonable assured - the Company receives as payment a deposit and the balance of the training upon the
completion of the training course.
Foreign
Currency Translation
The
Company uses the United States dollar (“USD”) for financial reporting purposes. The Company maintains the books and
records in its functional currency, being the primary currency of the economic environment in which its operations are conducted.
For reporting purpose, the Company translates the assets and liabilities to U.S. dollars using the applicable exchange rates prevailing
at the balance sheet dates, and the statements of income are translated at average exchange rates during the reporting periods.
Gain or loss on foreign currency transactions are reflected on the income statement. Gain or loss on financial statement translation
from foreign currency are recorded as a separate component in the equity section of the balance sheet and is included as part
of accumulated other comprehensive income. The functional currency of the Company’s subsidiary in Australia is Australian
Dollars (“AUD”).
The
exchange rates used to translate amounts in AUD into USD for the purposes of preparing the financial statements were as follows:
September
30, 2018
|
|
|
Balance
sheet
|
|
AUD
1.00 to USD 0.72
|
Statement
of operations and comprehensive loss
|
|
AUD
1.00 to USD 0.76
|
December
31, 2017
|
|
|
Balance
sheet
|
|
AUD
1.00 to USD 0.78
|
Statement
of operations and comprehensive loss
|
|
AUD
1.00 to USD 0.77
|
September
30, 2017
|
|
|
Balance
Sheet
|
|
AUD
1.00 to USD 0.78
|
Statement
of operations and comprehensive loss
|
|
AUD
1.00 to USD 0.77
|
Income
Taxes
The
Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “
Income Taxes”
.
The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax
credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company
records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The
Company follows the provisions of ASC 740-10, “
Accounting for Uncertain Income Tax Positions
.” When tax returns
are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements
in the period during which, based on all available evidence, management believes it is more likely than not that the position
will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are
not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured
as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable
taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described
above should be reflected as a liability for unrecognized tax benefits in the accompanying condensed balance sheets along with
any associated interest and penalties that would be payable to the taxing authorities upon examination.
Earnings
(Loss) Per Common Share
The
Company computes net earnings (loss) per share in accordance with ASC 260, “
Earnings per Share”
. ASC 260 requires
presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS
is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during
the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing
diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the
exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At
September 30, 2018 and December 31, 2017, there were no convertible notes, options or warrants available for conversion that if
exercised, may dilute future earnings per share.
Fair
Value of Financial Instruments and Fair Value Measurements
ASC
820, “
Fair Value Measurements and Disclosures”,
requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC
820 prioritizes the inputs into three levels that may be used to measure fair value:
Level
1
Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level
2
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability
has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level
3
Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.
The
Company’s financial instruments consist principally of cash, accounts receivable, prepaid deposit for acquisitions, accounts
payable, accrued liabilities and payable to related party. Pursuant to ASC 820, “
Fair Value Measurements and Disclosures”
and ASC 825, “
Financial Instruments”
, the fair value of our cash equivalents is determined based on “Level
1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded
values of all the other financial instruments approximate their current fair values because of their nature and respective maturity
dates or durations.
Derivative
Financial Instruments
ASC
Topic 815, “
Derivatives and Hedging
(“ASC Topic 815”)”, establishes accounting and reporting standards
for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and
measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or
recorded in other comprehensive income (loss) depending upon the purpose of the derivatives and whether they qualify and have
been designated for hedge accounting treatment. The Company does not have any derivative instruments for which it has applied
hedge accounting treatment.
The
Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there
are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for
separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may
issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities,
rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other
services.
Derivative
financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for
as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date,
with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding
and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized,
in order to initially record the derivative instrument liabilities at their fair value.
Reclassifications
Certain
classifications have been made to the prior year consolidated financial statements to conform to the current year presentation.
The reclassification had no impact on previously reported net loss or accumulated deficit.
Recent
Accounting Pronouncements
In
May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “
Revenue from Contracts with Customers
(Topic 606),” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 -
Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The FASB has issued numerous
updates that provide clarification on a number of specific issues as well as requiring additional disclosures. The core principle
of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines
a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required
within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in
the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction
price to each separate performance obligation. The guidance also requires enhanced disclosures regarding the nature, amount, timing
and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance may be adopted
through either retrospective application to all periods presented in the financial statements (full retrospective approach) or
through a cumulative effect adjustment to retained earnings at the effective date (modified retrospective approach). The guidance
was revised in July 2015 to be effective for emerging growth companies for annual and interim periods beginning on or after December
15, 2018. The Company is currently evaluating ASU 2014-09 and its impact on its consolidated financial statements.
In
October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810):
Interests Held through Related Parties That Are
under Common Control”
. These amendments change the evaluation of whether a reporting entity is the primary beneficiary
of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity
treats indirect interests in the entity held through related parties that are under common control with the reporting entity.
If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of
a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic
of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate
basis, its indirect variable interests in a variable interest entity held through related parties, including related parties that
are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for
fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted,
including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period,
any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of
this standard is not expected to have a material impact on the Company’s consolidated financial position and results of
operations.
In
July 2017, the FASB issued ASU 2017-11,
Earnings Per Share (Topic 260)
; Distinguishing Liabilities from Equity (Topic 480);
Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II)
Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain
Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. For public business entities, the amendments in Part I
of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019,
and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including
adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected
as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require
any transition guidance because those amendments do not have an accounting effect. The Company is currently in the process of
evaluating the impact of the adoption on its consolidated financial statements.
In
February 2018, the FASB issued ASU No. 2018-02
Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income
. The amendments in this Update allow a reclassification
from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs
Act of 2017. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement-Reporting
Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive
income as required by GAAP. The Company is currently in the process of evaluating the impact of the adoption on its consolidated
financial statements.
The
Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have
a material impact on results of operations, financial condition, or cash flows, based on current information.
NOTE
3 – PREPAID DEPOSITS FOR ACQUISITIONS
The Company had prepaid deposits of $100,022
and $23,200 at September 30, 2018 and at December 31, 2017, respectively. Prepaid deposits at September 30, 2018 consisted
of $100,000 prepayment towards acquisition of an entity named All Crescent Sdn Bhd located in Malaysia and $22 prepaid expenses.
Prepaid deposits at December 31, 2017 consisted of (i) 20,000 prepaid to a third party towards acquisition of an entity named
All Crescent Sdn Bhd located in Malaysia, and (ii) $3,200 prepayment towards acquisition of Global Institute of Vocational Education.
NOTE
4 – ACQUISITION OF GLOBAL INSTITUTE OF VOCATIONAL EDUCATION
On
June 11, 2018, Anvia Australia, a wholly-owned subsidiary of the Company, completed its acquisition of all of the assets and liabilities
of Global Institute of Vocational Education Pty Ltd from its former shareholder, an unrelated-party to the Company, for a cash
purchase price of $62,375 (AUD 81,900 Australian Dollars). The Company evaluated this acquisition in accordance with ASC 805-10-55-4
to discern whether the assets and operations of the assets purchased met the definition of a business. The Company concluded there
were not a sufficient number of key processes that developed the inputs into outputs. Accordingly, the Company accounted for this
transaction as an asset acquisition.
Global
Institute of Vocational Education Pty Ltd, located in Melbourne, Australia, is a Registered Training Organization (RTO) under
Australian Qualification Framework (AQF) by Australian Skills Quality Authority (ASQA). Global Institute’s current scope
includes Diploma of Business and Safety Training and is in the process of applying to add to qualification scope, all relevant
qualifications within construction sector.
Acquisition Balance Sheet - June 11, 2018
|
|
|
|
|
|
|
|
Assets acquired and liabilities assumed:
|
|
|
|
|
Cash
|
|
$
|
1,571
|
|
|
|
|
|
|
Other assets
|
|
|
740
|
|
Intangible asset – Licensing fees
|
|
|
62,277
|
|
Total Assets Acquired
|
|
$
|
64,588
|
|
|
|
|
|
|
Liabilities assumed:
|
|
|
|
|
Payable to officer
|
|
$
|
682
|
|
Advanced from Customer
|
|
$
|
1,531
|
|
Total Liabilities Assume
|
|
$
|
2,213
|
|
Net Assets Acquired
|
|
|
62,375
|
|
|
|
|
|
|
Total Consideration Paid
|
|
$
|
62,375
|
|
For
the three months and nine months ended September 30, 2018, the Company impaired the Intangible asset - Licensing fees at September
30, 2018 and recorded the impairment expense of $62,277 in the accompanying condensed consolidated financial statements.
NOTE
5 – ACCRUED LIABILITIES
Accrued
liabilities were comprised of the following:
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Professional fees
|
|
$
|
26,027
|
|
|
$
|
23,230
|
|
Consulting fees
|
|
|
14,050
|
|
|
|
6,804
|
|
Other accrued expenses
|
|
|
21,550
|
|
|
|
-
|
|
Total
|
|
$
|
61,627
|
|
|
$
|
30,033
|
|
NOTE
6 – RELATED PARTY TRANSACTIONS
The
related parties of the Company with whom transactions are reported in these financial statements are as follows:
Name
of entity of individual
|
|
Relationship
with the Company and its subsidiary
|
Ali
Kasa
|
|
Director
and CEO of the Company
|
|
|
|
Egnitus
Australia Pty Ltd
|
|
Entity
controlled by Mr. Ali Kasa
|
Lindita
Kasa
|
|
Spouse
of Ali Kasa and former sole shareholder of Anvia (Australia) Pty Ltd
|
Egnitus
Australia Pty Ltd
|
|
Entity
controlled by Mr. Ali Kasa
|
Egnitus
Holdings Pty Ltd
|
|
Entity
controlled by Mr. Ali Kasa
|
Egnitus
INC.
|
|
Entity
controlled by Mr. Ali Kasa
|
Transactions
Accounts
Payable
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Egnitus Holdings Pty Ltd
|
|
$
|
-
|
|
|
$
|
10,500
|
|
Accounts
payable was for the cost of training and consulting services provided to the Company’s customers.
Payable
to Related Party
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Lindita Kasa
|
|
$
|
-
|
|
|
$
|
3,000
|
|
Payable
to Mrs. Lindita Kasa was for the cost of purchase of Anvia (Australia) Pty Ltd.
Payable
to Affiliate
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Egnitus Holdings Pty Ltd.
|
|
$
|
10,479
|
|
|
$
|
4,120
|
|
Payable
to affiliate was for the Company’s working capital needs. Funds advanced to the Company are non-interest bearing, unsecured
and due on demand.
Due
from Affiliate
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Egnitus INC.
|
|
$
|
71,420
|
|
|
$
|
-
|
|
|
|
September
30, 2018
|
|
|
December
31, 2017
|
|
Ali
Kasa
|
|
$
|
12,784
|
|
|
$
|
6,807
|
|
|
|
September
30, 2018
|
|
|
December
31, 2017
|
|
Egnitus
Australia Pty Ltd
|
|
$
|
-
|
|
|
$
|
2,462
|
|
The
amounts due from related parties are non-interest bearing, unsecured and due on demand.
NOTE
7 – CONVERTIBLE PROMISSORY NOTE
On
June 21, 2018, the Company executed a $333,000 Convertible Promissory Note (the “Note”) with Labrys Fund, an unrelated-party
(the “Lender”), bearing an interest rate of 12%, unsecured, and due on December 21, 2018 (the “Maturity Date”).
The total consideration received against the Note was $303,000, with the Note bearing $30,000 Original Issue Discount (the “OID”)
and $3,000 for legal expenses. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains
payable regardless of time and manner of payment by the Company. The Maturity Date is the date upon which the principal sum of
this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The Note may be prepaid at any
time before December 21, 2018 without any prepayment penalties. Any amount of principal or interest on this Note which is not
paid when due, shall bear interest at the rate of the lesser of (i) twenty-four percent (24%) per annum or (ii) the maximum amount
allowed by law from the due date thereof until the same is paid (the “Default Interest”). Interest shall commence
accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of
days elapsed.
The
Lender has the right in its sole and absolute discretion, from time to time, and at any time on or following the 180
th
calendar day after the date Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default
Interest, each in respect of the remaining principal amount of this Note to convert all or part of the outstanding and unpaid
principal amount of this Note into fully paid and non-assessable shares of Common Stock of the Company as per the Conversion formula:
Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion
Price is the lesser of 60% of the lowest trade price for the last 25 days prior to the issuance of the Note or 60% of the lowest
market price over the 25 days prior to conversion. Total debt outstanding at September 30, 2018 pursuant to the convertible note
payable resulted in potential conversion of debt into 644,302 shares of common stock. The Note contains certain representations,
warranties, covenants and events of default, and increases in the conversion discount and amount of the principal and interest
rates under the Note in the event of such defaults.
In
connection with the issuance of the Note, the Company recorded a debt discount related to the OID in the amount of $30,000 which
will be amortized to interest expense over the term of the loan. In accordance with ASC 815, the conversion feature meets the
definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company recognized
a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $321,073 using the
Black-Scholes pricing model, which will be amortized to interest expense over the term of the Note, using effective interest method.
The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $1.50 at issuance date,
a risk-free interest rate of 2.12%, expected volatility of the Company’s stock of 38.48%. For the three months and nine
months ended September 30, 2018, the Company has recognized respectively interest expense of $15,333 and $16,833 related to the
amortization of the OID, interest expense of $10,072 and $11,057 on the Note and the amortization of the beneficial conversion
feature discount as it related to this Note of $154,867 and $188,090.
Under
the provisions of ASC 815-40, convertible instruments issued by the Company qualify for derivative treatment due to the variable
conversion formula. The embedded conversion features of the Note are bifurcated and recorded as a liability which is revalued
at fair value each reporting date. If the fair value of the embedded conversion feature exceeds the face value of the related
debt, net of other discounts, the excess is recorded as a change in fair value on the issuance date. Embedded conversion features
are valued at their fair value, rather than by the intrinsic value method. The Company calculated the estimated fair values of
the liabilities for embedded conversion feature at June 30, 2018 and September 30, 2018 with the Black-Scholes option pricing
model using the closing price of the Company’s common stock at each respective date and the ranges for volatility, expected
term and risk-free interest indicated above. As a result, the Company recorded a change in the fair value of the liabilities for
embedded conversion option derivative instruments for the three months and nine months ended September 30, 2018 of $90,119 and
$76,000, respectively, which was included in other expenses.
Additionally,
in connection with the Note, the Company also issued 272,058 shares of common stock of the Company to the holder as a security
deposit, provided however, the shares must be returned to the Company’s treasury if the Note is fully repaid and satisfied
prior to the Maturity Date. The refundable shares fair value was calculated as $408,087 being the fair value of common stock on
the date of issuance (Note 9) and recorded as restricted stock receivable in the accompanying consolidated financial statements
at September 30, 2018.
On
June 5, 2018, the Company entered into an Equity Financing Agreement and Registration Rights Agreement with GHS Investments,
LLC (the “GHS”) pursuant to which GHS has agreed to purchase up to $10,000,000 in shares of Company common stock.
The obligations of GHS to purchase the shares of Company common stock are subject to the conditions set forth in the Equity Financing
Agreement, including, without limitation, the condition that a registration statement on Form S-1 registering the shares of Company
common stock to be sold to GHS be filed with the Securities and Exchange Commission and become effective. The Registration Rights
Agreement provides that the Company shall use commercially reasonable efforts to file the registration statement within 30 days
after the date of the Registration Rights Agreement and have the registration statement become effective within 90 days after
it is filed. The purchase price of the shares of Company common stock will be equal to 80% of the market price (as determined
in the Equity Financing Agreement) calculated at the time of purchase. In connection with the Equity Financing Agreement, the
Company executed a convertible promissory note in the principal amount of $40,000 (the “GHS Note”) as payment of the
commitment fee for the Equity Financing Agreement. The GHS Note bears interest at the rate of 8% and must be repaid on or before
March 5, 2019. For the three months and nine months ended September 30, 2018, the Company has accrued and recorded an interest
expense of $807 and $1,026, respectively, on the GHS Note.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
In
the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory,
litigation and other matters. The Company expenses these costs as the related services are received.
If
a loss is considered probable and the amount can be reasonable estimated, the Company recognizes an expense for the estimated
loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate
assessment of recoverability and reduces the estimated loss if recovery is also deemed probable.
NOTE
9 – STOCKHOLDERS’ EQUITY
The
Company’s capitalization at September 30, 2018 was 100,000,000 authorized common shares with a par value of $0.0001 per
share, and 20,000,000 authorized preferred shares with a par value of $0.0001 per share.
Common
Stock
On
January 2, 2018, the Company entered into a stock-for-stock acquisition agreement with Anvia Australia, an entity organized under
the laws of Australia. Pursuant to the terms of the Acquisition, the Company issued to the owner of Anvia Australia 5,000 shares
of its common stock, valued at $0.60 per share as the fair value of the common stock, in exchange for all of the issued and outstanding
stock of Anvia Australia to complete the share exchange and restructuring of entities under common control. Mr. Ali Kasa, who
is the officer, director and majority shareholder of the Company, is the spouse of Mrs. Lindita Kasa, the sole shareholder of
Anvia Australia prior to the acquisition. The Company issued the shares to Ms. Lindita Kasa on May 10, 2018. The Company has recast
prior period financial statements to reflect the conveyance of Anvia Australia to the Company as if the restructuring had occurred
as of the earliest date of the consolidated financial statements.
On
May 10, 2018, the Company issued to Mr. Nikolin Kasa, brother of Mr. Ali Kasa, 5,000 shares of its common stock valued at its
fair market value of $6,000 for providing consulting and business advisory services.
On
June 21, 2018, the Company issued 272,058 shares of common stock as a commitment fee in fully refundable shares, provided however,
the Company satisfies its obligations on the Labrys Note on or before December 21, 2018. The shares are to be returned to the
treasury of the Company in the event the Labrys Note is fully repaid on or prior to December 21, 2018. The refundable shares fair
value was calculated at $408,087 at the fair market value of common stock on the date of issuance (Note 7).
As
a result of all common stock issuances, the total issued and outstanding shares of common stock at September 30, 2018 and December
31, 2017 were 19,285,425 and 19,003,367, respectively.
Preferred
stock
Series
A Preferred Stock
The
Company’s directors and officers have a beneficial ownership of the entire class of the Company’s Series A Preferred
Stock, which voting together as a class, have the right to vote 51% of the Company’s voting shares on any and all shareholder
matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s
Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred
Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least 60% of the outstanding
shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders
of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations
that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A
Preferred Stock.
Other
than the Majority Voting Rights, our Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption
rights, whatsoever; provided, however, he Series A Preferred Stock and the rights associated therewith, could act to prevent or
delay a change in control.
In
February 2017, the Company issued 600 shares of Series A preferred stock to its President for total proceeds of $0.06, and 400
shares of Series A preferred shares to an officer and director for total proceeds of $0.04.
At
September 30, 2018 and December 31, 2017, the Company has 1,000 shares of Series A preferred stock issued and outstanding, respectively.
NOTE
10 – SUBSEQUENT EVENTS
Management
has evaluated subsequent events through November 9, 2018, the date the financial statements were available to be issued noting
the following transactions that would impact the accounting for events or transactions in the current period or require additional
disclosures.
On
October 12, 2018 Anvia Holdings Corporation (the “Company”) entered into a term sheet to acquire all of the issued
and outstanding common shares from the shareholders of Xamerg Pty Ltd., an Australian vocational education institution operating
under the name Eagle Academy (the “Eagle Academy”). On October 11, 2018, the Company paid a deposit of $46,228 (AUD
65,000) to the principal owner of Xamerg Pty Ltd. which is 5% of total purchase price for this company.
NOTE 11 – COMPARATIVE FIGURES
The comparative figure on the fiscal year
ended 31 December 2017 had been reclassified to conform with current financial statement presentation.