The accompanying notes are an integral part of these
consolidated financial statements.
Condensed Notes
to Consolidated Financial Statements
September 30, 2022
(Unaudited)
NOTE 1- ORGANIZATION, DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Background
GHST World Inc. (“the Company”), is a
Delaware corporation that was incorporated on November 12, 1999.
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.
Basis of Presentation
The interim unaudited financial statements included
herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. In management's
opinion, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly our results of
operations and cash flows for the three months ended September 30, 2022 and 2021, and our financial position as of September 30, 2022,
have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected
for the full year.
Certain information and disclosures normally included
in the notes to the annual financial statements have been condensed or omitted from these interim financial statements. Accordingly, these
interim unaudited financial statements should be read in conjunction with the financial statements and notes thereto for the year ended
June 30, 2022.
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 net losses of $163,922 and $58,955 for the three months ended September 30, 2022 and 2021.
The Company has an accumulated deficit of $9,582,869 and a stockholders’ deficit of $52,577 as of September 30, 2022, and used $38,318
and $57,090 in cash flow from operating activities for the three months ended September 30, 2022 and 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. These financial statements do not include any adjustments related to the recovery and classification of recorded asset amounts
and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern
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.
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.
GHST WORLD, INC. Condensed Notes to Consolidated Financial Statements
September 30, 2022
(Unaudited) |
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.
Foreign Currency
Transaction gains and losses are recognized in earnings.
The Company is subject to foreign exchange rate fluctuations in connection with the Company’s international transactions as certain
vendor payments and repayments of related party advances are done in foreign currency.
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 valuation of other assets and patents, 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 September 30, 2022 or 2021.
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.
Fair Value
The carrying value of cash, other asset, accounts
and other payable approximate their fair value based on the liquidity or the short-term maturities of these instruments. The fair value
hierarchy promulgated by GAAP consists of three levels:
| · | Level one — Quoted market prices in active markets for identical assets or liabilities; |
| · | Level two — Inputs other than level one inputs that are either directly or indirectly observable;
and |
| · | Level three — Unobservable inputs developed using estimates and assumptions, which are developed
by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls within the hierarchy
requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company has no assets or liabilities
that are measured at fair value on a recurring and/or non-recurring during the three months ended September 30, 2022 and 2021.
GHST WORLD, INC. Condensed Notes to Consolidated Financial Statements
September 30, 2022
(Unaudited) |
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. Once a patent is granted, 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. As of September 30, 2022 and June 30, 2022, patent cost totaled $39,181.
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 for the Company consist primarily of other assets and patents. 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. For the three months ended September 30, 2022, the Company
recognized an impairment loss on other assets of $115,000.
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.
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.
GHST WORLD, INC. Condensed Notes to Consolidated Financial Statements
September 30, 2022
(Unaudited) |
Stock Based Compensation
The Company applies the fair value method of ASC 718,
Share Based Payment, 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.
Net Loss Per Share
Basic net loss per share is computed by dividing the
net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common
share is computed using the weighted average number of common shares outstanding for the period, and, if dilutive, potential common shares
outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options,
stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive. The Company had no potentially dilutive securities outstanding for the three months ended
September 30, 2022 or 2021.
Recent Accounting Pronouncements
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 primary 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.
On September 30, 2022, the Company’s management
determined that the carrying value of the assets are impaired as there has been no third-party sales of such art work since acquisition
and the planned business activity relating to such art work has been delayed. As a result, the Company has recorded an impairment loss
of $115,000 for the three months ended September 30, 2022.
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 $39,181 as of September 30, 2022, and June 30, 2022. 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 three months ended September 30,
2022 and 2021. The Company also applied for a European patent for this device in 2016. In October 2022 the Company was informed
the European Application was approved pending payment of a fee by the Company and other administrative procedures. The Company will begin
to amortize in the second quarter of the fiscal year ending June 30, 2023.
GHST WORLD, INC. Condensed Notes to Consolidated Financial Statements
September 30, 2022
(Unaudited) |
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 six
months. The conversion was contingent on the Company effectuating a 1-for-100 reverse stock split which was effected on September 30,
2021. As of September 30, 2022, and June 30, 2022, the Company has a total of $9,559 that has not been converted to common stock.
During the year ended June 30, 2022 certain investors
accepted a total of 118,663,761 shares at an average price of approximately $0.0019 in exchange for $225,259 of debt which was classified
as common stock payable.
NOTE 6 – RELATED PARTY TRANSACTIONS
At September 30, 2022 and June 30, 2022, the Company
owed related parties a total of $70,792 and $75,446, respectively. These shareholder loans are unsecured, non-interest bearing and are
due on demand.
As shown in Note 5, the Company has committed to converting
certain debts to equity. Included in the debts is $9,559 as of September 30, 2022, of amounts due to related parties that will be converted
as described in Note 5.
NOTE 7 – STOCKHOLDERS’ EQUITY
On August 7, 2021, the board approved
amending its articles of incorporation to reduce the number of authorized shares from 700,000,000 to 310,000,000 of which 300,000,000
are reserved for common stock and 10,000,000 for preferred stock. The amendment was effective on September 9, 2021. Effective on September
30, 2021, the Company effectuated a 100-1 reverse stock split. All share and per share amounts in the accompanying consolidated financial
statements and footnotes have been retroactively adjusted to reflect the split.
Common Stock Issuances
During the three months ended September 30, 2022,
the Company issued 452,022 shares in exchange for $43,648 at an average price of $0.10.
NOTE 8. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation
relating to claims arising out of our operations in the normal course of business. As of September 30, 2022, there were no pending or
threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
NOTE 9 – SUBSEQUENT EVENTS
In October 2022, the Company sold 160,208 shares
of common stock for cash proceeds of $14,419 or $0.09 per share.
On November 3, 2022, the Company sold 52,150 shares
of common stock for cash proceeds of $4,694 or $0.09 per share.
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