The accompanying notes are an integral part of these
consolidated financial statements.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 1- ORGANIZATION AND DESCRIPTION
OF BUSINESS
Background
GHST World Inc. (“the
Company”), formerly GHST International, Inc., Ghost Technology, Inc and IA Europe Group Inc. (“IAEG”), is a Delaware
corporation that was incorporated on November 12, 1999. The Company previously filed U.S. Securities and Exchange Commission (“SEC”)
filings as General Telephony.com, Inc. (“GTI”) prior to its name change. On December 6, 2002, IAEG merged with GTI in a transaction
treated as a reverse acquisition and recapitalization.
The Company is a holding
company for various technology and other activities. The Company has acquired and is developing several patents in the technology sector.
On June 29, 2019, the
Company acquired all the stock of GHST Art World, Inc, a Florida corporation, whose principle assets consisted of 119 art paintings and
reproductions. The Company issued 43,478,000 shares of common stock and paid $15,000 in cash to effectuate the acquisition. See Note
3.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Liquidity and Going
Concern
The
financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge
its liabilities in the normal course of business for the foreseeable future. The Company had a net loss of $37,656 for the year
ended June 30, 2020 and $93,415 for the Nine months ended March 31, 2021. The Company has an accumulated deficit of $9,209,111 and a
stockholders’ deficit of $29,070 as of March 31, 2021 and used $90,521 in cash flow from operating activities for the nine months
ended March 31, 2021.
Management
believes these conditions raise substantial doubt about the Company’s ability to continue as a going concern for
the next twelve months from the date these financial statements were issued. The ability to continue as a going concern is dependent
upon profitable future operations, positive cash flows, and additional financing.
Management
intends to raise money through investors as needed to support its working capital needs.. Currently the Company intends to raise capital
from its existing shareholders and from the possible sale of a minority interest in its subsidiaries. Management cannot provide any assurances
that the Company will be successful in completing these undertakings and accomplishing any of its plans.
GHST WORLD, INC.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Basis of Presentation
The consolidated financial
statements have been prepared in conformity with U.S. GAAP. The consolidated financial statements include all adjustments, which consist
of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management
to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily
indicative of results that may be expected for any other interim period or for the full year. These consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Amendment 2 to Form
10 filed on May 7, 2021.
Principles of Consolidation
The
consolidated financial statements include the accounts of the following wholly owned subsidiaries:
All intercompany balances
and transactions have been eliminated in consolidation.
Concentration of
Credit Risk
The Company’s
financial instruments that are exposed to concentrations of credit risk primarily consist of its cash. The Company places its cash with
financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable
government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties
to which it is a credit counterparty, and as such, it believes that any associated credit risk exposures are limited.
Use of Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Such estimates and
assumptions impact, among others, the following: the fair value of share-based payments and deferred taxes.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly
from estimates.
Cash
Cash are amounts held
at local banks. The Company had no cash equivalents at March 31, 2021 or June 30, 2020.
GHST WORLD, INC.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Risks and Uncertainties
The Company is undertaking
a new business venture that is inherently subject to significant risks and uncertainties, including financial, operational, technological
and other risks that could potentially have a risk of business failure.
Impairment of Long-Lived Assets
The Company accounts
for impairment of long-lived assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant
and Equipment, (“ASC 360”). Long-lived assets consist primarily of property, plant and equipment. In accordance
with ASC 360, the Company periodically evaluates long-lived assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. When triggering event indicators are present, the Company obtains appraisals on an
asset by asset basis and will recognize an impairment loss when the sum of the appraised values is less than the carrying amounts of
such assets. The appraised values, based on reasonable and supportable assumptions and projections, require subjective judgments. Depending
on the assumptions and estimates used, the appraised values projected in the evaluation of long-lived assets can vary within a range
of outcomes. The appraisals consider the likelihood of possible outcomes in determining the best estimate for the value of the assets.
As of March 31, 2021 and June 30, 2020, the Company did not recognize any impairment losses.
Intangible Assets
The Company capitalizes
external costs, such as filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. The Company
expenses costs associated with maintaining and defending patents subsequent to their issuance in the period incurred. The Company will
amortize capitalized patent costs for internally generated patents on a straight-line basis over ten years, which represents the
estimated useful lives of the patents. The ten-year estimated useful life for internally generated patents is based on management’s
assessment of such factors as the integrated nature of the portfolios being licensed, the overall makeup of the portfolio over time,
and the length of license agreements for such patents. The Company assesses the potential impairment to all capitalized net patent cost
when events or changes in circumstances indicate that the carrying amount of its patent portfolio may not be recoverable. For the nine
months ended March 31, 2021 the Company has capitalized $8,025 of patent costs. As of March 31, 2021 total patent cost totaled $41,811.
Income Taxes
Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets, including tax loss and credit
carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the
deferred tax assets and deferred tax liabilities. 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.
GHST WORLD, INC.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The effect of income
tax positions is recognized only if those positions are more likely than not of being sustained. Recognized income tax positions are
measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected
in the period in which the change in judgment occurs.
The Company measures
and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company’s
tax returns are subject to examination by federal and state taxing authorities for the years ended June 30, 2007 through 2019. However,
the Company's federal net operating losses for tax years ending June 30, 2019 and 2020 will remain subject to examination until the losses
are utilized or expire. Under the Tax Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017, Net Operating Losses
(“NOLs”) incurred for tax years beginning before January 1, 2018, will be able to be carried forward for 20 years. For NOLs
incurred in tax years beginning after December 31, 2017, these NOLs will be subject to the new limitations imposed by TCJA. Under the
new law, an NOL can offset only 80% of taxable income in any given tax year. Furthermore, NOLs can no longer be carried back, they must
be carried forward. The 20-year carryforward period has been replaced with an indefinite carryforward period for NOLs incurred for tax
years beginning after December 31, 2017. The Company’s NOL for the year ended June 30, 2020 will be subject to the 20-year carryforward
period and would be utilized before any NOLs incurred for tax years beginning after December 31, 2017. The Company’s NOL incurred
for the year ended June 30, 2019 and 2020 are subject to the new rules of TCJA. The NOL carryforwards for the periods ended June 30,
2020 and 2019 are approximately $48,000 and $37,000, respectively and the total NOL carryforward to the year ended June 30, 2020 is approximately
$2.6 million.
Stock Based Compensation
The Company applies
the fair value method of ASC 718, Share Based Payment, formerly Statement of Financial Accounting Standards ("SFAS") No. l23R
"Accounting for Stock Based Compensation", in accounting for its stock-based compensation. This accounting standard
states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period,
which is usually the vesting period, if any. As the Company does not have sufficient, reliable, and readily determinable values relating
to its common stock, the Company has used the stock value pursuant to its most recent sale of stock for purposes of valuing stock-based
compensation.
Recent
Accounting Pronouncements
In August 2018, the
FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation
Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”, which aligns the requirement for capitalizing
implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation
costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years beginning after December 15, 2020.
GHST WORLD, INC.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
In January 2017, the
FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”
in order to simplify the measurement of goodwill impairment by eliminating Step 2 from the goodwill impairment test. Currently, Step
2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount
of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the
fair value at the impairment testing date of its assets and liabilities following the same procedure that would be required for purchase
price allocation in a business combination. Under the amendments in this ASU, a goodwill impairment loss will be measured using the difference
between the carrying amount and the fair value of the reporting unit limited to the total carrying amount of that reporting unit’s
goodwill. The guidance in this ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to
perform a qualitative assessment. However, entities must disclose the amount of goodwill allocated to each reporting unit with a zero
or negative carrying amount. The amendments in this ASU are to be applied on a prospective basis and became effective for the Company
as of January 1, 2020, but early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently
evaluating the impact of adopting this new standard but does not expect that it will have a material effect on its consolidated financial
statements.
There are no other
recent accounting pronouncements that are expected to have a material effect on the Company's financial statements.
NOTE 3 – OTHER
ASSETS
On June 29, 2019, the
Company acquired all the stock of GHST Art World, Inc, a Florida corporation, whose principle assets consisted of 119 art paintings and
reproductions. The Company issued 43,478,000 shares of common stock and paid $15,000 in cash to effectuate the acquisition. The Company
valued the stock at the fair market value of the stock on the date of issuance or approximately $0.0023 per share for a total purchase
price of $115,000. The entire purchase price was allocated to the art and no goodwill was recorded.
NOTE 4 – PATENTS
The Company obtained
a patent dated June 30, 2020, which is a protection device used in sporting activity with the capability to monitor data from the device.
The Company has capitalized the patent costs totaling $41,811 and $33,786, respectively at March 31, 2021 and June 30, 2020. The Company
will amortize the patent over the useful life of the patent once it is placed in service. No amortization was recorded for the Nine months
ended March 31, 2021 and for the year ended June 30, 2020.
NOTE 5 – COMMON
STOCK PAYABLE
The Company has an
agreement with certain investors to convert their investment into common stock of the Company at a price equal to the average value of
the stock over the previous Nine months. The conversion is contingent on the Company effectuating a 1-for-100 reverse stock split and
upon a change in the Company’s name. As of March 31, 2021, and June 30, 2020, the Company has received a total of $217,784 and
$242,715 respectively.
On August 20,
2020, certain investors agreed to accept 25,000,000 shares at an average price of approximately $0.001 in exchange for $24,931 of
previously paid subscriptions.
These events are subject to clearance with the Financial
Industry Regulatory Authority (“FINRA”) which previously declined to approve our application. We believe FINRA did so because
we had previously failed to file required reports with the Securities and Exchange Commission (the “SEC”), which subsequently
revoked our registration under the Securities Exchange Act of 1934 (the “Exchange Act”). Our delinquency occurred under prior
management with a different business model. The failures to file resulted from a lack of capital to pay professionals.
We have again registered with the SEC under the Exchange
Act through our effective Form 10. On June 10, 2021, we filed a new application with FINRA. We cannot assure you FINRA will grant our
application.
GHST WORLD, INC.
Notes to Consolidated
Financial Statements
March 31, 2021 and
June 30 2020
Unaudited
NOTE 6 – RELATED
PARTY TRANSACTIONS
At March 31, 2021,
the Company owed related parties a total of $13,687. These shareholder loans are unsecured, non-interest bearing and are due on demand.
See note 3 as these amounts that will be converted to common stock are from related parties.
As shown in Note 3,
the Company has committed to converting certain debts to equity. Included in the debts is $94,552 as of March 31, 2021 of amounts due
from related parties that will also be converted as described in Note 3.
In connection with
the sales of common stock the Company paid a total of $13,903, of which $9,183 as a fee to the son of the Chairman of the Board and $4,720
to a company owned by the CFO.
These transactions
were in the normal course of operations and were measured at a value that represents the amount of consideration established and agreed
to by the related parties.
NOTE 7 – STOCKHOLDERS’
EQUITY
The Company has authorized
700,000,000 shares of common stock, $0.001 par value, of which 523,908,071 shares are issued and outstanding as of March 31, 2021.
Common Stock
Issuances
On August 20, 2020,
certain investors agreed to accept 25,000,000 shares at an average price of approximately $0.001 in exchange for $24,931 of previously
paid subscriptions.
In November and December
2020 the Company received $139,066 in exchange for 90,828,439 common shares at an average price of $0.0012 per share.
In March 2021, the
Company received $23,316 in exchange for 10,137,183 common shares at average price of $0.0023 per share.
NOTE 8- INCOME TAXES
The Company has accumulated
losses of approximately $9.2 million since its inception. For income tax purposes, the Company has operating loss carryforwards of approximately
$2.5 million from tax years beginning before January 1, 2018, that begin to expire in 2027. The Company has approximately $85,000 of
tax losses for years beginning after December 31, 2017. These operating losses are subject to the limitations which were enacted in the
Tax Cuts and Jobs Act (“TCJA”). These operating losses can offset only 80% of taxable income in any given tax year. The carryover
period for these operating losses is indefinite. No federal or state tax asset has been reported in the financial statements, because
the Company believes there is a 50% or greater chance that the carryforwards will expire unused. Accordingly, the potential tax benefits
of the loss carryforwards (approximately $900,000) have been offset by a valuation allowance of the same amount.
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