The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 2022
(unaudited)
1. Business:
Our Business:
Kingfish Holding Corporation (the “Company”) was incorporated in the State of Delaware on April 11, 2006 as Offline Consulting, Inc. It became Kesselring Holding Corporation on June 8, 2007 and on November 25, 2014 it changed its name to Kingfish Holding Corporation.
The primary business of the Company is to seek a suitable private company acquisition. The Company has not been engaged in any other business activity.
On October 28, 2022, the Company and Renovo Resource Solutions, Inc., a Florida corporation (“Renovo”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Renovo will be merged with and into the Company (the “Merger”), with the Company being the legal successor or surviving corporation in the Merger. Consummation of the Merger is subject to a number of conditions, including among others approval of the Merger Agreement by Renovo’s stockholders, the Company shall have been approved as a Secondary Metals Recycler under Section 538.25 of the Florida Statutes to be effective immediately following the closing of the Merger, and the satisfaction of certain other customary closing conditions.
2. Summary of Significant Accounting Policies:
Basis of presentation:
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the periods presented.
Use of estimates:
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Cash:
Cash is maintained at a financial institution and, at times, the balance may exceed federally insured limits. The Company has never experienced any losses related to the balance. Currently, the FDIC provides insurance coverage up to $250,000 per depositor at each financial institution and the Company’s cash balance did not exceed such coverage on December 31, 2022.
For purpose of the statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash.
Fair Value of Financial Instruments:
The carrying amounts of cash and current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. Management does not hold or issue financial instruments for trading purposes, nor does the Company utilize derivative instruments in the management of the Company’s foreign exchange, commodity price or interest rate market risks.
The Financial Accounting Standards Board (“FASB”) Codification clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
| Level 1: | Quoted prices in active markets for identical assets or liabilities |
| | |
| Level 2: | Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability |
| | |
| Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Revenue Recognition:
The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers,” and all related interpretations for recognition of our revenue from services. Revenue is recognized when the following criteria are met:
| · | identification of the contract, or contracts, with the customer; |
| · | identification of the performance obligations in the contract; |
| · | determination of the transaction price; |
| · | allocation of the transaction price to the performance obligations in the contract; and |
| · | recognition of revenue when, or as, we satisfy the performance obligation. |
Income Taxes:
Deferred taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Future tax benefits for net operating loss carry forwards are recognized to the extent that realization of these benefits is considered more likely than not. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits for all periods presented. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefit in interest expense and penalties in operating expenses.
Net income (loss) per share:
Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares during the period of computation. Diluted loss per share gives effect to potentially dilutive common shares outstanding. The Company gives effect to these dilutive securities using the If-Converted Method. Potentially dilutive securities include convertible financial instruments.
At December 31, 2022 and 2021, convertible notes payable to related party of $90,000 can potentially convert into 90,000 shares of common stock. Interest expense related to the convertible notes was immaterial. These shares have been excluded from the diluted net loss per share calculations because the effect of including them would be anti-dilutive at December 31, 2022 and 2021.
3. Going Concern:
As reflected in the Company’s financial statements, the Company has an accumulated deficit of $4,938,823 and $4,894,498 as of December 31, 2022 and September 30, 2022, respectively. The Company used cash of $153,660 and $23,437 in operating activities during the quarters ended December 31, 2022 and 2021, respectively. The Company has a working capital deficiency of $168,516 at December 31, 2022 that is insufficient in management’s view to sustain current levels of operations for a reasonable period without additional financing. These trends and conditions continue to raise substantial doubt surrounding the Company’s ability to continue as a going concern for a reasonable period. Ultimately, the Company’s ability to continue as a going concern is dependent upon management’s ability to continue to curtail current operating expense and obtain additional financing to augment working capital requirements and support acquisition plans. There can be no assurance that management will be successful in achieving these objectives or obtaining financing under terms and conditions that are suitable. The accompanying financial statements do not include any adjustments associated with these uncertainties.
4. Convertible Notes Payable to Related Party:
The Company entered into a convertible note with a director for $20,000 effective December 7, 2015. The note bears interest at a rate of 3.5% per annum and all unpaid principal and interest are due on demand by the director. The outstanding principal balance of the note is convertible into the Company’s shares of common stock at the conversion price of $1.00 per share.
The Company entered into a convertible note with a director for $20,000 effective March 3, 2016. The note bears interest at a rate of 3.5% per annum and all unpaid principal and interest are due on demand by the director. The outstanding principal balance of the note is convertible into the Company’s shares of common stock at the conversion price of $1.00 per share.
The Company entered into a convertible note with a director for $30,000 effective July 11, 2016. The note bears interest at a rate of 3.5% per annum and all unpaid principal and interest are due on demand by the director. The outstanding principal balance of the note is convertible into the Company’s shares of common stock at the conversion price of $1.00 per share.
The Company entered into a convertible note with a director for $20,000 effective September 19, 2016. The note bears interest at a rate of 3.5% per annum and all unpaid principal and interest are due on demand by the director. The outstanding principal balance of the note is convertible into the Company’s shares of common stock at the conversion price of $1.00 per share.
Based on the Company’s stock price at the respective commitments dates, the Company determined that the above convertible notes did not have a beneficial conversion feature to the note holder.
5. Note Payable to Related Party:
The Company entered into a note with Mr. Toomey, a director, for $130,000 effective February 1, 2021. The note bears interest, commencing on the date of the loan, at an initial rate of 2% per annum and the note matures on December 31, 2023. The maturity date of the note will accelerate and be due and payable immediately upon any change of control, merger, or other business combination (as defined in the note). If the maturity date is extended for any reason whatsoever (including in connection with an acceleration event), the note will bear interest at a rate of 5% per annum, commencing on the date of any such extension. The note is not convertible into the Company’s common shares.
The Company entered into a note with Mr. Toomey, a director, for $50,000 effective March 7, 2022. The note bears interest, commencing on the date of the loan, at an initial rate of 2% per annum and the note matures on December 31, 2024. The maturity date of the note will accelerate and be due and payable immediately upon any change of control, merger, or other business combination (as defined in the note). If the maturity date is extended for any reason whatsoever (including in connection with an acceleration event), the note will bear interest at a rate of 5% per annum, commencing on the date of any such extension. The note is not convertible into the Company’s common shares.
Pursuant to the terms of the Merger Agreement, Renovo loaned $200,000 in principal amount to the Company on October 28, 2022 (the “Renovo Loan”). The Renovo Loan is evidenced by a promissory note dated October 22, 2022 issued by the Company to Renovo. The Renovo Promissory Note bears interest, commencing on the date of the loan, at an initial rate of 6% per annum and the note matures on October 28, 2024. No payments of principal or interest are due prior to the maturity date and on such date all such amounts are payable in full. The Company may prepay the amounts owed under the Renovo Promissory Note at any time without any prepayment penalties. In the event of a default by the Company under the Renovo Promissory Note, the outstanding principal amount, accrued and unpaid interest, and all other amounts payable under the Renovo Promissory Note shall become immediately due and payable without notice, declaration, or other act on the part of the Renovo.
6. Preferred Stock:
The Company is authorized to issue up to 20,000,000 shares of Preferred Stock with designations, rights and preferences determined from time to time by the Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the Company’s Common Stock. The terms of the preferred stock have not been approved. As of December 31, 2022 and September 30, 2022, there was no Preferred Stock issued and outstanding.
7. Income Taxes:
The Company’s provision (benefit) for income taxes was as follows:
| | 12/31/2022 | | | 09/30/2022 | |
Current | | | | | | |
Federal | | $ | - | | | $ | - | |
State | | ̶ | | | ̶ | |
Foreign | | ̶ | | | ̶ | |
| | ̶ | | | ̶ | |
Deferred | | | | | | | | |
Federal | | | (8,863 | ) | | | (35,462 | ) |
State | | | (1,266 | ) | | | (4,885 | ) |
| | | | | | | | |
Total | | $ | (10,129 | ) | | $ | (40,347 | ) |
The income tax provision differs from the amount of tax determined by applying the Federal statutory rate as follows:
| | 12/31/2022 | | | 09/30/2022 | |
| | | | | | |
Income tax provision at statutory rate: | | $ | (10,129 | ) | | $ | (40,347 | ) |
Increase (decrease) in income tax due to: | | | | | | | | |
Change in Valuation Allowance | | | 10,129 | | | | 40,347 | |
| | $ | - | | | $ | - | |
Net deferred tax assets and liabilities were comprised of the following:
| | 12/31/2022 | | | 09/30/2022 | |
Long-term deferred tax assets (liabilities) | | | | | | |
Net Operating Loss | | $ | 662,729 | | | $ | 652,600 | |
Valuation Allowance | | | (662,729 | ) | | | (652,600 | ) |
| | $ | - | | | $ | - | |
The tax benefit for the period presented is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related tax deferred assets will be recognized when management considers realization of such amounts to be more likely than not.
The Company’s earliest tax year that remains subject to examination by all tax jurisdictions was September 30, 2016.
8. Rescission Liability:
On November 20, 2009, the Company issued 2,000,000 shares of its common stock to pay for services valued at $20,000. The issuance of these shares was declared invalid by the court since they were issued by prior management who did not have the authority to do so since they were validly removed on November 16, 2009. These shares remained outstanding at December 31, 2022 and will be returned to the Company’s transfer agent upon locating the holder of these shares.
9. Recent Accounting Pronouncements:
Recent pronouncements issued by the FASB, the American Institute of Certified Public Accountants (“AICPA”) and the SEC did not have a material impact of the Company’s present or future financial statements.
10. Commitments and Contingencies:
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, “Contingencies.” The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of December 31, 2022 and the date the statements are available for use, the Company is not aware of any contingent liabilities that should be reflected in the financial statements.
11. Subsequent Events.
On October 28, 2022, the Company and Renovo entered into an Agreement and Plan of Merger (“Merger Agreement”) pursuant to which (i) Renovo will be merged with and into the Company (the “Merger”) in accordance with the provisions of the Delaware General Corporation Law (the “DGCL”) and the legal separate corporate existence of Renovo shall thereupon cease, and (ii) the Company shall be the legal successor or surviving corporation in the Merger.
Under the terms of the Merger Agreement, the Company will engage in a 1-for-500 reverse stock split prior to the Merger and, at the effective time of the Merger (“Effective Time”), each outstanding common share, no par value, of Renovo (“Renovo Stock”) will be converted into and will represent the right to receive 7,200 shares (“Exchange Ratio”) of common stock, par value $0.0001 per share, of the Company (“Company Stock”), after giving effect to the reverse stock split. The Exchange Ratio shall be fixed and no adjustment shall be made under any circumstances other than with respect to certain anti-dilution provision of the Merger Agreement. No fractional share of the Company Stock will be issued pursuant to the Merger. To the extent that a holder of Renovo Stock would otherwise have been entitled to receive a fraction of a share of Company Stock (after taking into account all certificates delivered by such holder), such holder shall receive, in lieu thereof, an additional fraction of a share of the Company Stock rounded up to the nearest whole share of the Company Stock.